McDonald’s is pivoting on its ambitious artificial intelligence (AI) plans, ending its partnership with IBM to implement AI-driven drive-thru ordering technology. The fast-food giant announced it would discontinue the test of its Automated Order Taker (AOT) in over 100 restaurants by July 26, according to a memo obtained by Digital Goss.
Initiated in 2021, the collaboration aimed to streamline operations using voice-activated ordering systems. However, the memo from Mason Smoot, McDonald’s senior vice president and chief restaurant officer for the U.S., indicated that despite some successes, the company sees potential in exploring broader voice ordering solutions. “After thoughtful review, McDonald’s has decided to end our current partnership with IBM on AOT. IBM remains a trusted partner, and we will continue to utilize many of their other products across our system,” the memo stated.
Challenges with the AI technology, particularly in interpreting different accents and dialects, contributed to the decision. This issue impacted order accuracy, a critical factor for drive-thru operations. While McDonald’s and IBM have not commented directly on these technical difficulties, sources familiar with the technology confirmed these challenges to Digital Goss.
Despite ending the IBM partnership, McDonald’s remains committed to exploring AI solutions for drive-thru services in the future. “Our work with IBM has given us the confidence that a voice ordering solution for drive-thru will be part of our restaurants’ future,” McDonald’s said in a statement. The company plans to continue evaluating scalable solutions and aims to make a decision on a future voice ordering system by the end of the year.
IBM expressed its ongoing collaboration with McDonald’s on other projects and mentioned that it is now engaging with several other quick-service restaurant clients interested in the AOT technology.
Previously, McDonald’s sold its McD Labs technology, formerly known as Apprente, to IBM in 2021, and its predictive ordering technology, Dynamic Yield, to Mastercard later that same year. These moves were part of McDonald’s broader strategy to modernize its restaurant operations.
Looking forward, McDonald’s new partnership with Google Cloud, announced during an investor day in December, has generated significant interest. Although details are sparse, Alphabet CEO Sundar Pichai expressed excitement about using Google’s generative AI, cloud, and edge computing tools to enhance McDonald’s dining experience globally.
Industry analysts, including BTIG’s Peter Saleh, have noted franchisee frustration with the slow progress and inconsistent performance of the automated order taker technology. Saleh highlighted that during a demonstration at McDonald’s Worldwide Convention in Barcelona, many orders processed by the AI system were incorrect, with overall accuracy reported in the low-to-mid 80% range.
The speculation is rife that Google might replace IBM as McDonald’s AI vendor, given Google’s substantial presence at the convention. Saleh emphasized the critical need for accuracy and cost efficiency in any future AI solutions, noting that the current system does not meet these requirements.
As McDonald’s evaluates its next steps in AI integration, the industry watches closely, anticipating how the fast-food leader will leverage advanced technologies to enhance customer experience and operational efficiency.