McDonald's high AI standards on display
“We are a restaurant, not a tech company.” — McDonald’s, probably
I’m hanging out in Copenhagen for a few days this week with an unpredictable schedule, please forgive any newsletter delays.
Last week, McDonald’s corporate office sent a memo to some 100 store locations telling them they were ending an IBM-powered voice AI experiment, pulling the tech from the stores without expanding the program. The letter to stores, obtained by Restaurant Business, leaves the door open to future voice experiments and partnerships. It’s been testing the tech since 2021.
The company didn’t offer details about why it chose to kill the tech. Perhaps it wasn’t serving the business? Maybe it was inhospitable? Maybe it made too many mistakes, or didn’t work well with humans. (This is all pure speculation on my part.) Regardless, the company seems focused on what comes next.
McDonald’s made an early and particularly large splash into drive-thru tech with its 2019 acquisition of Dynamic Yield, an Israeli company that offered, among other things, menu board personalization. It spent $300 million on the purchase.
Around the same time, McDonald’s acquired Apprente, a startup that built voice-based conversation bots in multiple languages. On paper, these acquisitions make sense. Huge restaurant group acquires a proprietary tech company that can give it a real leg up! Why not?
(I can not overstate how game-changing this move felt; suddenly tons of growing restaurant technology companies had a new set of buyers to cour. I probably wrote four or five thinkpieces around that time wondering if there would be a rush by established restaurants to snap up tech startups.)
But after causing a stir with its early (well, “early”) tech acquisitions, the fast food giant got less excited about dealing with the tech. It sold Dynamic Yield to Mastercard in 2021. It also created, and then sold, an in-house tech lab, built from the Apprente acquisition, to IBM the same year.
What does it mean? Well, it seems that large restaurant companies like McDonald’s are less interested in running their own technology. The company’s statements in its memo to restaurants were full of standard and expected corporate speak, but there’s truth in there: Technology is great, but there are so many — so many — external options that it probably makes sense to partner… not build or buy.
Regardless of who the company chooses to partner with, it’s not ditching AI.
But don’t call it boom times. Leaders at Presto, an AI-enabled voice ordering company, are seeking a reverse stock split from investors — essentially reducing the number of shares but increasing their value. The company faces a de-listing from the Nasdaq stock exchange because of its share price value.
A different announcement from Presto caught my eye a few weeks ago — its CEO said the company was encouraging its bots to make more mistakes, reducing the number of times a human intervenes in the ordering process. (This feels kind of like the AI-training version of parenting; sometimes you gotta let them fly.) Presto also recently announced its bots could speak in Spanish in addition to their negative English, even transitioning between the two as necessary.
Back at McDonald’s, execs promised more information, and maybe even a decision, on the future of voice ordering at the company before the end of the year. Meanwhile, in a statement IBM says they’re in talks with other restaurants to bring its tech to the drive-thru. If McDonald’s doesn’t want it, surely someone does?
One way or another, though, it does seem clear that the days of talking to a human in the drive-thru are numbered.
What else?
We have a new episode of The Simmer! Thanks to Union Square Hospitality Group CEO Chip Wade for joining us to talk about the future of full service dining and the best BEC in Manhattan. — The Simmer
Fancy LA grocer Erewhon has a partnership with a dating app. When I moved to San Francisco almost 15 years ago, I remember friends mentioning the “dateway,” a Safeway grocery store in the marina district. I lived pretty far from the neighborhood, but I sure did take a bus up there from time to time. (I met my husband the old-fashioned way, in a bar.) — SF Gate
Shake Shack hires Arby’s veteran Stephanie Sentell as chief operating officer. Like Shake Shack’s new CEO, Rob Lynch, Sentell lives in Atlanta. :eyes emoji: — Restaurant Dive