Back-of-house Technology

Faced with mounting debt and falling revenue, Presto Automation is betting big on drive-thru AI.

The company wants to spin off its Presto Touch tablet payment business, which generates roughly 90% of its revenue, to focus on its drive-thru voice automation solution called Presto Voice. 

“We have been evaluating strategic alternatives of our Presto Touch solution and considering whether to engage in a wind-down which would be a sale, partial sale or abandonment of the Presto Touch business in the coming months,” Presto said in its 10-Q.

The move seems fraught with risk. 

Voice generated only 12% of Presto’s total income for the last three months of 2023, or about $600,000. The firm also had over $72 million in outstanding liabilities at the end of 2023. For Q4 2023, Presto generated nearly $4.9 million in revenue, but expenses, especially G&A and R&D, pushed its loss for the period to a whopping $19.9 million. 

This cash crunch is likely to get worse; three of Presto’s biggest clients have chosen not to renew their Presto Touch contacts. 

Applebee’s, Chili’s and Red Lobster, which accounted for 88% of Presto’s revenue in the back half of 2023, informed the company that they did not intend to renew contracts. Two of those contracts expire on June 30, and one, accounting for 12% of Presto’s revenue, expired on Feb. 29, according to the company’s 10-Q released last month.

Nearly two weeks later, the heavily-indebted company canceled its earnings call just over 2 hours before it was scheduled to take place, marking the latest sign of trouble for the firm. A Presto spokesperson wrote in an email to Restaurant Dive that the board canceled the investor call because it had nothing new to report. 

The company’s liquidity problems, according to the 10-Q, “raise substantial doubt about its ability to continue as a going concern and to comply with its debt covenants unless it raises additional capital to meet its obligations in the near term.” 

On Feb. 29, the company tried to raise more funds by selling $2.1 million worth of its stock, at a price of about $0.25 per share.

Presto doesn’t have a timeline on Voice profitability

Krishna Gupta, Presto’s chairman, said Applebee’s, Chili’s and Red Lobster declined to renew their contracts because Presto’s decision to focus on its drive-thru voice automation business hurt Presto Touch in 2022. 

“By that point, we were very far down the path on the voice AI business and we just couldn't dedicate the right amount of attention and resources to the [Presto Touch business],” Gupta said in an interview with Restaurant Dive that took place between the release of Presto’s 10-Q and the cancellation of its earnings call. “We told everyone that this [Touch] was not going to be our top priority.”

Gupta said Voice is the future of Presto’s business. He claims the company has a plan to get Voice to profitability despite the steep R&D costs associated with deploying a new technology. He declined to share a specific timeline.

Even Presto’s most advanced voice AI product requires human intervention at least 70% of the time, according to the company’s 10-Q, and less advanced versions may require significantly more. Restaurants won’t need to intervene on their shopfloors, however — Gupta said the company is using workers in the Philippines to ensure the accuracy of the orders taken by the voice bots.

“They are training the models. They're also ensuring that the experience is smooth,” Gupta said. Over time, the number of workers involved in the AI order process should decrease if the model’s efficiency improves, he said. 

AI remains reliant on human labor

This sort of labor-intensive tech process is widespread in the AI industry, Gupta said. In other words, this suggests much of the “intelligence” in this technology category is, in fact, the cognitive labor of low-paid, contingent workers throughout the Global South, as documented by The Verge. These workers train computer programs to replicate the outcomes of processes they perform.

Gupta denied that Presto’s AI backstop with workers from the Philippines was a form of labor arbitrage, a process by which employers exploit differences in the cost of labor between markets to save revenue.

Despite frequent claims that voice AI is a revolutionary tech solution, the results have been mixed in the restaurant sector. 

Del Taco canceled its test contract with Presto Automation, according to the 10-Q, and a proprietary test of voice AI at McDonald’s in 2022 failed to reach an acceptable level of order accuracy.

