Ten McDonald’s Restaurants in Chicago Test Automated Drive-Thru Ordering

Minimum wage hikes = more robots and AI.

Ten McDonald¡¯s restaurants in Chicago are testing automated drive-thrus using voice-ordering AI software.

CEO Chris Kempczinski said the AI technology is 85% accurate and can take 80% of orders.

The company obtained the AI technology in its 2019 acquisition of Apprente.

At 10 McDonald¡¯s locations in Chicago, workers aren¡¯t taking down customers¡¯ drive-thru orders for McNuggets and french fries ¡ª a computer is, CEO Chris Kempczinski said Wednesday.

Kempczinski said the restaurants using the voice-ordering technology are seeing about 85% order accuracy. Only about a fifth of orders need to be a taken by a human at those locations, he said, speaking at Alliance Bernstein¡¯s Strategic Decisions conference.

Over the last decade, restaurants have been leaning more into technology to improve the customer experience and help save on labor. In 2019, under former CEO Steve Easterbrook, McDonald¡¯s went on a spending spree, snapping up restaurant tech. One of those acquisitions was Apprente, which uses artificial intelligence software to take drive-thru orders. Financial terms of the deal were not disclosed.

Kempczinski said the technology will likely take more than one or two years to implement.

McDonald¡¯s has also been looking into automating more of the kitchen, such as its fryers and grills, Kempczinski said. He added, however, that that technology likely won¡¯t roll out within the next five years, even though it¡¯s possible now.

CNBC Reporting...

When the extra unemployment runs out the people that think they can go to McDonalds are going to be in for a RUDE awakening. And the people that kept working will really be doing well. 

They don't even need automated drive thrus right now. All they have to do is:

1) Develop an app and have it sync when near the drive menu screen. Immediately, it should display your order and then you can/should also be able to pay via the app all without ever handing anybody cash or a plastic payment card.

-Order on the app, pay and literally just drive up to the restaurant to pick up. (Most restaurants are already doing this.)

2) Have a touch screen at the drive thru with all the available options..

Technology is already making the fast food business more efficient with the elimination of jobs. Sooner or later, there will be a time where you will need an engineering degree or some sort of trade to fix the machines/software in the restaurant! Nobody will be making the food, dealing with the customers because EVERYTHING will be automated! 

In and Out has paid their employees well over minimum wage for quite a while and yet is cheaper than McDonald's and is 10 times better. It's not the minimum wage hikes, it's corporate greed.

Its definitely corporate greed ...

McDonalds is a POS company that serves trash food 

In and Out is cheaper and so much better. Recently had Shake Shack for the first time. It's good too but significantly more expensive than McD. There's a place hear in the Northwest called Burgerville that is good too. That's really the only fast food i'll eat. In Cali In and Out was my cheat fast food meal. Ate it two or three times a month. In Oregon I have to go pretty much to Salem to have it. Like 30+ minutes away. But yeah, McD is trash. The fries are fucking good though. Burgers don't taste like beef.

@StumpTownStu

 I MISS the hell out of In-N-Out burger. When I lived in Las Vegas I was there once a week! I'd like a Double Double please with animal style fries and a vanilla shake? 

I don't know if you have ever been to Seattle much the the burger joint named D*CK...s (short for Richard) is really good. Mugg should know all about it. 

the self service order terminals can help with complex orders 

@Daddy_Freddie

 I was in Seattle last week. I'll have to look it up next time i'm there.

Any job a robot or AI can do is probably not a job any human would want to do.  Technology has been replacing humans for 10,000 years. People always complain at first, but you don't see people today missing working as a switchboard operator or shoveling coal into a steam engine

People will adjust.

But people can't adjust to working a job for too low a wage

@StumpTownStu

Not sure what you meant here?  In-and-Out is far more expensive than McDonald's and it is not close.  Part of the reason their profit margins are far higher -- around 20% for In-and-Out versus around 6-7% for McDonald's.  The two have very, very different business models.  In-and-Out is very, very slow on expansion and you cannot buy a franchise and it is privately-owned.  McDonald's on the other hand is always expanding, franchisable, can buy stock in them, is a global icon, and has a far more varied menu (in order to compete with similar places). 

