The $2.1 Billion McDonald's Machine

Summary

This video script delves into the psychology behind McDonald's self-order terminals (SOTs), revealing how they subtly manipulate customers into spending more. It discusses the impact of design on choices, the use of nudges and dark patterns to upsell, and the potential for data collection to further optimize the user interface. The script highlights how SOTs have increased average order sizes and profits, while also raising concerns about their influence on consumer behavior.

Takeaways

• 🍔 McDonald's is the world's most valuable fast food chain with its stock price nearly quadrupling over the past decade.
• 📱 Self-service kiosks (SS) are a key factor in McDonald's success, with large touch screens resembling giant smartphones.
• 📈 The introduction of SS has led to an increase in average order size and profits, with a reported 15% increase in Germany.
• ⏳ Customers spend more time at SS, which is beneficial for McDonald's as it influences purchasing behavior.
• 🛍️ Design influences choices, with McDonald's using UI tricks to nudge customers towards more expensive items.
• 🔍 Reference values are set with expensive items to make cheaper options seem more appealing in comparison.
• 📊 The placement of items on the menu encourages upselling, with more expensive items more prominently displayed.
• 🎉 Colorful animations and rewards are used to encourage adding items to the cart, making customers feel good about their choices.
• 💳 The design subtly encourages card payments over cash, which can lead to more impulse purchases.
• 🍟 McDonald's uses bundling and cross-selling strategies to increase order profitability, making add-ons seem like a bargain.
• 🌐 The SS interface is a global tool, potentially collecting vast amounts of data for continuous UI optimization.

Q & A

What is the main purpose of self-order terminals (SOTs) in McDonald's restaurants?

The main purpose of self-order terminals in McDonald's is to provide a modern, user-friendly interface for customers to place their orders, which has been a key factor in the success of the 'restaurants of the future' concept and has reportedly increased profits.

How has the introduction of SOTs impacted the average order size at McDonald's?

The introduction of SOTs has led to an increase in the average order size, as customers tend to order more items when using the terminals compared to when they order at the counter.

What is the role of design in influencing customer choices at McDonald's?

Design plays a significant role in influencing customer choices by presenting options in different ways, using techniques such as nudging, dark patterns, and bundling to encourage customers to add more items to their orders.

What is the concept of 'bundling' as mentioned in the script?

Bundling is a pricing strategy where items are offered together at a price that is cheaper than if they were purchased separately, making the offer seem more attractive to customers and increasing the profitability of the order for McDonald's.

What is a 'nudge' in the context of user interface design?

A 'nudge' is a design element that subtly influences user behavior by presenting options in a certain way, often without the user being consciously aware of the influence.

What is a 'dark pattern' in user interface design?

A 'dark pattern' is a user interface design technique that is intended to trick users into taking actions that may not be in their best interest, such as hiding important information or presenting choices in a misleading way.

How do SOTs affect the likelihood of customers making impulse purchases?

SOTs increase the likelihood of customers making impulse purchases by providing a more relaxed and private ordering environment, allowing customers to add items to their orders without feeling rushed or judged.

What is the potential impact of SOTs on McDonald's profits, as mentioned in the script?

According to an insider who spoke to the German public broadcaster ZDF, the introduction of SOTs has increased McDonald's profits in Germany by about 15%.

How do SOTs handle the payment process, and what is the potential influence on customer spending?

SOTs encourage customers to pay by card, which is known to increase the likelihood of making impulse purchases and spending more money overall, by making the cash payment option less prominent.

What is the potential for McDonald's to collect and utilize customer data through SOTs?

McDonald's could potentially collect a significant amount of data through SOTs, which could be used for A/B testing and optimizing the user interface to maximize additional item purchases.

What are the potential downsides of using SOTs for customers, as discussed in the script?

The potential downsides of using SOTs include being subtly manipulated into buying more than originally intended, and the risk of making unhealthy food choices due to the design of the interface encouraging larger orders.

Outlines

00:00

🍔 The Psychology of Ordering at McDonald's

This paragraph discusses how McDonald's self-order terminals (SOTs) influence customers to make larger and more expensive purchases than initially intended. It highlights the use of design elements and psychological tricks, such as prominent placement of more expensive items and the subconscious comparison to reference values, to nudge customers towards upselling. The paragraph also mentions how the SOTs have contributed to an increase in McDonald's profits and the potential for data collection and A/B testing to further optimize the user interface for maximum sales.