Sweetgreen said on its Q4 earnings call Thursday that tests of its Infinite Kitchen automated system at two suburban stores yielded improvements in throughput, order accuracy and labor turnover. Average ticket at those units was over 10% higher than in surrounding markets. 

Sweetgreen CFO Mitch Reback said each Infinite Kitchen represents $450,000 to 500,000 in incremental development costs but could yield a 7-point margin improvement at restaurants where it is installed.

CEO Jonathan Neman said the cost of retrofitting restaurants with the robot makeline is higher than the $450,000 figure, but that the cost depends on the level of renovations and amount of downtime needed to fit the machine into existing restaurant footprints.

Sweetgreen plans to open between 23 and 27 new restaurants in 2024, seven of which will contain Infinite Kitchen technology, Reback said. The chain also aims to renovate three to four large, urban stores to include the automated system. 

The $450,000 to $500,000 per-unit incremental cost of the Infinite Kitchen system is equivalent to the yearly starting wage of approximately 14 full-time kitchen workers at one Washington, D.C. Sweetgreen, based on current job posting listing the hourly rate for back-of-house workers as $16.63. That cost is also equivalent to about 23 employees working the average weekly hours for a restaurant production worker based on Bureau of Labor Statistics data. 

Neman said the robotic makeline has the capacity to make 500 bowls an hour, and that it hasn’t reached that level of demand in the current test markets. But Neman believes “some of the places that we're going to be testing this year are going to be those heavy urban environments where it does have that [level of demand]. So we do expect a sales lift in those restaurants.”

It’s unclear how the Infinite Kitchen’s production rate compares to a standard store. The company didn’t immediately respond to a request to clarify what about the Infinite Kitchen system was driving higher tickets or, whether the performance difference between the test units and the surrounding market existed prior to the installation of the robotic makelines.

Sweetgreen is also looking to make changes to its Sweetpass program.

“We have not yet seen the benefit of that program. So something that we're actively working on our optimizations and simplifications of the program,” Neman said. He added that the chain wants to make it ”simpler, better for the customer and better for the company to drive more transactions.”

Neman expects the program to be a major priority this year. Sweetgreen plans to simplify its rewards, improve to the in-app experience and create greater personalization.

The company’s Sweetpass+ subscription program, the higher tier of its loyalty program, has yielded “some incrementality out of those guests but it's not a huge member base. So it's not really driving the overall transaction growth in a big way,” Neman said.

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Yum bolstered its technology across thousands of restaurants in 2023, deploying a range of products from front-of-house kiosks to back-of-house automation to support franchisees and grow digital sales. 

“2023 was a landmark year for successfully scaling our suite of proprietary technologies across our global restaurant base,” Yum CFO Chris Turner said Wednesday during the company’s earnings call. 

Technology remains an important aspect of Yum’s digital sales, which grew 22% to nearly $30 billion in 2023. Digital mix also exceeded 45%, according to the company’s earnings release. Systemwide sales were up 10% globally, as well. 

“If you look at that 10% global system sales growth for the full year, we think digital played a big part of that, both on the unit side and the same-store sales side,” Turner said. “As those capabilities continue to mature, we can get more and more leverage out of our digital technology, teams and capabilities in-house.” 

Yum has also accelerated the rollout of proprietary technology that optimizes back-of-house operations and helps operators better run their restaurants, CEO David Gibbs said. 

“We are equipping our franchise partners with distinctive capabilities that differentiate them from the competition, especially in emerging markets,” Gibbs said. 

Check out how Yum is deploying various technologies across its restaurant brands below.

Kiosks

Kiosks help provide a consistent customer experience, boost ticket sizes and help streamline operations, Turner said. Over the past year,  the chain increased its penetration of kiosks by 70% in KFC restaurants outside of China. By the end of the year, kiosks were installed in 500 KFC U.S. locations, up from about zero two years ago. The company has begun adding kiosks to KFC Latin America units using its proprietary TicTuk platform, and expects to triple the number of restaurants featuring kiosks this year, Turner said. Kiosks will likely be in a vast majority of KFC stores by the end of 2026, Turner said during the company’s November earnings call. Kiosks are also being installed across Habit Burger restaurants. 

