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McDonald's · 2019–2024 · An AI story

Order After Order

At a McDonald's drive-thru, the voice taking orders kept adding chicken nuggets while the customers laughed and asked it to stop. After testing it since 2021, McDonald's switched the system off.

◷ 2 min read

The video was posted on TikTok in 2023, and the Associated Press later described it. A car is at a McDonald’s drive-thru. The people inside are laughing and asking the ordering assistant to stop. It appears to keep going, adding chicken nuggets to their tab, order after order. Other clips AP described showed the same voice adding ice cream with ketchup and butter, and picking up orders from other cars nearby.

That voice was the Automated Order Taker, which McDonald’s tested with IBM at more than 100 restaurants.

Two years before that clip, the plan had sounded well in hand. McDonald’s had bought Apprente, a startup whose software took drive-thru orders, in 2019. In June 2021 chief executive Chris Kempczinski told an investor conference that at ten Chicago restaurants a computer, not a worker, was now taking the orders. Accuracy was about 85 percent, he said, and only about a fifth of orders had to be taken by a human. Another challenge, CNBC reported, was training staff to stop jumping in to help.

He called the next step a big leap. Going from ten restaurants to 14,000, he said, meant “an infinite number of promo permutations, menu permutations, dialect permutations, weather.” His approach to tech deals was to buy, “jumpstart it, turbo it and then spin it back out and find a partner that will work and scale it for us.” Later that year McDonald’s sold the unit, by then called McD Tech Labs, to IBM and made IBM that partner.

By spring 2024, franchisees were frustrated, according to a note from BTIG analyst Peter Saleh. Updates were infrequent, he wrote, and a demonstration at McDonald’s worldwide convention was underwhelming; CNBC, summarizing the note, reported that every order witnessed there was wrong. “We are still hearing that accuracy remains in the low-to-mid 80% range and operating costs are high,” Saleh wrote. That was about where Kempczinski had put it three years before. Two people familiar with the system told CNBC it had trouble with different accents and dialects. McDonald’s declined to comment on accuracy.

Saleh’s bar was plain. The system would have to be at least 95 percent accurate and cheaper than a person at the window, he told CNBC, “and the way it is designed now, does neither.”

IBM saw it differently. It said the technology was “fast and accurate in some of the most demanding conditions,” and that it was talking with other fast-food chains.

In June 2024 a memo went to franchisees from Mason Smoot, McDonald’s chief restaurant officer for the US. “While there have been successes to date, we feel there is an opportunity to explore voice ordering solutions more broadly.” The test would end without expanding, and the system would be shut off in every restaurant no later than July 26.

The company did not give up on the idea. Six months earlier it had announced a partnership with Google Cloud, with no details on what it would cover. Its prepared statement said: “Our work with IBM has given us the confidence that a voice ordering solution for drive-thru will be part of our restaurants’ future.”

What this story shows

Levels of AutomationThe computer took the whole order and staff stood by to step in. In 2021 about a fifth of orders still needed a person, and the CEO said workers had to be trained to stop jumping in to help.Jagged Technological FrontierBy the CEO's 2021 account, about four in five orders needed no human. Yet two sources told CNBC the system struggled with accents and dialects, and AP described a clip of it adding nuggets after customers asked it to stop.Exploration vs. ExploitationThe 2021 plan was to buy a technology, jumpstart it, then hand it to a partner to scale. Three years later McDonald's ended the automated order-taking work with IBM, while calling IBM a trusted partner whose other products it would keep using, and said it wanted to "explore voice ordering solutions more broadly."Sunk Cost FallacyMcDonald's bought the technology in 2019, sold the unit to IBM in 2021, tested the system in more than 100 restaurants, then shut it off without expanding it. No source gives the cost, so how much it walked away from is not public.

Sources

  1. CNBC, McDonald's to end AI drive-thru test with IBM, June 17, 2024
  2. Restaurant Business, McDonald's is ending its drive-thru AI test, June 14, 2024
  3. AP, McDonald's is ending its test run of AI-powered drive-thrus with IBM, June 18, 2024
  4. CNBC, McDonald's is testing automated drive-thru ordering at 10 Chicago restaurants, June 2, 2021