McDonald's (MCD) essentially created the fast-food market in the U.S. (and by extension the world) and it remains a key innovator. The company's "restaurant of the future" model created a blueprint for operating in a digital-first world (or at least it brought the Starbucks (SBUX) model to the more traditional fast-food world).
The Chicago fast-food chain detailed some of that plan way back in 2016.
Inside the restaurants, McDonald’s is bringing greater control, convenience and personalization to our customers through the use of kiosks to place orders, staffed with guest experience leaders to assist in the process. Customers can place their order and skip the front counter entirely, with their food brought right to their table. Additionally, customers will be able to place orders directly on the mobile app for pickup or have a kiosk recognize their app profile, which holds customized favorites and preferred payment methods.
Now, of course, digital ordering has become table stakes in the fast-food game, but McDonald's has continued to innovate. It has tested and implemented more efficient drive-throughs, has expanded its delivery capabilities, and has been adding predictive artificial intelligence to its drive-through lanes.
That's tough for any company to compete with, but Yum Brands (YUM) has taken technology in a new direction at a number of its KFC and Pizza Hut locations.
Image source: Pizza Hut.
Pizza Hut and KFC Have a New Robot Boss
Most AI and automation have focused on customer experience, with some also focusing on production of food items. Yum's new technology comes closer to an area that Starbucks has also been working on -- making its restaurants run more efficiently by automating tasks that humans aren't needed for,
For Starbucks, those efforts have focused on inventory. For Pizza Hut and KFC, this has involved integrating the company's Dragontail order and delivery platform. The company explained how this works in a news release when it acquired the technology platform.
Dragontail’s platform is focused on optimizing and managing the entire food preparation process from order through delivery. Its connected, intelligent, end-to-end AI-based solution automates the kitchen flow combined with the process of dispatching drivers. It helps restaurants sequence and time each order, while planning optimal delivery routes and combining delivery orders by location. The technology also offers consumer-facing capabilities that enable customers to track their order en route. In addition, it can operate with outside food delivery partners.
Basically, Dragontail manages the restaurant's operations. That doesn't replace people, but it certainly augments what they can accomplish. The new technology has been added to 2,800 stores in 21 markets across KFC and Pizza Hut, up from 13 markets last quarter and nine markets from the end of 2020, Yum Chief Financial Officer Chris Turner said on the company's Q4 earnings call.
"Dragontail allows us to tap into the power of artificial intelligence to streamline the end-to-end food preparation process and optimize delivery routes for drivers," he said.
"At Pizza Hut International, we continued deploying HutBot, our intelligent coaching app designed to enhance both the team member and customer experience by digitizing routines and insights into operational efficiencies."
Pizza Hut's Tech Drives Customer Satisfaction
Technology might save companies money in the long run (after the capital expenditure has been taken) but saving money does not drive repeat business. The real advantage for Pizza Hut and KFC may be how its new tech drives customer satisfaction. That's something that could win business from McDonald's and other rivals.
"When HutBot is deployed and used effectively, it's proven to increase customer satisfaction scores. We ended the year with HutBot live in over 6,000 Pizza Hut locations in 70 markets," he said.
Dragontail and HutBot aren't the company's only forays into using technology and AI to grow its business.
"To round out our technology strategy, our easy insights platform provides us with invaluable knowledge about our consumers, enabling us to enhance the customer relationship," Turner said.
Yum! recently acquired Kvantum, a leading AI-based consumer insights, and marketing performance analytics business, and has expanded its use at its restaurants dramatically.
"We will continue to prioritize initiatives that lead to incremental sales growth and improved unit economics for our franchisees.," the CFO added.
"The impressive adoption rates of these technology platforms are evidence of our franchisees' confidence in the investments we made to advance our digital and technology ecosystem this year. We're confident these investments have created a meaningful competitive advantage and will be a point of differentiation for Yum as we serve the elevated expectations of customers."
