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McDonald’s is considering selling part of Dynamic Yield, the artificial intelligence company it acquired in 2019.
The purchase was McDonald’s largest acquisition in 20 years, a step in modernizing restaurants for the digital age. Dynamic Yield specializes in personalization and decision logic. The technology allows the menus at McDonald’s Drive-Thrus to change based on various factors such as weather, current traffic, and more. The deal was worth more than $ 300 million.
McDonald’s does not break the financial performance of Dynamic Yield’s business.
Dynamic Yield has additional retail customers, and McDonald’s said the potential sale would be related to third-party business, not what the company is doing for the fast food giant.
McDonald’s said the potential sale at this point is exploratory and preliminary and it is possible that it may not. The possibility of a sale was first reported by the Wall Street Journal.
“The potential sale of the non-McDonald’s portion of our business was discussed from the start and now seems like the right time to look into this possibility. We look forward to our continued relationship and build the use of Dynamic Yield’s technology at McDonald’s continue from restaurants around the world, “Liad Agmon, founder and CEO of Dynamic Yield, said in a statement.
McDonald’s weathered the pandemic with strength, reporting that U.S. sales in the same store rose 5.5% in its latest earnings report, partly due to marketing investments and promotions. A highly anticipated line of chicken sandwiches has also just launched, which has boosted franchisee spirits, although tensions with management remain high. Restaurant owners have struggled against Dynamic Yield’s segregated technology fees, which McDonald’s said was due due to a 2017 billing delay and the end of a long-term subsidy for Happy Meals.
CEO Chris Kempczinski told analysts he was confident that US President Joe Erlinger and the franchisee’s leadership could resolve the differences.
In a February email sent to members by the National Owners Association’s owner advocacy group, which was viewed by CNBC, the NOA board of directors said the company had failed to demonstrate that franchisees were charging $ 423 per month in technology fees for in the Owed past uncollected fees of $ 70 million. McDonald’s has agreed to engage Ernst & Young for an independent review to resolve the dispute.
“What we don’t do is allow our suppliers to dictate what we owe and what we don’t owe, except on the basis of the services we provide. When we find ourselves in this type of relationship, we find another supplier. “The email to the owners from the NOA board said.
The email added that McDonald’s founders and executives warned that the company would become a supplier to franchisees. NOA said, “There’s no reason McDonald’s should be our third-party technology provider or that they should manage technology the way they do.”