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The Spoon

Daily news and analysis about the food tech revolution

drive-thru

AI, Voice Tech, and a $4B Delivery Business Are Turning McDonald’s Into a Tech Company

Traffic may have been sluggish and continued growth a challenge during the last few months, but, McDonald’s shows no signs of slowing when it comes to technology initiatives. On the company’s Q3 earnings call this week, CEO Steve Easterbrook emphasized McDonald’s existing achievements as well as future ambitions for digital initiatives like delivery, the drive-thru, self-order kiosks, and mobile ordering.

Delivery remains the centerpiece of McDonald’s digital growth strategy — and its biggest driver. Easterbrook said on the call that the company expects delivery to drive $4 billion of global systemwide sales — up from $1 billion just three years ago.

On average globally, customers place 10 delivery orders per second, and Easterbrook, and McDonald’s saw an increase in those orders when it added DoorDash as a delivery partner in July, ending its longstanding exclusive deal with Uber Eats.

On this week’s earnings call, McDonald’s also highlighted its efforts in the drive-thru lane, where the chain has been deploying its Dynamic Yield technology that uses machine learning to personalize suggestions for customers based on data like weather, time of day, and popular menu items. McDonald’s acquired the tech in March of this year. Dynamic Yield is now installed at more than 9,500 McDonald’s drive-thrus in the U.S., with deployment plans for nearly every U.S. location with an outdoor digital menu board “expected by year-end,” Easterbrook said. The company will also roll out Dynamic Yield across all of Australia by 2020 and is currently evaluating future locations as well as the role of the technology in things like self-order kiosks and the McDonald’s mobile app. “Ultimately Dynamic Yield will facilitate a range of personalization benefits where we can leverage knowledge of the customer and order patterns to provide a tailored experience in restaurants at the drive-thru and on our app,” Easterbrook said.

Also fueling this drive towards more personalization for customers is Apprente, the Silicon Valley-based voice-ordering tech startup McDonald’s acquired in September of this year. Easterbrook said on the call he expects the technology to reduce complexity for McDonald’s workers — a known factor is longer wait times at the drive-thru nowadays. “Apprente talent and technology comes with the promise of more efficient and accurate ordering at the drive-thru, and a better experience for our customers.”

For the drive-thru, especially, efficiency remains an ongoing challenge. According to recent numbers, drive-thru wait times have significantly lengthened over time thanks to more complex menus as well as restaurants trying to accommodate the rising number of mobile orders their employees juggle in addition on those made onsite. Multiple QSRs are using different methods to combat this slowdown, from Chipotle’s “Chipotlans,” which are dedicated drive-thrus for mobile orders, to KFC’s drive-thru of the future, which is primarily designed to serve mobile orders.

While these efforts and others tackle some aspects of the drive-thru lag, they currently lack one of the key elements to the future of the drive-thru: using AI to predict both customer preferences and future demand, so that restaurants can be better prepared. Thanks to its efforts around Dynamic Yield and Apprente, McDonald’s still leads the QSR industry on that score — though others are bound to follow, and no doubt soon.

With Delivery and Drive-Thru, Chipotle Is Aiming to Make Digital a $1 Billion Business

Chipotle’s is “knocking on the door of digital becoming $1 billion business,” CEO Brian Niccol said on a the company’s Q3 2019 earnings call today.

Digital sales for the fast-casual chain grew 88 percent year-over-year during the quarter, to $257 million, representing 18.3% of sales for the quarter, he said.

As expected, Niccol noted that delivery remains a major driver for digital growth for the company. Since 2018, Chipotle has had a partnership with DoorDash that includes integrated delivery — where orders made on the DoorDash platform go directly to Chipotle’s in-house POS system — to speed up service. The company was also one of the early adopters of the increasingly popular hybrid delivery strategy, where restaurants can use a combination of in-house and third-party functionality to built out a delivery operation that best suits their individual businesses.

Delivery may have been front and center for Chipotle this past quarter, but the company’s efforts around the drive-thru are also becoming a major part of its digital strategy. Once known as a chain that rejected the idea of the drive-thru, Chipotle has since begun adding these so-called “Chipotlanes,” which are drive-thru lanes dedicated to mobile orders. On the earnings call today, Chipotle CFO Jack Hartung said that “based on the early success of Chipotlanes, we shifted our real estate strategy to seek more sites that can accommodate a Chipotlane.” Chipotle currently has more than 80 restaurants under construction, he said, and about half of those will have a Chipotlane, bringing the company’s total of them to 60 by the end of 2019.

Drive-thru lanes across the QSR industry have gotten slower over the last decade as menus get more complicated and restaurants struggle to keep up with changing consumer expectations around technology and digital capabilities. Adding more dedicated lanes for mobile orders will help, but the real technology to keep an eye on in the drive-thru will be AI. On that front, Chipotle isn’t completely silent. The company has been “quietly” introducing AI into stores over the last several months in the form of AI-powered voice assistants for phone orders. If Chipotle wants to realize its ambitions of digital becoming a billion-dollar business, it will need to double-down on these efforts and others in the AI realm in the coming months.

