QSRs Continue To Embrace Technology
The last few years has seen quick service restaurants invest heavily in technology to boost traffic and increase sales. Two of the biggest names in the industry—McDonald's and Yum! Brands, were in the news this week for dealmaking in the technology space.
Yum! Brands, the parent of chains KFC, Pizza Hut and Taco Bell, announced earlier this week that it has agreed to acquire the artificial intelligence-based consumer insights and marketing performance analytics business of Kvantum. The acquisition will enable Yum! Brands to make data-driven marketing decisions and acquire new technology talent.
Yum! Brands plans to combine Kvantum with Collider Lab, which is a culture-based consumer insights and marketing strategy consultancy the company acquired in 2015. The move enables Yum! Brands to work towards its global technology strategy of providing a best-in-class digital journey across mobile, online, delivery and restaurant operations.
“Technology strategies that elevate the customer and employee experience and lead to smart, data-driven marketing decisions are critical to keeping our brands R.E.D. (relevant, easy to access and distinctive) and delivering growth for our franchisees and shareholders," Yum! Brands CEO David Gibbs said. "We're excited about the opportunity this acquisition presents, and the potential to scale Kvantum's proven technologies across our system to strengthen our data and advanced analytics capabilities and elevate our world-class marketing competencies globally."
Earlier this week McDonald's said that it is considering selling part of Dynamic Yield, the artificial intelligence startup the company acquired in 2019 for $300 million. Dynamic Yield's technology powers menus at McDonald's drive-thrus and can recommend items to customers depending on various factors such as weather or current traffic.
The decision by McDonald's to sell a stake in Dynamic Yield, which was its largest acquisition in two decades, comes as franchisees complain the technology hasn't increased sales as was promised. McDonald's reviewed transactions and found that Dynamic Yield's technology contributed to sales less than previously reported.
Despite the complaints and the technology not living up to expectations, McDonald's is standing by it. The potential sale would only be for the portion of Dyanmic Yield that works with outside retailers, which is becoming a larger part of its business.
"The potential sale of the non-McDonald's part of our business has been discussed from the outset and now feels like the right time to explore that possibility," Dynamic Yield founder and CEO Liad Agmon said. "We look forward to our continued relationship while continuing to expand the use of Dynamic Yield's technology at McDonald's restaurants around the world."
The news from Yum! Brands and McDonald's this week are just the latest examples of how quick service restaurants are embracing technology to remain competitive.
Mortgage rates jump by most in a year. The average contract rate on a 30-year fixed-rate mortgage jumped by the most in nearly a year to 3.23% from 3.08% last week to hit the highest level since July, according to the Mortgage Bankers Association's seasonally adjusted index. Despite the rise in rates, applications to refinance a home loan to rose by 0.1% last week while applications to purchase a home jumped by 2%. "The housing market is entering the busy spring buying season with strong demand," MBA associate vice president of economic and industry forecasting Joel Kan said. "Purchase applications increased, with a rise in government applications – likely first-time buyers – pulling down the average loan size for the first time in six weeks."
Apollo funds to acquire Michaels. The Michaels Companies announced it has entered an agreement to be acquired by funds managed by Apollo Global Management in a deal valuing the company at $5 billion. Apollo will pay $22.00 per share for Michaels, which is a 47% premium to the closing stock price on February 26, 2021, which is when speculation of the deal first surfaced. "We are excited to enter into this new chapter together with Apollo, who shares our strategic vision for Michaels as an omnichannel retailer that offers a one-stop-shop experience for the entire Michaels community," Michaels CEO Ashley Buchanan said. "As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms."
Las Vegas Sands cashes in on Vegas properties. Las Vegas Sands Corp. announced it has entered an agreement to sell its Las Vegas properties, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center, for about $6.25 billion as it focuses on its Asian operations. "This company is focused on growth, and we see meaningful opportunities on a variety of fronts," Las Vegas Sands chairman and CEO Robert Goldstein said. "Asia remains the backbone of this company and our developments in Macao and Singapore are the center of our attention."
GM extends shutdowns amid chip shortage. General Motors announced it will extend production cuts across three North American plants as the company and auto industry as a whole continue to deal with a shortage of semiconductors. GM announced a fourth plant in Brazil will also take downtime as a result of the shortage. "We continue to work closely with our supply base to find solutions for our suppliers' semiconductor requirements and to mitigate impacts on GM," GM said. "Our intent is to make up as much production lost at these plants as possible."
Walmart to support U.S. manufacturers. Walmart president and CEO John Furner announced in a blog post yesterday the company's a new ten-year commitment to spend an additional $350 billion on items made, grown or assembled in the U.S. Walmart estimates the commitment will support more than 750,000 new American jobs. "U.S. manufacturing really matters. It matters to our suppliers, to entrepreneurs and to the environment," Furner wrote. "It matters to our customers - more than 85% of which have said it's important for us to carry products made or assembled in the U.S."