McDonald's headquarters and franchisees are investing millions of dollars to speed up drive-thru times after six years of increasingly long waits.
On Monday, McDonald's announced a new program to encourage certain franchisees to upgrade their drive-thrus, according to internal documents obtained by Business Insider.
McDonald's announced in March it would acquire Dynamic Yield in a $300 million deal and add new AI capabilities to drive-thrus.
The fast-food giant has been making behind-the-scenes tweaks to speed up drive-thru, like cutting menu items, adding new tech, and having workers compete with other locations on service times.
McDonald's drive-thru wait times keep stretching longer and longer. But, the fast-food giant is willing to invest millions of dollars to reverse the trend.
Earlier this week, QSR magazine released its annual Drive-Thru Performance Study. Across the industry, drive-thru times had increased by 20 seconds, with customers spending an average of 255 seconds from speaker to order window in 2019.
The average drive-thru time at McDonald's was 284 seconds, or almost five minutes — an increase of almost 11 seconds over last year's average time.
The day before, McDonald's had internally announced a new program aimed at preventing these drive-thru waits from getting any longer. In an internal memo dated September 30 and obtained by Business Insider, McDonald's announced a new, optional program intended to encourage franchisees with modernized locations and single-lane drive-thrus to upgrade their drive-thrus.
"As we continue to look for opportunities to build our drive-thru business and capitalize on the success we've seen in drive-thru this year, we are introducing a new side-by-side drive-thru standalone program," the memo reads.
The program essentially means that more locations will be encouraged to open a second lane, internally called side-by-side drive-thrus. In recent years, as McDonald's has increasingly emphasized kiosk and mobile ordering sales, locations were required to have 90 cars coming through during peak hours to be eligible for a side-by-side drive-thru; the new program lowers that figure to 70 cars during peak hours.
McDonald's previously announced a program to encourage franchisees to update their restaurants as part of the company's "Bigger, Bolder Vision 2020" — or BBV 2020 — growth plan. While many franchisees pushed back against investments required by BBV 2020, such as restaurant redesigns, the National Owners Association said in January that drive-thrus were an aspect of the growth plan that "will actually produce a return on investment."
The new drive-thru program's commitment letter and implementation details have not been finalized. However, according to the memo, the new program will be funded similarly to BBV 2020 — franchisees who choose to participate will pay 10% of the costs upfront, then receive a five-year rent reduction equal to 40% of total project costs.
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McDonald's quest to fix drive-thru
McDonald's drive-thru times have been getting longer every year for the last six years, according to QSR magazine.
The slowdown has been part of an industry-wide shift, as wait times across the industry have grown longer, menus have gotten more complex, and executives have focused on in-store innovations such as tablets. Plus, more customers means longer wait times — and QSR found that Chick-fil-A and McDonald's tend to have the most people waiting in line.
McDonald's declined to comment for this article. However, CEO Steve Easterbrook told investors on an earnings call in June that global directors and other executives decided earlier in the year it was time that the company make a serious effort to improve drive-thru.
"We kind of had a white-of-the-eyes conversation at the start of March. And we collectively agreed that we were going to renew some emphasis on the drive-thru service times," Easterbrook said. "They've been going the wrong way with most of our markets for three or four years for reasons we can understand, as we've added more to our business, but we knew that wasn't a sustaining trend."
Later in March, McDonald's announced it would acquire artificial-intelligence startup Dynamic Yield in a $300 million deal.
Dynamic Yield's technology will allow drive-thru menus to update instantaneously. For example, if a customer is ordering a coffee, an AI-enabled drive-thru will be able to suggest that the customer add on an order of donut sticks, ideally convincing customers to spend more. McDonald's began testing the technology at drive-thrus in 2018 and plans to roll out the tech at drive-thrus by the end of the year.
In September, McDonald's announced another acquisition that could assist in drive-thru: Apprente, a voice technology startup. According to a press release from the company, Apprente is "expected to allow for faster, simpler and more accurate order taking."
Countless tweaks can cut seconds off drive-thru times
Hollis Johnson/Business Insider
While the acquisitions have been McDonald's most clear-cut drive-thru investments, the fast-food giant has been making many behind-the-scenes tweaks to speed up drive-thru times.
"When you talk about progress in the drive-thru, I mean, frankly, it will improve," Easterbrook said in June. "We want to get incremental improvement week-to-week-to-week. So, each time a customer comes back, say a week or two later, they can notice a few seconds difference."
Menu simplification has helped speed up service time, according to Easterbrook. In April, news broke that McDonald's was cutting its more expensive Signature Crafted Recipes burgers and sandwiches from the menu and slashing items from its late-night menu.
McDonald's is trying to gamify the process with an incentive program that pits locations against each other as they compete for the fastest service times. According to the company, a competition between markets around the US earlier this year helped speed up service times and boost customer counts.
McDonald's is also rolling out new technology and diagnostic tools that allow workers to have a better handle on what might be slowing down drive-thrus.
"They can basically decompose the various elements of a drive-thru visit for a customer into its constituent seconds," Easterbrook said in June. "So, how long are we taking to take the orders? How long are we taking to take the payment? How long it takes us to gather the food and present it? How many cars are we asking to pull forward and bring the food later?"
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