By Isabelle Bousquette and Belle Lin

McDonald's is giving its 43,000 restaurants a technology makeover, starting with internet-connected kitchen equipment, artificial intelligence-enabled drive-throughs and AI-powered tools for managers.

The goal? To drive better experiences for its customers and workers who today contend with issues ranging from broken machines to wrong orders, according to Brian Rice, the Chicago-based burger giant's chief information officer.

"Our restaurants, frankly, can be very stressful. We have customers at the counter, we have customers at our drive-through, couriers coming in for delivery, delivery at curbside. That's a lot to deal with for our crew," Rice said in an interview. "Technology solutions will alleviate the stress."

The investments are coming at a key time for McDonald's, whose U.S. sales were sluggish in January -- reflective of a broader slump in the fast-food industry. McDonald's said consumers remain pressured, particularly low-income diners and families. The restaurant is hoping that a better tech-enabled experience will help it deliver on its goal of growing its loyalty patrons from 175 million to 250 million by 2027.

To accomplish that, McDonald's tapped Google Cloud in late 2023 to bring more computing power to each of its restaurants -- giving them the ability to process and analyze data on-site. The setup, known as edge computing, can be a faster, cheaper option than sending data to the cloud, especially in more far-flung locations with less reliable cloud connections, said Rice.

Rice joined McDonald's in 2022 from Cardinal Health, where he also served as chief information officer. Before his tenure at the healthcare-supplies distributor, Rice served in senior technology positions at cereal maker Kellogg, candy-maker Mars and carmaker General Motors.

Edge computing will enable applications like predicting when kitchen equipment -- such as fryers and its notorious McFlurry ice cream machines -- is likely to break down, Rice said. The burger chain said its suppliers have begun installing sensors on kitchen equipment that will feed data to the edge computing system and give franchisees a "real-time" view into how their restaurants are operating. AI can then analyze that data for early signs of a maintenance problem.

McDonald's is also exploring the use of computer vision, the form of AI behind facial recognition, in store-mounted cameras to determine whether orders are accurate before they're handed to customers, he said.

"If we can proactively address those issues before they occur, that's going to mean smoother operations in the future," Rice added.

McDonald's began rolling out edge computing to some U.S. restaurants in 2024, the company said, and plans to include more this year. It declined to say how many restaurants currently have edge cloud connectivity, and when the process will be completed.

Additionally, the ability to tap edge computing will power voice AI at the drive-through, a capability McDonald's is also working with Google's cloud-computing arm to explore, Rice said. The company has been experimenting with voice-activated drive-throughs and robotic deep fryers since 2019, and ended its partnership with International Business Machines to test automated order-taking at the drive-through in 2024.

Edge computing will also help McDonald's restaurant managers oversee their in-store operations. The burger giant is looking to create a "generative AI virtual manager," Rice said, which handles administrative tasks such as shift scheduling on managers' behalf. Fast-food giant Yum Brands' Pizza Hut and Taco Bell have explored similar capabilities.

McDonald's is an early mover in its industry when it comes to using edge computing, but it's by no means alone, according to Jose Gomes, a managing director of retail and consumer goods at Google Cloud. The technology is expected to be used by any sector with distributed physical locations, including hospitals and factories.

Despite its first-mover advantage, McDonald's will still face challenges including cost and the difficulty of rolling out the same technology across franchises and corporate-owned locations, said Sandeep Unni, a retail analyst at market research and IT consulting firm Gartner. McDonald's declined to say how much it is spending on its technology initiatives.

But, compared with some of its quick-service restaurant peers, McDonald's has been relatively aggressive at investing in new digital technologies, Unni said. That, combined with the vast amount of data it has collected on its customers, gives the fast-food giant a leg up on figuring out how to improve customer loyalty.

AI will be able to help McDonald's tailor its promotions and offers by using customer data such as prior purchasing history, and even linking it with weather data, Rice said. "A customer who we know loves our sweet treats could get an offer through the app for a McFlurry on a hot summer day," he said.

Write to Isabelle Bousquette at isabelle.bousquette@wsj.com and Belle Lin at belle.lin@wsj.com

(END) Dow Jones Newswires

March 05, 2025 07:00 ET (12:00 GMT)

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