McDonald’s to end artificial intelligence pass test with IBM

McDonald’s is changing the course of its artificial intelligence plans.

The fast food giant is to end a trial of its AI technology partnership IBM in more than 100 restaurants. The so-called Automated Order Taker will close no later than July 26, according to a memo sent to franchisees late last week, obtained by CNBC.

The global AI partnership began in 2021. The combination of technologies from the two companies aimed to simplify and speed up voice-activated ordering operations.

“While there have been successes to date, we feel there is an opportunity to explore voice ordering solutions more broadly,” said the franchise memo from Mason Smoot, senior vice president and restaurant chef for McDonald’s US “After careful review , McDonald’s has decided to end our current partnership with IBM on AOT – IBM remains a trusted partner and we will continue to use many of their other products throughout our system.

Two sources familiar with the technology told CNBC that among its challenges, there were issues with interpreting different accents and dialects, which affected the accuracy of the order. McDonald’s declined to comment on the technology’s accuracy or challenges, while IBM did not immediately respond to a request for comment on the tool’s accuracy.

The decision comes as restaurants from Del Taco to Wingstop at Panera and others have been testing different ways to use AI, from the front to the back of the house as a way to streamline operations. Chipotle AND Yum Brands have also been leaders in robotics and AI investments in recent years.

In a statement, McDonald’s told CNBC that it is not ruling out possible future AI plans, even as it ended the IBM partnership.

“As we move forward, our work with IBM has given us confidence that a voice ordering solution for the drive-thru will be part of the future of our restaurants,” the company said in a statement. “We see tremendous opportunity in advancing our restaurant technology and will continue to evaluate long-term, scalable solutions that will help us make an informed decision about a future voice ordering solution by the end of the year. “

In the statement, IBM said it will work with McDonald’s on “a number of other projects” as the test is completed.

“IBM is also now in discussions and piloting with several Quick-Serve Restaurant customers who are interested in AOT technology,” the company said in a statement.

McDonald’s sold its McD Labs technology, formerly known as Apprente, to IBM in 2021. It also sold Dynamic Yield, a predictive ordering technology, to Mastercard in late 2021, following a strong acquisition in 2019 which was part of its modernization plans for the restaurants.

While McDonald’s AI plans for the future are unclear, all eyes will be on it Alphabetof Google. At its investor day in December, McDonald’s announced a new partnership with Google Cloud, but neither company has provided details on what it will entail.

“We are excited to see how McDonald’s will use our generative artificial intelligence, cloud and edge computing tools to enhance their iconic dining experience for their employees and their customers around the world,” said in a statement at the time Alphabet CEO Sundar Pichai. .

In a note this spring, BTIG analyst Peter Saleh wrote that franchisees hadn’t seen much progress on the automated drive-thru order taker, “expressing disappointment that updates were sparse and the demo at the worldwide convention was underwhelming,” as all the orders witnessed there were incorrect. “We’re still hearing that accuracy remains in the low-to-mid 80% range and operating costs are high,” while a wider test of the technology had yet to be done.

Saleh added that there was speculation about Google’s large presence at April’s McDonald’s World Convention held in Barcelona, ​​leading some to believe that Google could replace IBM as the company’s AI vendor.

“Accuracy is the most important thing right now,” Saleh told CNBC on Monday. “It will have to be at least 95% accurate and it will have to save [franchisees] the money to have a person on the move, and the way it’s designed now, it does neither,” he said of the IBM technology.

Google did not immediately respond to CNBC’s request for comment about what its partnership with McDonald’s might entail. McDonald’s declined to comment.