McDonald's Buys Israeli Digital Startup Dynamic Yield -- Update

By Heather Haddon and Dana Mattioli 

McDonald's Corp. is buying Israeli digital startup Dynamic Yield Ltd., in a bid to improve in-store ordering and online marketing at the burger giant.

As part of the deal announced Monday, McDonald's will pay more than $300 million for closely held Dynamic Yield, people familiar with the matter said. The deal is the fast-food giant's first acquisition in years and its biggest in two decades.

McDonald's will use Dynamic Yield's technology at its drive-through windows, where digital displays will change in real-time based on factors such as weather and what the customer is ordering. During heat waves, for instance, a drive-through display could promote a McDonald's ice-cream cone.

The move is a sign of the burger chain's increasing willingness to dabble in new technologies to better compete in the fiercely competitive fast-food industry. McDonald's is aggressively expanding technology in its restaurants through self-ordering kiosks, a mobile-pay function and through delivery with Uber Technologies Inc.'s UberEats service. Chief Financial Officer Kevin Ozan has said that McDonald's wants to focus this year on better promoting its delivery service.

Dynamic Yield helps retailers provide personalized digital promotions to consumers using streams of customer data. Its customers include IKEA, Forever 21 and Fendi, according to the company's website.

The move is a rare one for McDonald's, whose last sizable deal was its acquisition of chicken-restaurant chain Boston Market for $173.5 million in 1999. It later sold the chain to Sun Capital Partners Inc. McDonald's took a stake in Chipotle Mexican Grill Inc. in 1998 and increased it before selling its position in the burrito-chain in 2006. By dollar amount, that stake was larger than the price of the Dynamic Yield acquisition. Still, the deal is a drop in the bucket for a company with a market value of $142 billion.

Dynamic Yield will remain a stand-alone company whose employees will continue to operate out of offices around the world. The company also will continue to serve its current clients and look to acquire new ones.

Write to Heather Haddon at [e-mail] and Dana Mattioli at [e-mail]

(END) Dow Jones Newswires

March 25, 2019 19:06 ET (23:06 GMT)

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