Dive Brief:

• McDonald's will sell artificial intelligence company Dynamic Yield to Mastercard, the companies said in a press release Tuesday. Terms of the deal were not disclosed, but the transaction is set to close in the first half of 2022. The companies plan to continue working together as McDonald's further scales and integrates "Dynamic Yield’s capabilities globally and across ordering channels," the release said. 
• The mega chain bought Dynamic Yield in 2019 for $300 million and later deployed the company's technology throughout its drive-thrus and ordering kiosks in the U.S., Australia and Canada to offer customers personalized promotions based on their purchase data, time of day, current store traffic, trending products and other factors. 
• The sale follows reports this spring that McDonald's was considering a partial sale of Dynamic Yield so it could offload the part of the business that works with retailers to boost online sales, while retaining the technology that enhances its drive-thrus. 

Dive Insight:

Yield AI is a software-as-a-service (SaaS) platform that uses artificial intelligence and other technologies to work with some 400 brands in the "retail, financial services, travel and restaurant industries, among others," the release said.

For Mastercard, the purchase will strengthen services it provides across McDonald's digital engagement via its merchant loyalty platform SessionM and the cloud-based testing software Test & Learn. And that's in addition to giving the no. 2 U.S. card company a foundation for scaling Yield AI's business.

"With Dynamic Yield’s expertise and our scale and relationships, we’ll be able to bring the connections between the end consumer and our customers to new heights,” said Mastercard's Data & Services President Raj Seshadri said in the release.

Card issuer Synchrony has also tapped Yield AI's services in the past for consumer engagement and considers the new combination with its card partner Mastercard as beneficial. "Combining this with the power of Mastercard’s other digital services unlocks additional capabilities to further enrich consumer engagement,” said Synchrony Senior Vice President Jeff Brousseau said in the release.

The deal fits with McDonald's larger effort to outsource its technology rather than own and operate it within the Golden Arches system.

The meld between Mastercard's payment expertise and Dynamic Yield's AI capabilities could help McDonald's strengthen its digital ordering strategy and deepen loyalty among its rewards members. As of October, roughly $13 billion, or 20% of the chain's orders in its top six markets, came through digital channels like the McDonald's app, ordering kiosks and delivery. 

The restaurant's franchisees have complained in the past that Dynamic Yield didn't deliver the sales boost they expected and that its technology failed to meet expectations. Dynamic Yield was McDonald's largest acquisition in roughly 20 years.

The move could ease the tension between corporate and McDonald's franchisees, who have been critical of the company's technology spending and fees for operators.

Once the deal has closed, Dynamic Yield Chief Technology Officer Ori Bauer will transition to CEO of the company. Current CEO Liad Agmon will remain at the firm in an advisory capacity.