Presto Automation may not make it through this month.
The supplier of voicebots and ordering tablets for restaurants is running out of cash and has just over a week to raise $6 million or risk violating an agreement with its lender.
It’s about to lose its three biggest customers, and is placing its hope in drive-thru voicebots that currently require human intervention to handle most orders.
To help navigate the situation, the company has turned to an advisory firm for a chief executive—its fourth in less than a year. Interim CEO Gee Lefevre, a 33-year-old senior managing director at Teneo, will help Presto raise capital and cut costs while exploring a potential restructuring or sale.
Despite the turbulence, the company has expressed optimism publicly. “The board has full confidence in our exceptional executive management team’s experience and ability to continue executing on the commercial scale-up opportunity immediately in front of Presto,” said Presto Chairman Krishna Gupta in a press release earlier this month.
But in an SEC filing last week, Presto said its liquidity problems have raised “substantial doubt” about its ability to continue operating, putting the future of what may be the industry’s largest provider of drive-thru robots in question.
That in and of itself is nothing new. Doubt has hovered over Presto ever since it went public in September of 2022 with the goal of automating the restaurant industry. It had a history of losses, a lack of working capital and an unproven artificial intelligence product, and investors were hesitant to buy in. A year and a half later, all of those things are still true.
Presto finished 2023 with just $3.4 million in unrestricted cash and nearly $73 million in debt, according to the SEC filing. It posted a net loss of $18 million in the fourth quarter alone, and in November, it laid off 17% of its staff in an effort to cut costs. And though it was able to raise $6 million earlier this month, with help from Gupta’s venture capital firm, Remus Capital, it said the infusion will only get it through the end of February. It has until March 8 to raise another $6 million under the terms of a forbearance agreement with its lender, Metropolitan Partners Group.
Presto was founded in 2008 by Rajat Suri, who dropped out of MIT to develop the company’s first product, a rudimentary pay-at-the-table device. That would go on to become the Presto Touch tableside ordering tablet that today makes up most of Presto’s business; it later introduced the Presto Voice AI drive-thru system. In the second half of 2023, those products generated less than $10 million in revenue combined.
A Presto Touch tablet. | Photo courtesy of Presto
The bulk of that came from ordering tablets at three chains: Applebee’s, Chili’s and Red Lobster. All three have said they don’t intend to renew their contracts with Presto, according to the SEC filing. The company is now considering selling all or part of the Presto Touch business or simply abandoning it so it can focus on Voice.
Though Voice accounts for only about 10% of Presto’s revenue, it has been the company’s main talking point since going public. The AI "voice assistant" is designed to automate drive-thru order-taking, helping to lower labor costs and boost upsells. Presto claims to be the biggest drive-thru voicebot supplier in the U.S., with installations at 145 locations of Hardee’s/Carl’s Jr. and Wienerschnitzel as of Feb. 1. A third customer, Del Taco, stopped using the technology last year.
Presto also has a hand in the drive-thrus of 347 Checkers locations, where it acts as an agent between the burger franchise and Israel-based voicebot supplier Hi Auto and shares in the revenue. In January, the two companies changed their agreement to allow each to compete for the Checkers account outright.
Voice is key to Presto’s long-term plans, but it faces serious limitations. According to the SEC filing, the current generation of Presto Voice relies on human agents to enter and check every order for accuracy. Presto said this so-called human-in-the-loop policy is common in the AI industry.
A more advanced version of Presto Voice, now in test at 54 locations, has done better. But it’s still completing just 30% of orders without a human having to enter them. Presto expects to have the upgraded system in place at 80% of its stores by the end of March.
Presto had not responded to a request for comment as of publication time. But in an earlier press release, Gupta said Presto Voice is enjoying “significant momentum,” thanks in part to California's new $20 hourly minimum wage for fast-food workers that will take effect April 1.
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