260 McNuggets? McDonald’s Ends Artificial Intelligence Drive-Thru Tests Amid Errors

McDonald’s is reportedly planning to end its artificial intelligence-powered automated drive-thru order-taking experiment at more than 100 locations after angry customers reported receiving items they didn’t order. (REUTERS/File Photo)

So, when McDonald’s announced in a June 13 internal email, obtained by trade publication Restaurant Business, that it was ending its partnership with IBM and shutting down its AI tests at more than 100 U.S. drive-thrus, customers who had interacted with the service were probably not shocked.

The decision to abandon the IBM deal comes as many other businesses, including its competitors, are investing in AI. But it exemplifies some of the challenges companies are facing as they jockey to unlock the revolutionary technology’s potential.

Other fast-food companies have had success with AI ordering. Last year, Wendy’s formed a partnership with Google Cloud to build out its AI drive-thru system. Carl’s Jr. and Taco John’s have hired Presto, a voice AI firm for restaurants. Panda Express has approximately 30 automated order-takers at its windows through a partnership with voice AI firm SoundHound AI.

Another SoundHound partner, White Castle, has AI assistants taking orders in 15 drive-thrus and plans to roll out 100 more, spokespeople for the two companies said. The technology completes almost 90% of orders without human involvement, works efficiently with staff and reduces wait times for customers during rush hour, said Jamie Richardson, a vice president at White Castle.

“It’s great for customers. It’s equally great for team members,” he told The New York Times. “I am not able to speculate why others wouldn’t invest in similar technology, but we’ve been really happy with ours.”

Keyvan Mohajer, CEO and co-founder of SoundHound, thinks the departure by McDonald’s is simply an example of a failed partnership.

“It was very clear that they are abandoning IBM, they are not abandoning voice AI,” he said. “They are very quickly pursuing other vendors.”

McDonald’s confirmed its intention to eventually return to this technology, writing in the internal email that “a voice-ordering solution” would be in the chain’s future.

In a statement, IBM said it looks forward to continuing to work with McDonald’s, adding that it is “in discussions and pilots” with several restaurants that are interested in building out their automated-order technology. McDonald’s confirmed the termination of its AI drive-thrus to the Times, but neither company would answer more specific questions.

Several researchers and experts in the industry see the McDonald’s exit as an example of how the new technology is not yet meeting expectations. They doubted that the company would make a speedy return to testing AI ordering in its drive-thrus.

“AI systems often have this very large upfront cost,” said Neil Thompson, director of FutureTech, a research project at the Massachusetts Institute of Technology’s computer science and AI laboratory. (FutureTech has worked with IBM, but Thompson said he had no inside knowledge of the deal with McDonald’s).

Currently, voice AI is inaccurate often enough that it requires some level of human oversight, which decreases cost savings, Thompson said. And McDonald’s has a strong alternative offering with higher profit margins: its mobile app.

“The app saves 100% of that labor involved in taking that order in a way these AI systems, at least currently, are not able to do for them,” Thompson said. “That makes it just much more economically attractive for them to be using the app than to be using the AI.”

McDonald’s has not ditched all of its AI investments. In December, the company announced it was working with Google Cloud. A spokesperson for the tech giant said it would be applied to “business use cases,” declining to be more specific.

Alex Imas, a behavioral science and economics professor at the University of Chicago, predicted that McDonald’s will watch from the sidelines as its competitors explore the technology.

The McDonald’s business model is not based on saving on the cost of a few drive-thru workers, Imas said. “I think they are going to want to wait and make sure this thing is ready for commercial use.”

He expects McDonald’s to use AI in other ways, perhaps by following the example of Target, which recently announced it was using the technology to assist its employees.

Gee Lefevre, interim CEO of Presto, acknowledged that the AI technology is very new — “less than 0.5% of all U.S. drive-thrus” are testing the use of AI to take voice orders, he said.

But he also noted that many early attempts have been successful.

Wendy’s, in an email to the Times, said its AI drive-thrus operate without human help on 86% of orders. And Presto has had a roughly 90% rate with most of its clients, Lefevre said.

He believes McDonald’s struggled because it used the wrong type of AI.

“The IBM model was still based on natural-language understanding,” Lefevre said, explaining that the model works like a tree. When the AI hears the customer’s order, it has a limited number of branches to follow that dictate its responses and actions.

This works really well when everything is going right, Lefevre said. But in a drive-thru, where indecisive customers frequently change their orders, he said, chains would be better off using the type of large-language model that powers chatbots such as ChatGPT.

As companies continue to test their AI drive-thru technologies, expect to see more videos of people getting bacon ice cream, condiments instead of food or enough nuggets to feed a sports team.

But ask Mohajer where voice AI is going and he’ll tell you why SoundHound has partnered with car companies such as Kia and Jeep.

Picture this.

You’re driving home from work when, all of a sudden, the car asks, “Are you hungry?”

After a few minutes of chatting with your vehicle, you decide on a burger, fries and a shake. The car finds the nearest greasy spoon, places your order for you and plugs in the directions. In three minutes, you pull up and there’s dinner, sitting patiently in a pickup lane, waiting for you to arrive.