We told you late last week that McDonald’s is ending its drive-thru AI test. In the process, it continued the fast-food giant’s reset on restaurant technology and proved, once again, that restaurant companies aren’t necessarily built to be tech companies.
The Chicago-based chain five years ago made a pair of notable acquisitions that promised to bring “artificial intelligence” to its restaurants.
The first was Dynamic Yield, which involved fancy drive-thru menu boards that act like the recommendation engines you see on ecommerce sites like Amazon or Netflix. The company then acquired Apprente, an AI company that would, in theory, enable a robot to take orders at the drive-thru speaker.
Such deals were part of the restaurant industry’s massive technology push, and in some respects would prove prescient. The pandemic started a year later, followed by a massive labor shortage, that forced restaurants to devote more energy into takeout as they sought long-term answers for their insatiable need for workers.
And, as McDonald’s moves tend to do, they helped trigger something of a gold rush in the restaurant technology space.
Neither would have quite the effect that McDonald’s planned. The company quickly implemented Dynamic Yield into drive-thrus around the country. Those screens did generate some higher average checks, but the true impact has never quite been quantified. McDonald’s sold that technology to MasterCard two years later.
But while McDonald’s was public about the Dynamic Yield technology during that period, it was quiet about the Apprente technology. In that deal, McDonald’s created McD Tech Labs, with the idea of forming an in-house tech lab as the company experimented with drive-thru voice bots.
Operators were chomping at the bit to add the technology to their restaurants in the hope of easing some of their labor burden during and after the pandemic. But executives continued to say that the technology was not quite ready for prime time.
McDonald’s sold McD Tech Labs to IBM in 2021, before it sold Dynamic Yield, and that sale kicked off a test of drive-thru AI in more than 100 locations in the U.S.
And then operators heard almost nothing. Meanwhile, other brands were making a big push into drive-thru voice bots. Checker’s and Rally’s, Hardee’s and Carl’s Jr., Krystal, Taco Johns and others implemented the technology in their restaurants. TikTok began making fun of the order-taking bots.
Bigger rivals, notably Wendy’s, began tests with Google on the technology. Outside the restaurant industry, artificial intelligence became a huge industry buzzword.
Yet McDonald’s is now more or less back at square one. It is ending the test and removing the technology from stores, a clear indication that the company is simply not confident in the AI it acquired five years ago and stuck with for another two years after the sale.
McDonald’s more deliberative approach is not necessarily a bad thing.
Drive-thru order bots can get things wrong or, apparently, can act like an annoying 8th grade English teacher. There are a lot of regional dialects in the U.S., making it challenging for a national brand to enable a single order-taking bot for its 13,500 locations.
Many of the chains that were the most aggressive on this technology needed it most, because their sales were weak and their profitability was weaker. McDonald’s hasn’t exactly struggled over the past five years.
Yet it’s also hard to ignore the idea that McDonald’s foray into drive-thru AI these past five years set the company back.
McDonald’s in 2019 was intent on generating its own technology. It then stuck with that technology after deciding that it was best left to the experts. It now finds itself looking for a new partner on drive-thru AI even as many of its competitors have the technology in hundreds of stores or are deep into tests involving top-notch tech companies.