Drive-Thrus Are Getting Slower. Can Tech Change That?

Wait times in the drive-thru lines are getting slower, according to QSR’s annual Drive-Thru Study, which launched this week and says drive-thru speed of service in 2019 was 20 seconds longer than in 2018.

The study actually covers a number of different areas of drive-thru performance, from customer service to order accuracy to which chains are installing digital menu boards. But the continued lag in speed of service stuck out this year.

In 2019, the average time a customer spent in the drive-thru — from speaker to order window — was 255 seconds. To put that number in context, the average time from speaker to order window in 1999 was roughly 181 seconds, according to data from previous QSR Drive-Thru studies. That number dipped up and down over the next decade before climbing to 226.30 seconds in 2016. It’s gone steadily upward ever since.

What’s with the wait?

One reason is menus. The QSR 2019 study notes that “more complex menus” contributed to slowdown in order accuracy, which fell just over 5 percentage points compared to 2018. As the study says, “more intricate menus touted by brands like Taco Bell and Arby’s proved to be a stiffer challenge for employees working to deliver complicated orders at top drive-thru speed.”

Along with those larger menus come more complicated food items, like Taco Bell’s now-retired XXL Grilled Stuft Burrito, the making of which adds more time to the drive-thru process. Even a latte, which isn’t an inherently complicated drink, takes more seconds to make than pouring a regular cup of coffee. Some chains brands have gotten hip to this problem and trimmed down their bloated menus. Even so, it ain’t 1985, when you could count McDonald’s burger offerings on one hand, and we’re not likely to return to that level of simplicity.

Mobile orders also contributed to the slowdown in drive-thru times, and with “lanes possibly getting more crowded with not only drive-thru customers but also those picking up mobile orders, it’s going to be difficult for brands to shave off seconds moving forward.”

Some are trying to knock out those extra seconds, most notably Dunkin’, which started building stores with dedicated drive-thru lanes for mobile-order customers in 2018. Fellow donut-peddler Krispy Kreme is doing the same as it revamps its locations for the digital age. In Australia, KFC is piloting a drive-thru-only store heavily focused on digital transactions and testing out new concepts to speed up wait times.

But mobile orders aren’t going away, and, as I mentioned earlier, menus aren’t about to get smaller, so what’s a restaurant chain to do?

Implement AI.

McDonald’s made that much clear when it acquired Dynamic Yield in March and subsequently rolled out the latter’s AI tech to hundreds of locations. Right now, that particular implementation of the tech is aimed at things like order accuracy and quickly upselling items to customers. Where it could make a massive impact, though, is in making restaurants more predictive.

Dynamic Yield-enabled menu displays at McDonald’s drive-thrus can show customers food based on data like the time of day, the weather, and trending menu items. Narrowing down someone’s food selection based on those factors could help the average customer parse through a massive menu and get through the selection process faster, shaving seconds off the time between ordering and collecting the meal. As McDonald’s CEO Steve Easterbrook noted on an earnings call in April, “. . . using the data collected based on current restaurant traffic at the drive-thru, the technology will begin to suggest items that can make peak times easier on our restaurant operations and crew.”

It could also help predict future demand. If the system can tell by data that it’s 80 degrees outside, sunny, and a football game is about to let out nearby, the restaurant can prepare itself with extra staffing ahead of time to move a potentially bigger rush through the line faster.

Meanwhile, companies like 5Thru and Valyant AI are implementing things like license plate recognition and conversational AI to speed up the order and pay process in the drive thru. 5Thru, in particular, is also working with car manufacturers to add voice-order capability in the vehicle, sort of like Domino’s is doing with Chevrolet and other car companies.

All of these efforts are aimed at automating parts, or eventually all, of the drive-thru process to keep chains competitive in what’s become a very oversaturated fast food market. This time next year, we’ll have a better idea of how far towards that goal Dynamic Yield can get McDonald’s, and AI in general can get the industry. If the seconds spend in line start to drop, we could one day offer a 2020-sized menu much faster, so restaurant operators can party like it’s 1999.

Newsletter: The New All-in-One Restaurant Tech Is Here, Digital Drive-Thru Goes Down Under

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I was in a local coffee shop recently and overheard a rep from a well-known POS company trying to sell his product to the shop’s manager. But for every feature he offered up (“It’ll manage payroll!” “It makes tipping easier!”), the cafe manager had more or less the same rebuttal: more tech would make more work for her staff.

I suspect this conversation is happening all over the world. Tech’s march on the restaurant industry is here to stay, but that doesn’t mean it’s necessarily making life easier for restaurants. In a growing number of cases, too many digital tools actually make it harder to get work done, particularly as demands for delivery and mobile orders ramp up and those functions have to be integrated into an already chaotic workflow.

But this week, we got a different glimpse into the future of the digital restaurant — namely, one where disparate tech solutions are replaced by a single digital platform that can manage every corner of the restaurant, from the kitchen system in the back to the kiosk out front to the off-premises order on its way out for delivery.