05:01

💳 The Impact of Design on Consumer Behavior

The second paragraph delves into the specifics of how McDonald's SOTs employ design strategies to encourage spending. It describes 'dark patterns' that obscure the total cost until the end of the ordering process, the use of card payments to facilitate impulse buying, and the bundling of items to increase order value. The paragraph also touches on the effectiveness of cross-selling through the SOTs and how the interface is designed to make customers feel like they are getting a good deal, even when they end up spending more than planned.

10:03

🔍 The Hidden Influence of Self-Order Terminals

This paragraph examines the broader implications of the design choices in McDonald's SOTs. It points out that while customers might think they are immune to subtle nudges and patterns, the effectiveness of these techniques is proven by the terminals' impact on sales. The paragraph suggests that the terminals are designed to maximize 'bad choices' and that the techniques used, while not unique, are often invisible to the untrained eye. It concludes by emphasizing the importance of being aware of these influences when using SOTs.

Keywords

💡Self-Order Terminals (SOTs)

Self-Order Terminals, or SOTs, are interactive kiosks found in fast food restaurants, such as McDonald's, that allow customers to place orders without interacting with a cashier. In the video, SOTs are highlighted as a key factor in McDonald's success, increasing profits and average order size. They are designed to be user-friendly with large touch screens, resembling giant smartphones, and are used to subtly influence customers to make larger purchases.

💡Nudging

Nudging is a psychological concept where design elements subtly influence people's behavior and choices. In the context of the video, McDonald's uses nudging through the design of their SOTs, presenting options in a way that encourages customers to upgrade their orders or add more items. For example, the script mentions how the placement and size of menu items can subconsciously lead customers to choose more expensive options.

💡Dark Patterns

Dark patterns are user interface design techniques used to trick users into making choices that may not be in their best interest. The video describes how McDonald's SOTs employ dark patterns, such as hiding the total cost of the order in a less noticeable part of the screen, which can lead customers to add more items to their order without fully realizing the cost.

💡Bundling

Bundling is a marketing strategy where multiple products or services are offered together at a discounted price, making the overall offer more attractive. The video explains that McDonald's uses bundling to increase the profitability of each order. By offering a meal that includes a burger, fries, and a drink, customers perceive it as a good deal, even though the individual components are cheaper when bought separately.

💡Cross-Selling

Cross-selling is a sales technique where additional products or services are suggested to customers during the purchasing process. In the video, it is mentioned that McDonald's SOTs effectively use cross-selling by suggesting add-ons like nuggets or desserts, which are more profitable for the company and can be easily added to the customer's order.

💡McDonald's Profits

The video discusses how the introduction of SOTs has significantly increased McDonald's profits. The terminals are said to have increased profits in Germany by about 15%, according to an insider. This is attributed to customers spending more time at the terminals, which leads to larger orders and higher average order values.

💡User Interface (UI)

The user interface, or UI, refers to the space where users interact with a device or system, in this case, the SOTs at McDonald's. The video emphasizes the importance of UI design in influencing customer behavior. Elements such as the size and placement of menu items, as well as the use of animations and colors, are all part of the UI that McDonald's uses to encourage larger orders.

💡Upselling

Upselling is a sales strategy where a seller encourages a customer to purchase a more expensive item or additional items. The video describes how the SOTs at McDonald's use upselling techniques, such as presenting more expensive items prominently and suggesting meal upgrades, to increase the size and cost of each order.

💡Average Order Size

Average order size refers to the total value of items ordered by a customer, averaged across all orders. The video script notes that the introduction of SOTs has led to an increase in the average order size at McDonald's, as customers are more likely to add extra items to their orders when using the terminals.

💡Customer Experience

Customer experience encompasses all interactions a customer has with a company or its products. The video acknowledges that SOTs improve the customer experience by making the ordering process more convenient and less stressful, especially for introverted customers. However, it also points out the downside of SOTs, which is their design to encourage unhealthy or excessive purchasing behaviors.

💡McDonald's Global

McDonald's Global refers to the overarching corporate entity that manages the McDonald's brand worldwide. In the video, the script mentions reaching out to McDonald's Global for comment on the use of SOTs and their impact on customer behavior, but receiving no response. This term represents the larger corporate structure behind the individual restaurants.

Highlights

McDonald's self-order terminals (SOTs) are a key factor in the success of the 'restaurants of the future' concept.

