Earlier today, we found out that fast food chain McDonald’s (NYSE:MCD) is pulling the plug on AI drive-thru window orders because, as it turned out, the AI was the single dumbest McDonald’s employee ever. So, what is McDonald’s going to do about its soaring labor costs and an artificial intelligence platform that is clearly failing on the job? It’s going to double down on its mobile app instead, and it’s got ambitious plans therein.
McDonald’s hopes to add as many as 100 million active users to the loyalty program over the next two and a half years. That might sound like a Big Mac bite that’s way too big to chew, but McDonald’s already has 150 million active users, so nearly doubling that figure isn’t exactly out of line.
How does it plan to get there? With marketing. In fact, its marketing has already driven some exciting propositions: the grown-up Happy Meal, as it’s known, pulled in quite a bit, while the Travis Scott meal back in 2020 drove a 4.6% hike in comparable store sales.
The Faulty AI
So, just how bad was that AI, anyway? Reports suggested that it had a hard time understanding numbers; one customer reported ordering a hash brown, a sweet tea, and a Coke. The AI ordering system somehow added a Diet Coke along with that. When the customer requested the Diet Coke removed, the AI complied, but then placed an order for nine sweet teas.
Another customer who ordered a vanilla ice cream and water got her order but also got two sides of butter and four ketchup packets along with it for reasons best described as “inscrutable.” Then, one customer placed an order for two 10-piece McNuggets meals, which somehow, inexplicably, swelled to 26 orders and a bill of over $250.
Is McDonald’s a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on MCD stock based on 19 Buys and 11 Holds assigned in the past three months, as indicated by the graphic below. After a 12.76% loss in its share price over the past year, the average MCD price target of $310.84 per share implies 24.44% upside potential.
