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McDonald's Apprente Buyout to Boost Technology Offerings

Zacks Equity Research

In a bid to improve technological offerings and customer experience, McDonald's Corporation MCD has announced its plan to acquire Apprente, a voice-based conversational system startup. However, the value of the deal has been kept under wraps.

This technology will make the order process faster, simpler and more accurate order taking at the Drive Thru. The company has already tested this technology at its restaurants. McDonald's president and chief executive officer, Steve Easterbrook, stated that “Apprente's gifted team, and the technology they have developed, will form McD Tech Labs, a new group integrated in our Global Technology team that will take our culture of innovation one step further.”

Technological Capabilities to Drive Growth

The Apprente buyout is the company’s third tech acquisition this year. In March, McDonald's had signed an acquisition agreement with Dynamic Yield Ltd. After testing Dynamic Yield in several U.S. restaurants, the company plans to expand this facility in other national and international restaurants in 2019. McDonald's will start integrating this technology into self-order kiosks and Global Mobile App.

By acquiring Dynamic Yield, McDonald’s can utilize the decision technology to provide personalized customer experience. With the help of this technology, the restaurant can have displayed Drive-Thru menus, depending on time, weather, restaurant traffic and popular items. The technology will also enable customers to view preferred menus from their personal choice algorithm.

The company has also invested in Plexure, a mobile app vendor, for the advance development of McDonald's Global Mobile App.

These strategic acquisitions will benefit McDonald’s to fortify technological capabilities.

McDonald’s continues to deliver positive results across the majority of its high-growth markets by focusing on new products alongside delivery growth, value and breakfast platforms’ enhancement. In the past six months, the stock has gained 15.3% compared with the industry’s 20.8% rally.

Zacks Rank & Key Picks

McDonald's has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Chuy's Holdings, Inc. CHUY, YUM! Brands, Inc. (YUM), and Shake Shack Inc. SHAK. Chuy's Holdings sports a Zacks Rank #1 (Strong Buy), whereas YUM! Brands and Shake Shack carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chuy's Holdings, YUM! Brands and Shake Shack have an impressive long-term earnings growth rate of 17.5%, 12.3% and 22.5%, respectively.

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