These are not really similar enough to compare as far as wages are concerned.  Maybe compare In-and-Out to WhatABurger.  Maybe compare McDonald's to Wendy's or even Chick-fil-A.

One could be seen more for a 'living wage' or to advance your career to support a family; the other could be seen as a first-time job or a part-time job (to supplement your income) or a student's work.

At any rate -- not a fair comparison to either.

@thorpe

I agree with the first part.  This part I am not so sure about.  They seem to adjust to me, by default.  They either live within their low-wage means.  By rooming with others, living with parents, etc. -- not spending as much, etc.  Or they use it to advance into supervisor, manager, etc.  Or they use it as a leaping off job into a better one.

So, they adjust alright.  They do not live a 100K lifestyle -- because they do not make it.  Or, if they want to -- they get another job.

Either way -- people adjust.

But you are right -- they always complain at first.

Before people comment about the DT they should be required to work it. I had many years in the QSR industry and that means drive thru and it is the most demanding, fast paced, dirty, unappreciated, stressful job in the whole place. Its smack in the sun and rude people who are relentless and inconsiderate..you have to handle dirty cash and be perfect in understanding blabbering idiots who cannot read a menu or pay attention during ordering and customers in DT are extremely short and expect immediate service. It used to be we had a time target per customer but you never see that now, speed of service has slowed way down as staffing and training are impossible, menus are enormous and now there are dual entry menus yet only one service line. 

If you ever had to work in a DT you never again complain in one and AI cannot perform remotely as efficiently as a human because the throughput of the process is the idiot customer. The more you have to rely on the dummy in the car for efficiency the worse DT SOS will be and the lower the profits for the business. 

Chick Fil A knows that SOS is key to banking in the QSR business, they have multiple employees along the path to confirm orders, handle transactions and decrease speed of service times and the more efficient, speedy and effective your DT is the more the customers will return and the more money for the operator.

AI for DT is moronic..so makes sense a dense company like McDonalds would consider it. In and Out and Chick Fil A know it takes a well oiled machine to run an awesome DT and I dont think either of those two with their higher margins are going to be dumb enough to venture to AI any time soon.

Corporate Fukks? 

@Raiders22

 In and Out is significantly less expensive than McDonald's.

Have you ever even eaten In n Out because it's one of the few fast foods i'll eat and believe me, i've eaten A LOT of In n Out. Then recently we had McDonalds, hadn't had it in quite some time, and realized how much more expensive it is compared to In n Out for a subpar product and burgers that don't taste like beef. The fries were still fire though. I'm a hamburglar. I love them. Doesn't matter if it's a posh gourmet restaurant burger or a burger from a roadside stand, it's my go to "cheat" meal. And there's no burger I have had more than In n Out's. I can't even begin to count. Probably close to one a week on average for over 10 years until I moved to Oregon. When i'm in Cali, it's still one a week. In Oregon it's one a month because it's a little bit of a trip. I have a strict diet otherwise but a I eat a burger about once a week.

My old BS corporate job keeps losing lawsuits to employees across the country...

I love every second of it .

Even with their dollar stuff as well?

Maybe you are right with combo stuff because I don¡¯t see exactly how to compare that. 

But for basic items it is not close at all to me. For example of nearby places in LA show this on menuwithprice:

Venice beach

McDonald¡¯s cokes:

Small $1.00

Large $1.59

Hamburger $1.71

Cheese Burger $2.05

Sunset blvd

In and Out cokes:

Small $1.50

Large $2.05

Hamburger $2.10

Cheese Burger $2.40

22% on a plain burger and 50% on a basic soda

Maybe if combos are of same weight and ounces you are correct.  I just don’t know exact sizing of both places combos.  They don’t show that.  

Glancing at combos they are pricier there. 

Quote:

1. Pricing

Let's get this one out of the way first. A basic ShackBurger at Shake Shack(NYSE:SHAK) will cost you $5.55 while an Original Charburger at The Habit(NASDAQ:HABT) will run you $7.65, though you can get an apparently unoriginal Charburger for $3.50. Grilled chicken sandwiches will run you over $6 at both locations.

In contrast, you can get a basic burger at McDonald's for around a buck, and for less than $6, you can get a Big Mac meal that will include fries and a drink. Same with a grilled chicken sandwich.

