McDonald’s AI Drive-Thru Experiment Fails, But Hope Remains for Future Voice Ordering Solutions

McDonald’s is ending its AI-powered drive-through ordering system after finding it too expensive and inaccurate, but the company sees potential for the technology to return in the future with improvements.

Key Takeaways: McDonald’s has decided to shut down its experimental AI drive-through ordering program by July 26, 2024, after testing it in over 100 US restaurants since 2021:

• The IBM-built automated voice recognition system struggled with understanding some customers’ accents and was deemed too costly and inaccurate by restaurant managers.
• Despite ending the current partnership with IBM, McDonald’s believes that a voice ordering solution will be part of its restaurants’ future and plans to evaluate long-term, scalable solutions by the end of the year.

Industry Trends: Several fast food chains, including Wendy’s, Carl’s Jr, Dunkin, and Hardee’s, are testing or already using AI technology in their drive-throughs:

• Yum Brands, owner of Taco Bell and KFC, has expressed its desire to adopt an “AI-first mentality.”
• However, automated ordering systems have faced criticism for inaccuracies and for relying on human workers in developing countries to supplement the AI in a majority of cases.

Analyst Insights: Restaurant industry analyst Peter Saleh from BTIG noted last year that McDonald’s franchisees were not finding significant value in the AI drive-through test:

• Saleh reported that accuracy remained in the low-to-mid 80 percent range, while operating costs were high.
• This feedback from franchisees likely contributed to McDonald’s decision to end the current program and explore alternative solutions.

Looking Ahead: While McDonald’s is ending its current AI drive-through program, the company remains optimistic about the potential for voice ordering technology in the future:

• The experience with IBM has given McDonald’s confidence that a voice ordering solution will eventually be part of its restaurants’ operations.
• The company plans to continue evaluating long-term, scalable solutions and aims to make an informed decision on a future voice ordering system by the end of the year.

The decision to end the AI drive-through program highlights the challenges of implementing cutting-edge technology in the fast food industry. While there is significant potential for AI to streamline operations and improve customer experience, the technology must be accurate, cost-effective, and scalable to justify widespread adoption. As McDonald’s and other fast food chains continue to experiment with AI solutions, it remains to be seen how the technology will evolve to meet the unique demands of the industry and win over both franchisees and customers alike.