McDonald’s, Yum, Wendy’s testing technology | Wilnesh News

Looking for ways to reduce labor costs, restaurants are looking to artificial intelligence to reduce drive-thru orders — but it could be years before the technology is widely available.

A survey shows that 16% of restaurant operators plan to invest in artificial intelligence, including speech recognition, this year. national restaurant association. Much of the big spending comes from large chains, which have the capital and scale to put technology to work for their businesses.

Even before the pandemic, restaurant labor costs had been rising, leading operators to look to technology to boost profit margins. Then COVID-19 hit, not only increasing labor costs but also causing people to switch from restaurants to drive-thru restaurants. California’s decision earlier this year to raise wages for fast-food workers to $20 an hour will only make operators more inclined to adopt technology to reduce labor costs, which so far has mainly helped automate back-office tasks.

Meanwhile, ChatGPT and other AI tools are breathing new life into generative AI for restaurants, although the industry has generally been slow to embrace technological advances.

A stumbling block for the nascent technology came in June, when McDonald’s told its franchisees that it was ending a trial of Automated Order Taker, the artificial intelligence technology it designed for its drive-thru lanes through a partnership with IBM. The fast-food giant, once a pioneer in the voice-ordering race, now plans to pivot to other providers.

And then there are rapid automationThe AI ​​drive-thru technology company disclosed in a U.S. Securities and Exchange Commission filing last year that it uses “human agents” to fulfill orders in places like the Philippines and India. Presto interim CEO Gee Lefevre insists that using humans is common in the artificial intelligence industry and helps train technology without putting pressure on restaurant staff. The company launched a fully automatic version in May. Still, the initial lack of transparency may scare away some players.

While some restaurants may be skeptical about using artificial intelligence for drive-thru now, adoption is likely to increase in the coming months and years.

TD Cowen analyst Andrew Charles said the tipping point for voice ordering could come within 12 to 18 months. By then, he believes at least two of the country’s 25 top restaurant chains will be fully committed to expanding small-scale trials of the technology across their operations.

“It’s like third-party delivery a few years ago: everyone was testing it, and then when McDonald’s partnered with Uber, others followed suit and formed their own partnerships,” Charles said.

This time, McDonald’s likely won’t be the first mover.

Companies with voice ordering technology say their artificial intelligence won’t replace jobs — it simply frees up workers to do other tasks. They also tout secondary benefits.

sound houndAn early leader in the field says its artificial intelligence can process more than 90% of orders without human intervention; typical accuracy for humans is between 80% and 85%. SoundHound also says its artificial intelligence can speed up drive-thru lanes by about 10% as it processes orders faster. Additionally, AI attempts to upsell customers on every order, thereby increasing the average check size.

Additionally, while younger customers may enjoy the greater efficiency and lack of human interaction, older customers often think differently. Most baby boomers prefer less technology at mealtimes, according to one company consumer survey by the National Restaurant Association, starting earlier this year.

The truth is, the technology isn’t perfect. Restaurants with weak Wi-Fi signal need to speed up the Internet connection. It will take a few years for voice ordering technology to catch up and get to know its customers better in places where you might find them off a noisy highway. Restaurants with long and complex menus may find AI’s dilemma more apparent.

For McDonald’s, the risk isn’t worth taking just yet.

The fast-food giant began its push into drive-thru artificial intelligence in 2019, when it acquired Apprente and renamed it McD Tech Labs. Two years later, McDonald’s Sold McD Tech Labs to IBM and announced a global partnership with the technology company, but the specific terms were not disclosed. McDonald’s has been testing the technology in several Chicago-area stores. After bringing the technology to IBM, a larger test was conducted with about 100 restaurants.

Yum Brands Executives said in early May that Taco Bell was expanding its voice AI testing from five locations in California to 30 restaurants “based on positive consumer feedback.” White Castle plans to use SoundHound’s technology in more than 100 of its restaurants by the end of the year. And last year, Wendy’s Announcing a test A corporate-owned restaurant in Columbus, Ohio, through a partnership with Google.

TD Cowen’s Charles said pioneers so far have mainly been companies with lower average sales volumes. This industry metric refers to the average annual sales of restaurant chains. Because these chains have lower sales, there is more financial incentive to use artificial intelligence to reduce higher labor costs, Charles said.

Panera Bread founder Ron Shaich told CNBC that the real winners will be the “fast followers” rather than the voice ordering pioneers. Shaich, current president vein He’s also the CEO of his investment company Act 3 Holdings, and he claims to have pioneered numerous restaurant technology advances: Panera restaurants offer free Wi-Fi, incorporate the chain’s mobile app and loyalty program, and launch self-ordering kiosks .

But when it comes to voice ordering, Sheich said he thinks it’s best to wait and see, wait for the technology to perfect, and focus on making sure the overall customer experience beats the competition.

“No one is going to go to a restaurant because they have this technology,” he said.

—CNBC Kate Rogers contributed reporting to this story.