Sure, a ShackBurger and a McDonald's hamburger aren't quite the same thing, but on sourcing and sustainability, the fast-food joint can pretty much stand toe to toe with so-called better-burger restaurants. McDonald's has committed to sourcing almost all of its meat responsibly and to have them raised in a humane manner.

Certainly, the types of people who will visit a Habit restaurant will largely differ from those who go to a McDonald's, but McDonald's ability to give a good, tasty meal at an affordable price gives it a leg up on the competition.

McDonald's (MCD) got a name for being among the most affordable fast-food chains around the turn of the 21st century due to its Dollar Menu, where everything¡ªas the name implied¡ªwould only set you back a buck. Alas, times change. In 2017, McDonald's instituted a $1 $2 $3 Dollar Menu¡ªbut today the only things on it nationwide are sodas of any size and small coffee drinks;1 in 2019, the company started letting their local branches choose what to put on it, so there's a lot of variation.2 Still, McDonald's overall offers many options that help keep dining costs low. Occasionally, McDonald's will run promotions offering soft drinks for $1, or 2 breakfast sandwiches for just $3. These deals keep luring hungry consumers toward the golden arches.

McDonald¡¯s

Dollar menu fans, rejoice -- with the news that the Golden Arches will soon roll out a successor to their much-beloved dollar menu, your quest for frugal fast food finds just got a whole lot easier. After McDonald's dropped its McPick 2 offerings last year and replaced its original Dollar Menu in 2013, things seemed a little bleak on the discount food front -- but fear not, the new "value-priced" menu was announced to have a national rollout date of early 2018, and is said to feature deals "for $1, $2 and $3." In the meantime, there's still quite a list of what you'll be able to get at McDonald's for under a dollar.

?McDonald's

McDonald¡¯s $1 Menu

? $0.43 Soft Baked Chocolate Chip Cookie

? $0.90 Small Coffee

? $0.99 Apple Pie

? $1 Apple Slices, two bags

? $1 BBQ Ranch Burger

? $1 Cheeseburger

? $1 Cone

? $1 Grilled Onion Cheddar Burger

? $1 Hash Browns

? $1 Parfait

? $1 Soft Drink, any size

? $1 Sweet Tea

¡°An In-N-Out store outsells a typical McDonald¡¯s nearly twice over, bringing in an estimated $4.5 million in gross annual sales versus McDonald¡¯s $2.6 million. In-N-Out¡¯s profit marginis an estimated 20%. That¡¯s higher than In-N-Out¡¯s East Coast rival Shake Shack (16%) and other restaurant chains that typically own their locations, like Chipotle (10.5%).¡±

¡°So how does In-N-Out maintain its margins? To start, thelimited menu means reduced costs for raw ingredients. The company also saves money by buying wholesale and grinding the beef in-house. By doing its own sourcing and distribution, it likely saves 3% to 5% in food costs a year. It cuts out an estimated 6% to 10% of total costs by owning most of its properties¡ªmany bought years ago¡ªand not paying rent. In-N-Out picks its locations carefully, clustering them near one another and close to highways to lower delivery costs while also avoiding pricey urban cores. It has just one location within the city limits of Los Angeles and one in San Francisco, while many Shake Shacks are smack in the center of town.¡±

Haha!  I can¡¯t remember the last time I have had fast food of any type.  

So, yes, it has been a while. So, I may have to defer more to you on the fast food menus. 

But you know I like to back my ¡®memory¡¯ and thoughts up with a tad of research.  

I just remembered some time back this came up somewhere on an investment forum and the one guy gave the profit margin numbers and prices to draw in customers, etc. ¡ª as a reason for backing up his position on investing in McDonald¡¯s at the time.  He was saying it is basically a myth that the ¡®lack of freezers¡¯ rhetoric was the reason for numbers, wages, etc. ¡ª it was more pricing.  He understood people kept coming back for their burgers but never agreed that was the reason for their wages. Etc. Etc. Longer and detailed with data response he gave. At any rate he loved MCD at the time. 

One of the more amazing things that stood out was how much Chick-fil-A outperformed them all, despite being closed one day a week.  

Good detailed article and reasoning for this also.