McDonald's is considered a pioneer in the fast food industry with these terminals, which can be found in almost all of its restaurants.

SOTs have supposedly increased McDonald's profits in Germany by about 15% according to an insider.

The terminals encourage longer order times, which is beneficial for profits.

Design influences our choices, as seen in the way McDonald's presents its food categories and pricing.

McDonald's uses reference values to subconsciously influence customers' perceptions of affordability.

Nudging techniques are used in the interface design to subtly influence behavior.

The interface design positions more expensive items more prominently to encourage larger orders.

Dark patterns in the interface, such as hiding the total price, are used to manipulate customers into spending more.

McDonald's encourages card payments at SOTs, as they lead to more impulse purchases.

The bundling principle is crucial for McDonald's profitability, as add-ons increase the order's profit margin.

Cross-selling through SOTs is more effective than traditional counter service.

McDonald's Germany confirmed that the average order size at SOTs is higher than at the counter.

SOTs could potentially collect vast amounts of data for AB testing to optimize the user interface.

McDonald's terminals are one of the most used interfaces in the world, with over 69 million customers served daily.

While SOTs improve the customer experience, they are also designed to maximize unhealthy choices.

McDonald's uses subtle manipulation techniques in SOTs that are invisible at first glance but highly effective.

Transcripts

you're at McDonald's and you're craving

a Double Cheeseburger so you find

yourself in front of one of these

self-order terminals or SS are in almost

every restaurant of the chain now you

start browsing and end up buying a big

tasty bacon with fries in a Coke plus

nuggets and a McFlurry for dessert once

you see your food in front of you you

feel guilty you ordered way more than

you initially wanted many people have

this experience at fast food restaurants

since the introduction of ss the average

order has gotten bigger and bigger but

why today we're going to talk about one

of the most used user interfaces in the

world and its countless tricks to take

as much money as possible from

you

Fern McDonald's is by far the most

valuable fast food chain in the world

its stock price has nearly quadrupled

over the past 10 years today there are

more than 40,000 McDonald's restaurants

around the world many of them are

so-called restaurants of the future SS

are a key factor in the success of the

concept with their large touch screens

they look like giant double-sided

smartphones McDonald's is considered a

Pioneer in the fast food industry when

it comes to these terminals they tested

the first sots in Europe in 2008 today

they can be found in almost all of its

restaurants other chains like like

Burger King and KFC have followed soon

the terminals have supposedly increased

McDonald's profits in Germany by about

15% that's according to an Insider who

spoke to the German public broadcaster

zdf in 2018 former McDonald CEO Steve

Easter Brook confirmed that the

terminals definitely increased profits

his main reason customers take

significantly longer to place their

order but why would that be a good thing

design influences our choices not only

at McDonald's but also in our everyday

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check out hot scan let's take a closer

