McDonald’s is spending $8.5 billion on changes: AI drive-thru, automated kitchens, new chicken menu, protein-packed meals and more

McDonald’s is preparing for a major overhaul of its restaurants, products and technology as it looks for new ways to grow in a market where fast-food traffic is flat in many places, including the U.S.

The company said Wednesday that it plans to spend $8.5 billion over the next decade to modernize its restaurants globally. The changes will include updated kitchens, new technology, more automation and changes to the way McDonald’s serves customers.

Here’s a breakdown of what the company plans to change.

McDonald’s Plans $8.5 Billion Restaurant Modernization

McDonald’s plans to spend $8.5 billion over the next 10 years modernizing its roughly 46,000 restaurants around the world.

Chairman and CEO Chris Kempczinski said at a meeting with investors at the company’s Chicago headquarters that the company needs to gain share from competitors and improve restaurant productivity as fast-food traffic remains flat in many markets.

Kempczinski said, “The winners will be the companies that create more demand and deliver it more efficiently,” as quoted AP.

What Will Change Inside McDonald’s Restaurants

The restaurant upgrades will include several physical changes.

McDonald’s plans to add lockers for delivery orders, make coffee preparation areas more visible and expand play areas. The company also plans to improve kitchen layouts.

The changes are designed to improve restaurant operations and the customer experience.

McDonald’s is also expanding the use of scales that help ensure order accuracy. The scales are already being used at 10,000 restaurants globally, and the company said they will be in 20,000 restaurants by 2028.

McDonald’s Is Expanding AI and Automation

Technology will play a major role in the modernization plan.

The company is deploying ArchIQ, a system developed with Google that uses artificial intelligence to improve order accuracy and automate tasks such as inventory management and scheduling.

McDonald’s AI-enabled drive-thru ordering system, Archy, can now take orders in both Spanish and English with a 90% accuracy rate.

Chief Financial Officer Ian Borden said Archy could eventually reduce at least 50 labor hours per week at a typical McDonald’s, as per the AP report.

However, Borden said the goal is not to reduce staffing. Instead, employees could spend more time on hospitality and tasks such as hand-breading chicken.

Kempczinski said customers in testing have responded positively to Archy because it helps make orders more accurate. He highlighted that, “It’s not AI is bad or AI is good. We try to be really thoughtful about how we use it,” as quoted by AP.

New McDonald’s Menu Items Are Coming

McDonald’s is also looking at changes to its menu.

The company said its hand-breaded chicken has already rolled out at 10,000 restaurants in Asia and at a handful of restaurants near Chicago. McDonald’s said the product has improved sales and quality ratings.

The company plans to expand testing of hand-breaded chicken to more markets in the U.S. and Ireland next year.

McDonald’s also plans to introduce grilled chicken sandwiches and wraps in the U.S. and other markets.

It will also experiment with products including egg bites and bowls as it looks to meet demand for more protein and different portion sizes.

McDonald’s Is Targeting Demand for More Protein

McDonald’s says changing customer preferences are also influencing its menu plans.

Skye Anderson, president of McDonald’s USA, said approximately 30 million Americans are now using GLP-1 weight loss drugs and are seeking smaller, more protein-packed meals as a result, according to the AP report.

At the same time, McDonald’s research indicates that 60 million Americans are actively seeking more protein in their diets.

Employee Training Will Focus More on Hospitality and Food Quality

McDonald’s is also changing its approach to employee training.

Tiffanie Boyd, McDonald’s chief people officer, said the company is rolling out new training focused on hospitality and food quality.

The training will be more experience-based. For example, employees will be shown what a perfectly cooked Big Mac tastes like.

The program will also encourage more pleasant interactions with customers.

McDonald’s Is Still Focusing on Value

Despite the planned restaurant and technology upgrades, McDonald’s says value remains important.

Kempczinski said low-income consumers, defined as U.S. households earning $45,000 or less, are still going out for fast food but not as often as they used to.

He said McDonald’s has done well with meal bundles such as its $5 meal deal.

The company is also exploring ways to offer entry-level prices on a basic menu of items in the U.S., similar to what it offers in Europe and other markets.

Kempczinski said, “This is the environment that we’re in right now. You have to be on your game and deliver that value,” adding, “The pressure around cost of living isn’t going away,” as quoted by AP.

What Will McDonald’s Franchisees Have to Pay

The restaurant upgrades will also involve additional spending by U.S. franchisees.

McDonald’s U.S. franchisees typically spend up to $450,000 per decade on required restaurant remodels.

Under the new plan, franchisees will have to spend an additional $800,000 over time. McDonald’s will cover part of that cost through rent relief and capital support.

Borden said the investments will be phased in over time as markets and individual franchisees are ready.

McDonald’s Expects Efficiency Gains From the Investment

McDonald’s says the investment could also provide financial benefits to its restaurants.

Once the upgrades are made, the efficiency improvements are expected to deliver roughly $100,000 in annual cash-flow benefits to the average U.S. restaurant, according to Borden. He said, “We’d love to see it going into hospitality to elevate the experience with our customers,” as quoted by AP.

Some of that money can be reinvested in the restaurant.