Kiosks have been installed in all Taco Bell U.S. locations and are already making an impact on sales. Taco Bell’s U.S. same-store sales were up 3% during the quarter and 15% on a two-year basis. Taco Bell reported a record digital sales mix of 31%, a seven-point increase year over year, during Q4. In-store kiosks sales increased 15 points last quarter, as well. 

Point of Sales

Poseidon, Yum’s proprietary point-of-sales system, was added to 1,700 Taco Bell U.S. locations last year. A total of 5,000 restaurants featured the system at the end of 2023. Poseidon is a cloud-first system that incorporates order management, cash management and real-time store reporting, according to Yum’s website. 

Artificial intelligence and automation

Dragontail, an AI-based kitchen order management and delivery technology, was deployed in 1,000 more restaurants during the quarter. For all of 2023, Yum added the tech to 4,000 additional units, Gibbs said. Dragontail is now in 7,000 locations across Pizza Hut and KFC. This year, Dragontail will be added to nearly 6,000 more restaurants. Yum acquired Dragontail Systems in 2021 for over $72 million.

Yum’s custom-built SuperApp, which offers automated routine management tools for restaurant managers, is in 8,500 Pizza Hut restaurants globally. KFC plans to have it installed in 6,000 units in 2024, Turner said. 

An AI-driven inventory management system is now in 90% of its KFC U.S. locations and about half of its Taco Bell U.S. locations. The technology is helping drive “more seamless and more accurate inventory ordering processes for our restaurant managers,” Turner said. Another 3,000 KFC, Taco Bell and Pizza Hut stores will have this system installed this year. 

Yum’s GlobalData Hub

The company will continue to bring together insights and provide “smarter and quicker decision making,” and further the company’s use of data, Turner said. This year, Yum expanded the reach of its Yum GlobalData Hub, which gathers most of its global transaction-level sales data and other key operational and customer metrics. The company will develop and test new AI-driven capabilities that use this data and integrate it into its tech platforms. The technology could allow personalized upsell recommendations for customers using digital platforms, intelligent pricing recommendations and routine management for general managers, Turner said. 

Jersey Mike’s and SoundHound have deployed the latter’s voice ordering artificial intelligence tool at five or six Jersey Mikes locations  in the first wave of a 50-store pilot, a Jersey Mike’s representative wrote in an email to Restaurant Dive. 

SoundHound’s AI now answers “100% of calls” at participating stores and is capable of taking multiple calls at once, according to a press release shared Wednesday. 

SoundHound wrote in an email to Restaurant Dive that its technology was trained on Jersey Mike’s menu and recognizes natural language, meaning “a customer can ask for a #55 or a ‘Big Kahuna’ or a Chicken Cheese steak, and the system understands that these are all the same sub.”

AI is becoming a key tool to bolstering restaurant staff and delivering top-notch customer service, Jersey Mike’s Scott Scherer, chief information officer, said in the release.

SoundHound said the technology, in addition to taking orders, could answer “a broad range of menu questions (e.g., about specials and promotions), and even provides information about opening times, parking, [and] allergens.”

Major chains have been testing phone ordering AI since well before the COVID-19 pandemic, with Chipotle running a version of the tech at 1,800 stores in 2019. But in recent years, the trend toward voice-ordering AI has accelerated, and a multitude of restaurant companies are using or testing it both at the drive-thru and on the phone.

Del Taco, for example, has worked with Presto AI to implement its voice-ordering tech at the drive-thru, where such bots are particularly useful in upselling. Wendy’s said its franchisees can test drive-thru AI powered by Google Cloud this year, and DoorDash announced last summer that it was developing an automated phone system for its partner restaurants. Last summer, White Castle announced it would deploy SoundHound AI to over 100 restaurant drive-thrus by the end of 2024.