look at the example from the beginning

to recap you only wanted to order a

double cheeseburger When you entered the

store in the main menu you are presented

with inviting images of burgers the more

expensive items like the double

hamburger Royale are especially

eye-catching on the left you can find

the different food categories here

McDonald's is setting a so-called

reference value going forward you'll

subconsciously compare other items to

these expensive ones even if you don't

go for the pricier Burgers the double

cheeseburger now seems pretty affordable

this makes you more likely to upgrade

the cheap

Burger we've just seen two examples of

nudging nudges are the design to

influence our Behavior by presenting

options in different ways sometimes they

are subtle and sometimes more obvious in

this case the icons on the side are much

smaller than the prominently placed

menus in the center more space on the

interface demands more of your attention

the same thing happens once you enter

the sub men the Bak burgers are at the

top and the cheaper ones are at the

bottom it's like a supermarket shelf you

have to bend down or scroll down to see

the cheap stuff the more expensive

expensive items are at eyee level as a

result you don't even notice the double

cheeseburger because of all the juicier

Burgers on top the big tasty bacon in

particular is just too tempting to

resist make it a meal yeah why not fries

and a coke let's go hm should you get

the mech menu small or the regular Mech

menu for just 50 cents more well of

course the regular then anything else

cheeseburger no nuggets hm yeah yeah

you're in the mood for that the colorful

animation you see when you make the

purchase isn't random it's there to

reward you and make you feel good about

adding things to the cart next the

terminal doesn't take you to the

checkout it just takes you back to the

menu now that you're looking at it a

dessert would be nice too why not get a

McFlurry wait how much is that now in

total oh down here it's

$19.97 this trick is called a dark

pattern dark patterns are designed to

get users to do things that aren't in

their best interests this is done by

presenting information in a way that

isn't neutral or by leaving things out

on purpose a classic example would be

the color accept all cookies button

while it may take several clicks to

select only necessary cookies the

terminal interface is similar whilst

less extreme the total amount is hidden

in a tiny corner of the large screen

standing in front of it you have to

actively look down to find the price for

McDonald's maximizing the average order

value is a key business strategy but for

you the price should be a minor detail

next to all the colorful products in a

statement to us McDonald's Germany

States the screens are as big as they

are to present information as clearly

and appealing as possible they are also

designed for

accessibility now it's finally time to

pay and here another NCH this time the

NCH is meant to motivate you to pay by

card you only see a smaller button for

the option to pay in cash at the

register there are a few reasons for

this when when you pay by card you're

more likely to make impulse purchases

and spend more money overall plus the

two-sided order terminals let more

people order at the same time up to 70%

of customers leave when there are more

than seven people in line you pay almost

€20 for a thick menu nuggets and a

dessert in total 2,300 calories once the

food is in front of you and even more so

after you devoured it all without Mercy

you ask yourself how did this happen

again the interface is a prime example

of upselling during the order process

you were tricked or at least subtly

manipulated into buying more than you

originally intended instead of a double

cheeseburger you end up with the big

tasty menu and those nuggets on top in

many small steps the terminal repeatedly

confronted you with moments of

comparison these comparisons create

subconscious pressure each step in the

ordering process seemed rational to you

at the time you may have even thought

you were getting a bargain but imagine

you had to follow Choice a double

cheeseburger for €350 or a meal plus

nuggets and ice cream for €1

1997 cents you probably would have

chosen the single burger this example is

of course slightly exaggerated but

making meals bigger is important for

McDonald's the margin on a single burger

is low only when you add drinks fries

and ice cream your order becomes really

profitable for the chain those add-ons

are cheap to buy and easy to prepare

that's why the menu is crucial for

McDonald's it works on the principle of

bundling the price is based on the most

expensive product like the big tasty for

McDonald's the additional drinks and

Fries make the offer worthwhile at the

same time for the customer it appears to

be a bargain as the items in the bundle

are much cheaper together than if they

were purchased

separately cross- selling also plays an

important role in menu management the

sot suggests additional products to you

that's much more effective than the

usual would you like some with that at

the counter there are no social

pressures often no queue behind you no

one watching often customers stand back

to back in front of the terminals and

that's how you ended up with nuggets you

hadn't planned on buying McDonald's

Germany confirmed that the average order

size at their SS was slightly higher

than at the counter what slightly means

in the definition remains unclear we did

ask for a ratio but received no answer

in 2015 the fast food compan reported to

have served more than 69 million

customers every day in over 100

countries about half of all orders were

placed through the order terminals this

makes the McDonald's terminal one of the

most used interfaces in the world

probably only surpassed by Tik Tok

Instagram and such McDonald's could

potentially collect a ton of data every

day data which they could use for

example for AB testing customers could

randomly be shown different versions of

buttons like different sizes colors or

wordings or some customers might see a

recommendation for six-piece nuggets

While others might see nine-piece

nuggets with these tests McDonald's

could continuously optimize the UI based

on millions of data points to squeeze

out the maximum amount of additional

items purchased it could be anything

from the exact size of the sidebar to

the color of the salad leaves or the way

the desserts are arranged McDonald's

Germany told us that they don't do AB

testing in Germany they could not tell

us whether the company does such tests

in other countries and referred us to

McDonald's Global we asked McDonald's

Global for comment but so far they

didn't respond friends in the US and UK

have tested the terminals in their

countries for us the user interface

seems to be pretty similar it's probably

safe to assume that the techniques

discussed in this video come into play

in McDonald's restaurants in one way or

another all over the

world there's no doubt that SS improve

the customer experience they save time

and make the whole process more chill a

real blessing for introverts and you

don't have to worry about being judged

at the register if you want to treat

yourself to a big meal with two desserts

but SS have a downside too they are

explicitly designed for you to maximize

your bad choices the techniques used are

not unique by any means but often

invisible at first glance you might

think this is all so see-through and

you're not influenced by little nudges

or dock patterns but people are

otherwise these terminals wouldn't be

this effective and a giant conglomerate

like McDonald's wouldn't use them