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McDonalds, late to mobile ordering, seeks to avoid pitfalls

McDonald's Corp this month will begin testing its long-awaited U.S. mobile ordering app with the goal of avoiding the kinds of service hiccups that have haunted digital debuts by companies such as Starbucks Corp. Digital ordering has been challenging for many restaurant chains and their customers. Domino's Pizza Inc, now the industry leader, took years to perfect it. Starbucks' technology took far less time, but in January the chain said mobile orders poured in faster than they could be processed, creating backlogs that drove away time-crunched walk-in customers. McDonald's sees mobile as a way to win back customers after four straight years of traffic declines, but the project is not without risks. "We can't impact the speed or the quality of our food," Jim Sappington, McDonald's executive vice president of operations, digital and technology, told Reuters in an interview at a temporary warehouse space in Chicago's West Loop where the company has built a new high tech restaurant. It features a redesigned kitchen to speed order flow and show off its technology initiatives. If its famous french fries are served cold or if mobile customers have to wait for orders, "you get a question of 'Why did I use the app?'," Sappington said. "Our focus is to make the overall experience clearly better."McDonald's said that automating more orders should cut transaction times, reduce errors and free up workers to do things like deliver food to tables or cars in spots designated for mobile orders. "It's better to be right than to be first to market,"

McDonald's Chief Executive Steve Easterbrook said recently. To that end, Sappington plans multiple pilot tests to work out any kinks and streamline the integration with the company's existing technology systems before rolling out the finished app in nearly all 14,000 U.S. restaurants and some 6,000 others in Canada, the UK, France, Germany, Australia and China, by the end of this year. LOW-TECH SOLUTIONS

Kitchens are the heart of McDonald's business and crucial to the success of mobile ordering."The potential is that they can screw up the flow of the whole restaurant," said Janna Sampson, co-chief investment officer at Oakbrook Investments LLC, which holds 65,000 McDonald's shares. McDonald's appears to be taking steps to protect itself from kitchen hiccups, she added. McDonald's is bringing restaurant operators to its Chicago warehouse space to show off a "hub and spoke" kitchen layout developed in French restaurants after the installation of self-service ordering kiosks. Among other things, that kitchen system clusters food preparation to increase efficiency, shaving miles off the daily distances covered by a restaurant's crew. Franchisees who operate most U.S. McDonald's restaurants will be tasked with sorting out the human elements of mobile ordering - namely how to best adjust kitchen layouts, work flows and staffing, said Richard Adams, a former McDonald's franchisee who now advises McDonald's restaurant operators.

Unlike many others, McDonald's app will track a customer's location to ensure that orders are sent to the right restaurant and timed so that food is not left to wilt under heat lamps. When the customer arrives at the restaurant, the app asks for confirmation and payment before sending orders to the kitchen. "If they don't start your order until you pull in the lot, are you really gaining that much time?" investor Sampson asked. The final version of the app will also ask customers to choose table service, counter or drive-through pickup, or curbside delivery. Easterbrook said that if 20 percent of drive-through customers use curbside and another 20 percent use the lanes for pickup only, restaurants could serve another 20 cars per hour, lifting business at U.S. drive-throughs that account for some 70 percent of U.S. sales.

Washington Post software deal a double win for Bezos

Billionaire Jeff Bezos scored a double win this week as the Washington Post, the newspaper he bought in 2013, signed its biggest contract to date to sell web publishing tools mostly hosted by Inc (AMZN. O), the company he founded and runs. The deal, with Los Angeles Times-parent tronc Inc (TRNC. O), is a boost for the Washington Post as it looks to branch out from its core news business against a backdrop of falling advertising revenue for traditional media. The newspaper's year-old service, called Arc Publishing, now has about a dozen clients and is aiming for $100 million in annual revenue. Bezos bought the Washington Post for $250 million four years ago in a private deal not related to Amazon."Thanks LA Times for choosing WaPo's Arc Publishing for your digital platform, and kudos to tech team at The Post!" Bezos posted on Twitter on Monday, when the deal was announced. The deal indirectly benefits Amazon Web Services (AWS), the world's biggest cloud-computing business and Amazon's fastest-growing unit, which posted a 55 percent jump in sales last year to $12.2 billion.

For AWS, Arc represents a new opportunity to extend its reach into the publishing world, where a host of software companies serve both news media and corporate clients that increasingly publish material on the web to directly reach customers. AWS already counts publishers Hearst and the Guardian as customers. Despite the Bezos connection, the choice of using AWS is not automatic, said the Washington Post.

"We will host with whatever cloud service gives us the maximum value," the company's Chief Information Officer Shailesh Prakash said in an email, noting it uses alternative vendors Instart Logic Inc and Akamai Technologies Inc (AKAM. O) for certain features. The Washington Post pays for AWS, he added."There's no doubt that this could prove to be a terrific source of captive clientele for Amazon Web Services and an interesting new market for them," said Jim Friedlich, CEO of the Lenfest Institute for Journalism and a former Wall Street Journal executive."If it succeeds, as I suspect it will, it will be a game-changer for The Washington Post," he said.

Justice Department to announce indictments in massive Yahoo hack: source SAN FRANCISCO U.S. Justice Department officials are expected to announce indictments on Wednesday against suspects in at least one of a series of hacking attacks on Yahoo Inc , according to a source briefed on the matter.

Snapchat 2017 ad revenue forecast trimmed to $770 million: eMarketer The 2017 advertising revenue forecast for Snap Inc’s Snapchat has been trimmed by $30 million due to higher than expected revenue sharing with its partners, digital marketing firm eMarketer said in its latest ad spending forecast on Tuesday.

McDonald's, late to mobile ordering, seeks to avoid pitfalls CHICAGO McDonald's Corp this month will begin testing its long-awaited U.S. mobile ordering app with the goal of avoiding the kinds of service hiccups that have haunted digital debuts by companies such as Starbucks Corp.