SoundHound said its AI “frees up Jersey Mike’s employees to focus on making delicious food and giving great service to in-store customers.” Robotics and artificial intelligence companies often frame their labor saving devices as ways to free up labor for redeployment within an establishment, rather than as a way to replace workers.

Wendy’s plans to expand its Wendy’s Fresh AI platform, which is currently active in four company restaurant drive-thrus in Columbus, Ohio, Wendys’ SVP and Global Chief Technology Officer Matt Spessard wrote Monday in a blog post. 

More restaurants are slated to add the AI chatbots to the drive-thru channel, and Wendy’s said it will offer franchisees the opportunity to pilot the technology in 2024 following ongoing interest from operators.

Wendy’s began piloting this program — a partnership with Google Cloud — in May to provide a tool that could understand customer customizations and respond to their common questions.

A growing number of QSRs have shown interest in generative AI as labor-saving technology that can improve the customer experience.

McDonald’s said last week that it partnered with Google Cloud to create cloud-based analytics across thousands of restaurants and develop AI. McDonald’s plans to add edge servers managed by Google Cloud on premise for faster analytics and enhancements to customer platforms, such as its mobile app and self-service kiosks. Restaurants will also have access to cloud-based analytics and AI onsite. Domino’s partnered with Microsoft earlier this year to use generative AI to improve the ordering experience and restaurant operations, with a pilot expected in the coming months.

Wendy’s plans to expand FreshAI into additional channels to improve the employee and customer experiences, as well. 

“This could include integrating AI with the Wendy’s app, in-restaurant kiosks, mobile devices, smart home devices and more with a multi-channel approach to provide the best experience for our fans — however they choose to order,” Spessard said. 

Adding AI to its digital channels could help Wendy’s grow this part of the business, which made up over 12% of sales during the third quarter. Wendy’s CEO Todd Pennegor said in November during the company’s earnings call. The company also has grown its loyalty program to 35 million and monthly active users grew 40% to 5 million quarter-over-quarter.

Wendy’s FreshAI uses generative AI that generates responses and adapts in real-time versus following a specific set of rules, Spessard said, adding that with “more than 200 billion ways to order Dave’s Double, leveraging generative AI is a crucial piece of innovating the Wendy’s drive-thru experience for customers.” 

So far, one of the chain’s test sites yielded service times that were 22 seconds faster than the rest of the Columbus market average. The technology allows staff to focus on preparing and completing orders with quality and speed. Accuracy has also improved. Wendy’s FreshAI has seen a success rate of nearly 99%, defining accuracy as an order that is started by the chatbot and submitted to the point-of-sales system even if a human had to join the conversation to fix an inaccuracy. 

“Our accuracy during the pilot, measured as the percentage of orders successfully handled by Wendy’s FreshAI without restaurant team member intervention, averaged 86% and we would expect the average to only to increase,” Spessard said.

Accuracy of drive-thru AI has come into question of late, especially after Presto Automation said in an SEC filing that about 70% of its orders require human intervention. Presto has partnered with Del Taco, CKE and Checkers & Rally’s in recent years. As its technology improves, Presto expects that number of orders not needing human intervention will reach 30% or better, improving to 70% by the end of 2024. The company said it plans to have its technology installed in 2,610 stores by 2025.

CaliExpress by Flippy, a fully automated restaurant created by Cali Group, Miso Robotics and technology firm PopID, is expected to open this month in Pasadena, California, according to a press release. 

The restaurant uses autonomous grill and fry stations that use proprietary artificial intelligence and robotics to cook food, requiring minimal human labor.

Customers order by creating signing into a PopID account on digital kiosks, after which robots prepare and cook their orders.