At least, that’s what Brightloom hopes to launch to restaurants this fall. The newly rebranded company, formerly known as Eatsa, announced yesterday that it’s revamped its existing end-to-end restaurant tech platform, into which it’s also integrating Starbucks’ famed mobile technology.

This is a big deal because, while many products claim to be “all-in-one” restaurant management software packs that make it easier for restaurant owners and operators to manage the entire business, no one’s yet managed to seamlessly integrate the mobile aspect of business into their system.

And nobody does mobile like Starbucks. Love ‘em or hate ‘em, it’s hard to deny the mega-chain’s dominance when it comes to offering fast, highly personalized order and pickup functions for customers. Brightloom’s soon-to-be-unveiled system will integrate the Starbucks mobile order, pay, and customer loyalty tech into its own system. We don’t yet know exactly what that will look like, but it will undoubtedly raise everyone’s standards around what restaurant-tech systems should be able to do and put pressure on others to make their offerings just as useful and less of a burden for restaurants to implement.

Good-bye, Crackly Speakerphone. Hello Digital Drive-Thru
Will all these digital developments render the crackly speaker at the drive-thru null and void? Probably, and sooner than we think.

While major QSRs like Dunkin’ and Starbucks have been implementing digital and mobile ordering into the drive-thru experience little by little over the last couple years, KFC took things a step further recently by announcing its first-ever drive-thru-only concept store.

The store, which is slated to open in November, will feature multiple drive-thru lanes dedicated to customers who have ordered their food via the KFC website or mobile app. The idea is to streamline the order process and cut down on how long it takes customers — or delivery drivers — to get their food. But again, it’s all about the implementation. KFC’s concept store could raise the bar on what QSRs are expected to deliver in terms of speed and quality. Or it could just be introducing another digital process that stresses workers out. We’ll know more when the pilot launches in November, in Australia.

Delivery Bots on the Rise
Or you could just let the restaurant come to you in the form of a roving bot. There’s a growing number of these devices delivering food from restaurant to customer, often on college campuses, which hold a lot of people in a relatively small geographic area.

But as my colleague Chris Albrecht pointed out this week, Kiwi announced it will test its semi-autonomous delivery bots on the streets of Sacramento, CA this fall, which suggests we’re coming to a point where these li’l roving machines will start to become a more common sight on regular city sidewalks. Who needs drive-thru when you can have your meal brought to you by a cute little box on wheels? As Chris said, “it was pretty amazing to whip out my phone, order a burrito, have a robot fetch my lunch and bring it to my location.”

For now, roving delivery bots are probably not a priority for most restaurants’ overall digital solutions. But as all-in-one offerings like the Brightloom-Starbucks tech get more commonplace and digital ordering becomes routine for customers and workers alike, there may be room for most restaurants to accommodate a bot or two in their tech stack.

KFC Is Testing Out a Drive-Thru-Only Concept Store in Australia

If you want a hint at what all drive-thrus of the future might look like, head to Australia, where KFC is piloting its first-ever drive-thru concept store.

The store, which will first be trialled in Newcastle, New South Wales, is the chain’s first drive-thru-only location and is meant to speed up the process of ordering, paying for, and collecting food while at the drive-thru.

Digital is the main focus here. Customers order ahead via the KFC mobile app, which will then generate a four-digit code. Once in the drive-thru lane, they key that code into a touchscreen receiver, which shoots the order to the kitchen where the food is made. Drivers then pull up to the main pickup window to retrieve the food.

KFC has also said this streamlined setup is ideal for delivery drivers picking up food, as it could cut down on how long they have to wait before collecting a customer’s order.

What’s potentially more exciting about this concept, though, is not what it will look like when the store opens in November, but what it could eventually become. Gary Mortimer, a retail expert at Queensland University of Technology, noted in a recent interview that while a drive-thru-only concept could speed up the process, in this iteration of KFC’s new store, customers still have to wait onsite for their food to be made. He then hinted at the potential of push notifications, which could be used to tell the customer when their food is ready and also alert the restaurant when a customer is less than a mile away.

That level of precise timing won’t make it into this first iteration of KFC’s new drive-thru only store, but the concept itself is a good indicator of what’s to come for drive-thrus all over the world as the restaurant industry goes more digital and customers expect their food faster.

Major QSRs still see over half their orders come from the drive-thru window. But at the same time, waits are getting longer. In response, tech companies and QSRs alike are implementing tech-driven initiatives to cut down those times. Dunkin’ has added dedicated drive-thru lanes for mobile orders, and Starbucks already offers a number of drive-thru/walk-up locations meant for speedier service in high-traffic areas.

KFC’s new store will still feature two lanes for more traditional drive-thru operations, where customers can order via a speaker phone that has a human being on the other hand. That human element will remain an important offering for QSRs implementing new tech concepts — for now. As customers grow more comfortable with digital, there’s a good chance the crackly speaker phone will fall by the wayside at some point.