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IBM to acquire McDonald’s McD Tech Labs


Earlier this year, the fast-food chain began using AI software to take orders from customers at ten of its outlets in Chicago. Credit: Faisal Mehmood / Unsplash.

McDonald’s has entered into an agreement with technology company IBM to sell its McD Tech Labs for an undisclosed amount

The McD Tech Labs develop employee and customer-facing technologies.

In 2019, McDonald’s acquired the tech company Apprente, which later became McD Tech Labs.

This acquisition allowed McDonald’s to test automated ordering technology (AOT).

This summer, between June and September, the fast-food chain began using artificial intelligence (AI) software to take orders from customers at ten of its outlets in Chicago, US.

The software was found to be 85% accurate, according to CEO Chris Kempczinski.

Implementing this technology at its 14,000 restaurants across the US is expected to take roughly two years.

While AOT can boost speed and accuracy, the challenge of including several languages as well as the McDonald’s menus from 40,000 locations across the world ‘is beyond the scale of our core competencies’, said Kempczinski on an earnings call.

IBM’s expertise in developing customer care solutions powered by AI and natural language processing is expected to advance the AOT technology through the integration of additional languages, dialects and menu variations.

The advanced AOT will help the fast-food chain take orders in more languages and dialects.

IBM expects this acquisition to complement the current work of developing and delivering AI-driven customer care solutions through IBM Watson.

Completion of the deal is subject to regulatory approvals as well as other customary closing conditions. It is expected to close by December.

Upon completion of the transaction, McDonald’s McD Tech Labs team will become a part of the IBM Cloud and Cognitive Software division.

Meanwhile, McDonald’s has announced its Q3 results, ending 30 September.

Its global comparable sales grew by 12.7% in Q3 2021, as against the same period a year ago.

The US comparable sales grew by 9.6%, while that of international operated markets increased by 13.9%.

The consolidated revenues rose 14% to $6. 20bn, and systemwide sales also increased 16% to $29.94bn.

Consolidated operating income surged 18% to $2.98bn and included $106m of strategic gains associated with the divestment of McDonald’s Japan stock.

Diluted earnings per share for the quarter jumped 24% to $2.76.

In a separate development, US-based coffee chain Starbucks has announced investments in wages and benefits.

Starting from late January 2022, employees holding two or more years of service could receive a raise of up to 5%, while those with five or more years would receive up to a 10% increase in their wages.

The coffee chain expects average pay for all US hourly employees to rise to nearly $17 an hour, up from $14 an hour, by next summer.

The barista hourly rates would range from $15 to $23 based on the market and tenure of the employee.





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