CaliExpress by Flippy claims that its technology creates a “safer, easier and friendlier kitchen” for employees by nearly eliminating slippage and burns at the fry station. Its creator companies also said it provides above-average wages to employees because the restaurant can be run by a small number of workers.

The use of technology also allows the restaurant to offer more expensive wagyu beef blends “at price points competitive with other premium burgers using standard meat,” per the press release. Its menu consists of burgers, cheeseburgers and french fries. An online menu has its hamburgers priced at $7, cheeseburgers at $8 and french fries at $4.50. 

The financial savings and streamlined operations offered by robotic makelines are making them popular among U.S. restaurant chains. Remy Robotics opened a bot-run “Better Days” kitchen in New York City over the summer that can cook hundreds of menu items in a 200-square-foot space. Sweetgreen opened its first automated kitchen this year and plans to accelerate the deployment of the technology in 2024. Chipotle is in the process of testing an automated makeline with Hyphen. 

“AI-powered, robotic order-taking and cooking enables the major chains that feed America to substantially improve quality, consistency and speed,” Rich Hull, CEO of Miso Robotics, said in a statement.

The location will also provide a “pseudo-museum” experience with Miso Robotics equipment on display, including “dancing robotic arms from retired Flippy units, experiential 3D-printed artifacts from past development” and photo displays. 

The restaurant, which is at 561 E. Green Street, is opening with reservations initially but will have a grand opening to follow. The company didn’t respond to questions, including queries about the staffing levels and the possibility of additional locations, by press time. 

Domino’s has partnered with Microsoft to use generative AI technology and cloud computing to improve ordering and restaurant operations, the companies said in a press release Tuesday. 

The companies will use Microsoft Cloud and Azure OpenAI Service to enhance the ordering process with personalization and simplification. 

The two companies will work together over the next five years and Domino’s expects to begin piloting generative AI technology for stores and customers within the next six months. 

Domino’s said it has already been working with data and AI to create more simplistic and robust restaurant operations.

For example, some operators are using AI-enabled technology to start preparing pizzas before the customer completes their online order, CEO Russel Weiner said during the company's August earnings call. Some of Domino’s units have also been dispatching pizzas to drivers before they return to stores. This allows for quicker delivery since drivers no longer have to waste time finding a parking spot at the restaurant. 

Domino’s is currently in the “early stages of developing a generative AI assistant powered by Azure OpenAI Service to help store managers save time on daily tasks such as inventory management, ingredient ordering and staff scheduling,” per the release. These tools are expected to improve pizza preparation and quality control, leaving managers more time to dedicate to the team member experience and customer service. 

As part of this partnership, Domino’s and Microsoft will create an innovation lab, in which companies’ leaders will work with engineers to accelerate the rollout of smart store and ordering innovations, the companies said. Both firms said they are also “committed to responsible AI practices that protect customer data and privacy.” 

Domino’s has long been exploring technology to improve operations. In 2019, it opened its Innovation Garage in Michigan to focus on piloting technologies like ordering kiosks, GPS delivery technology, autonomous delivery vehicles and the company’s AnyWare ordering tech. A few months after opening this center, the company rolled out a GPS delivery tracker to help improve delivery times. The company previously tested autonomous delivery vehicles in select markets. This year, the company rolled out Pinpoint Delivery where customers can put a pin on a map and have pizza delivered to that location.

Chipotle is testing an automated makeline, built by Hyphen, for salads and bowls at the Chipotle Cultivate Center in Irvine, California, per a press release published Tuesday. The chain won’t test the makeline at a restaurant this year, but will pilot it in restaurants before deciding on a broader rollout, Chipotle said.

The makeline processes digital orders that include bowls and salads and sends them Hyphen’s system directly through the Chipotle app, Chipotle.com or third-party platforms.

About 65% of Chipotle’s digital orders are for salads or bowls, so the makeline could free up workers to focus on making burritos or other items, and providing hospitality, according to the press release.

