Automating Drive-Thrus with AI Still a Long Drive: 70% of Orders Need Humans

DRIVETHRUCITY

Fast-food chains in the US, including Checkers and Carl's Jr., are touting AI-powered drive-thrus as magic bullets to speed up service and cut labor costs. However, the reality behind these "labor-zapping wizards" is more nuanced, as revealed by a key player in the industry.

Presto Automation Inc., a company that initially promised a nearly autonomous chatbot for order-taking, attracted significant interest from restaurants grappling with rising wages. They even boasted about OpenAI's Sam Altman as an early investor and leveraged his involvement to promote their technology. Aiming to triple their reach to 1,200 locations next year, Presto Automation seemed poised for rapid expansion.

However, recent filings with the US Securities and Exchange Commission and subtle shifts in their marketing paint a different picture. The company, now publicly traded, acknowledges that "off-site agents," primarily located in areas like the Philippines, are involved in over 70% of customer interactions, acting as a safety net for the AI system. DRIVETHRUCITY

"We felt it crucial to clarify our cost structure and highlight the unique features of our solution to ensure transparency for market participants," a Presto spokesperson wrote in an email. The company also emphasized that deploying off-site workers assists in training their AI system, ultimately aiming to decrease human intervention.

In July, the SEC notified Presto of an investigation into "specific aspects of its AI technology" regarding its disclosures. Meanwhile, Rajat Suri, founder and CEO, stepped down in March, with Xavier Casanova taking the reins internally. Under Casanova's leadership, significant changes have been implemented, including a 17% workforce reduction and the full disclosure of human agent involvement.

Both the SEC and Presto declined to elaborate on the specifics or nature of the probe. DRIVETHRUCITY

Presto now frames its "humans in the loop" approach as a competitive edge, arguing it liberates restaurant staff to prioritize food preparation. The company further champions the discreetness of this integration, stating in a filing that diners remain unaware of the human element behind the scenes.

"Our human agents play a crucial role in reviewing, validating, and correcting orders," Casanova, Presto's newly minted CEO (previously COO), assured investors on a recent earnings call. He went on to emphasize, "Human oversight will remain essential in ensuring order accuracy."

Presto's admission of human involvement raises questions about disclosure transparency for public companies integrating AI into their products. In this case, Brian Dobson, a Chardan Capital Markets analyst covering disruptive technologies, believes earlier disclosure about the limited autonomy (less than 30%) of Presto's drive-thru software would have been valuable for shareholders.

"This episode underscores the critical need for investors to carefully assess the capabilities and limitations of AI companies," Dobson remarked, holding a neutral rating on Presto's stock. He further noted, "Wall Street's understanding of artificial intelligence is still nascent." DRIVETHRUCITY

Presto's shares have plummeted over 60% this year, dipping its market value below US$50 million.

Suri, the tech firm's founder, and customers Checkers and Del Taco declined to comment. A spokesperson for CKE Restaurants Holdings, owner of Carl's Jr. and Hardee's, confirmed Presto as one of several AI ordering vendors used by its franchisees and directed further inquiries to Presto. DRIVETHRUCITY

The allure of AI

AI's promise has captivated the U.S. restaurant industry, grappling with both labor shortages and rising wages. Companies like Presto have marketed voice chatbots as a solution, boasting faster ordering, increased upselling (think tempting desserts!), and improved accuracy. This is particularly attractive considering studies like Intouch Insight's report that drive-thrus may get up to 14% of orders wrong.

But despite the buzz surrounding AI, especially since the arrival of OpenAI's ChatGPT, replacing human employees with chatbots at the drive-thru intercom faces significant hurdles. McDonald's, for instance, has experimented with the technology for years, yet a widespread rollout remains elusive.

One key challenge is the sheer diversity of accents, speech patterns, and background noise (car radios, traffic) that AI chatbots must navigate in a drive-thru setting. Additionally, complex orders may still pose a decoding challenge for even the most advanced AI systems. DRIVETHRUCITY

The "Magic" Behind AI-Powered Drive-Thrus

While AI may conjure up images of automated efficiency, the reality at drive-thrus isn't always so seamless. When AI stumbles or a customer requests human interaction, most providers simply alert a restaurant worker to take over. However, Presto takes a different approach, employing both on-site and off-site human agents to support the chatbot and minimize customer handoffs.

This hybrid model isn't unique. ConverseNow also leans on off-site agents, claiming their AI handles the "majority" of orders independently. Valyant AI previously did the same but transitioned away earlier this year. Conversely, giants like IBM, Google, and SoundHound aim for full automation and avoid human intervention. DRIVETHRUCITY

More efficient?

Presto's business model sparks broader questions about the true efficiency of AI tools for businesses. One concern is their reliance on overseas workers, potentially fueling another wave of customer service outsourcing to cheaper labor markets.

While Presto acknowledges these "off-site agents" as an added expense that will increase with expansion, the company (despite operating losses since its public debut last September) still expects human involvement to decrease as its AI system evolves. OpenAI's involvement through its development platform is touted as key to improving the drive-thru chatbot, particularly in its natural dialogue abilities.

Shelly Palmer, head of a tech consulting firm for major companies, observes that the rush to embrace AI often leads to overlooking crucial details.

"The AI hype has everyone misunderstanding this tool," Palmer points out. "There's this expectation of AI as some kind of magic solution."

 DRIVETHRUCITY

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Beyond the Buzzwords: AI Drive-Thrus Struggle with 70% of Orders, Relying on Humans

Ordering From a Chatbot? Think Again: Humans Run Most Drive-Thrus

Robots Can't Fry Your Fries: Drive-Thrus Still Reliant on Humans for 70% of Orders

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