According to its latest filing with the Securities and Exchange Commission, drive-thru AI supplier Presto has enough cash to continue operating through the middle of this month.
While that would be a big problem for a lot of companies, Chairman Krishna Gupta said it’s normal for things to be a bit touch-and-go at small growth firms like Presto.
But unlike most startups, which can deal with those challenges in private, Presto is publicly traded and obligated to open its books to the world. “Everything gets telegraphed in real time,” said Gupta, who was Presto’s first investor in 2008, when he was running a VC firm out of his MIT dorm room.
A look at Presto’s annual financial report last week led to a Restaurant Business article detailing the company’s liquidity issues, key customers not renewing contracts and the considerable human labor behind its AI voicebots. The filing said that there was “substantial doubt” about Presto’s ability to continue operating unless it raised more capital.
But Gupta said Wednesday that the filing does not tell the whole story of Presto’s situation and that the company is making progress on all fronts, including financially.
“We clearly have a capital strategy. We have a long-term capital strategy,” he said. But he couldn’t say more than that—another constraint of being publicly traded. “We can’t talk about any of our plans until we announce them.”
On Monday, the company said that it had raised about $2.1 million by selling more than 8 million shares of stock. That money, combined with existing cash and revenues, will keep Presto going through the middle of March, according to an SEC filing.
The next day, Presto canceled a quarterly call with investors two hours before it was scheduled to begin. Gupta said the company’s board determined that Presto had nothing new to tell the market, “so why would we have an earnings call just to have an earnings call?”
All-in on AI
Presto is in the midst of making a significant change to its business model. Last year, about 90% of the company’s $26 million in revenue came from selling tableside ordering tablets to casual-dining chains like Applebee’s. The remaining 10% came from AI-powered voicebots that take drive-thru orders at fast-food chains. But the company decided late last year to drop the tablets and focus solely on AI.
“It’s not that we don’t see a future in the tablet business,” Gupta said, “but we can’t split our bandwidth, our management attention, our resources in two different directions.”
The move means that Presto is cutting ties with its three largest customers, Applebee’s, Chili’s and Red Lobster. “Our focus and our attention is 100% on the voice AI business,” Gupta said.
Presto is one of just a handful of companies that offer AI drive-thru bots. The technology has seen increased interest from restaurants in recent years as they grapple with staffing shortages and rising labor costs, but it has yet to fully take hold in the industry. With more than 150 restaurant locations using its technology, Presto says it’s one of the biggest providers of drive-thru voice AI in the U.S.
Robots with human help
Though Presto’s system does involve artificial intelligence, it also relies on human workers in the Philippines to monitor the majority of transactions for accuracy. Gupta said this “human-in-the-loop” arrangement is common in AI and is necessary to ensure accuracy and improve the software.
“Any AI company that comes to me that tells me that there’s no humans in the loop, I don’t even look at,” said Gupta, who invests in tech companies. “You need humans in the loop to train the models.”
There will be no near future when humans aren’t working in the background for Presto, he said. But over time, the workers will get more efficient and the AI will get smarter. The latest version of Presto’s technology is able to handle about 30% of orders without human intervention, according to its annual filing.
“Our strong focus is on reducing the reliance on humans in the loop, and we’re making progress on that every month,” he said.
Gupta contended that how Presto’s AI works is of less concern to restaurants than whether it works at all. “The customer doesn’t care whether you have AI or not, what they care about is whether you’re driving accuracy or not,” he said. “I absolutely think that a pure, AI-only approach does not drive enough accuracy.”
Presto’s current clients include Hardee’s/Carl’s Jr. and Wienerschnitzel. A third, Del Taco, decided to stop using its technology last year.
It’s working with several other brands, Gupta said, though he declined to name them because the relationships aren’t public. “We’re not just sitting on our hands here,” he said. “We’re very open for business.”
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