It’s unclear how many bowls Chipotle’s makeline can process per hour, or how production costs compare to human assembly of these menu items. But investment in automated food assembly systems is growing among fast casuals and QSRs looking to improve service times and throughput. Chipotle alone has already implemented robotic guacamole and tortilla chip maker tests to boost efficiency over the past year and a half. 

“Our goal is to have the automated digital makeline be the centerpiece of all our restaurants' digital kitchens,” Curt Garner, Chipotle’s chief customer and technology officer, said in the press release.

Promotional materials for the makeline raise questions about how Chipotle will manage food safety with the device. A video attached to the press release shows the makeline dispensing ingredients into bowls via free fall. At about the 14-second mark, and again at the 17-second mark, ingredients ricochet out of the bowl, landing somewhere in the makeline. 

Chipotle did not immediately respond to a request to clarify how, and how frequently, workers would have to clean the machine, which relies on complex mechanisms to dispense precise quantities of ingredients. The rate at which ingredients miss, or bounce out of, the bowls in the video, could cause problems if the machine dispenses meat or other ingredients that need to be stored in specific temperatures to remain healthy for human consumption. 

Food safety problems have dogged Chipotle over the years. In April 2020, the brand agreed to pay a $25 million fine and institute a comprehensive food safety program after food safety infractions sickened more than 1,100 people from 2015 to 2018. It’s possible, however, that reducing the number of interactions employees have with Chipotle’s food via Hyphen’s makeline could help mitigate some risks of foodborne illness. 

Chipotle invested in Hyphen as part of its Cultivate Next venture fund beginning last summer, aiming to help the robotics company develop labor-saving technology. Digital makelines have been a key part of Chipotle’s long-term strategy for a while, as digital orders have put pressure on the chain’s operations. Chipotle has also invested in Vebu, the maker of the “autocado” robot it’s testing that peels and halves avocados, through the Cultivate Next fund. The company is also working to deploy dual-sided grills that dramatically speed up chicken cook times.

Checkers and Rally’s and Hi Auto have partnered to provide Spanish voice AI ordering at the drive-thru, the companies said Thursday in a press release.

The technology is already at 350 locations following a two-month beta test at five restaurants. 

Checkers & Rally’s has previously worked with Presto AI for drive-thru voice ordering at corporate stores and Valyant AI for drive-thru voice ordering at franchised locations.

Checkers and Rally's plans to expand the Hi Auto tech to more restaurants nationwide. A handful of franchisees are still using the Valyant AI system, while Presto AI has been acting as a reseller of Hi Auto’s system at Checkers, Checkers and Rally’s wrote in an email. Hi Auto sells its system directly to other customers.

Hi Auto’s bilingual functionality automatically detects the customer’s spoken language and responds in the correct language to take the order. The technology takes customer orders, can recognize each item, upsells and send orders through the point-of-sale system. 

Only about 20% of fast food workers are of Hispanic origin, according to Data USA research from 2020, so this tool could help lessen the burden of order-taking on Spanish-speaking staff. The AI can understand “complex menus, partial sentences, diverse accents, detailed requests, as well as mid-order changes,” according to the press release. Hi Auto claims to have a 95% order accuracy rate, as well. 

“With the addition of Hi Auto’s Spanish translation capabilities to our AI voice ordering technology at the drive-thru, we’re further enhancing guest interactions, increasing order efficiency and embracing our welcoming culture,” said Minh Le, chief information officer at Checkers & Rally’s.

Other chains have been expanding their drive-thru AI capabilities, too. White Castle partnered with SoundHound earlier this year to bring its voice ordering to 100 drive-thrus. SoundHound’s technology currently recognizes 25 languages, including Spanish, but it’s not available through its drive-thru AI tech at this time. Del Taco is deploying Presto AI at its drive-thrus. CKE partnered with three different drive-thru AI companies earlier this year, and Wendy’s is testing Google’s chatbot at a company-owned restaurant in Ohio.