You know how they say it’s not what you know, but who you know? That’s doubly true if you’re trying to insert yourself into McDonald’s technology supplier network.
Just ask Kytch, a company that makes a device that fixes the burger giant’s perpetually broken ice cream machines. You’d think that McDonald’s would welcome such a fix since, after all, their ice cream machines are broken so often they’ve become meme-worthy.
Apparently not, as illustrated by the burger chain’s orchestrated email campaign warning franchisees to stay away from Kytch, claiming it violated the machinery’s warranty, intercepted confidential info, and suggested the device was dangerous to operators since it has a remote operation function. McDonald’s also used the email campaign to promote a new ice cream machine from Taylor (the manufacturer of the oft-broken machines), which promised to have similar remote management features as the Kytch appliance.
According to Kytch, the McDonald’s email campaign killed their business and severely hobbled plans to launch an entire line of connected kitchen products for pro kitchens.
Kytch cofounder Melissa Nelson says the emails didn’t just result in McDonald’s ice cream machines remaining broken around the world. They also kneecapped Kytch’s fast-growing sales just as the startup was taking off. “They’ve tarnished our name. They scared off our customers and ruined our business. They were anti-competitive. They lied about a product that they said would be released,” Nelson says. “McDonald’s had every reason to know that Kytch was safe and didn’t have any issues. It was not dangerous, like they claimed. And so we’re suing them.”
Kytch ended up suing Taylor last May for stealing trade secrets (according to the suit, Taylor worked with a franchisee to obtain a Kytch gadget and copy some features) and, just this month, the startup filed suit against McDonald’s.
So why would McDonald’s wage a war on something that, from all appearances, makes their customers’ and franchise operators’ lives better?
One reason could be that the chain earnestly believes the machine’s remote turn-on capabilities really do create a safety hazard. However, those concerns should have been eliminated once Kytch’s machine achieved UL certification.
Another possibility is that the device interfered with the steady revenue stream from Taylor’s maintenance contracts, which make up about a quarter of the equipment company’s revenue. I’m more inclined to believe this could be partially responsible for McDonald’s hesitancy, especially if Taylor had promised a new machine with some of the features of the Kytch.
Whatever the reason, the Kytch-McDonald’s kerfuffle illustrates how the chain’s internal motivations aren’t always aligned with that of their customers or franchisees when it comes to doing what’s best from a technology perspective. And this isn’t the first time the company’s technology management has struck a discordant note with franchise operators. Last year the chain’s franchisees pushed back against the chain’s high fees and centralized command and control of technology deployment. In the case of Kytch, it’s this very same rigid control of technology deployment that is robbing franchisees of a solution that one franchise operator said saved him “easily thousands of dollars a month” from lost revenue and repair fees.”
In their defense, McDonald’s has been working hard in recent years to upgrade their franchisees’ tech stack, including acquiring AI-powered personalization startup Dynamic Yield. Still, with all that investment in futuristic kitchen tech, you’d think the burger chain would want to make sure something as basic as a McFlurry-making appliance would work well, even if it meant embracing a fix from an upstart.
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