Artificial intelligence (AI) euphoria is taking over the world and companies across the spectrum are trying to incorporate AI into their products and services. Taco Bell is one of the first companies in the restaurant industry to fully embrace the technology, and it is in the process of rolling out AI drive-through ordering to restaurants across the country.

While other companies in the sector are also using AI to enhance customer experience and cut labor costs, Taco Bell’s initiatives are perhaps the most ambitious to date. Here’s everything we know about the service that Taco Bell expects to roll out to hundreds of stores in the US by the end of this year.

Yum! Brands which owns Taco Bell as well as other fast-food chains like KFC, Pizza Hut, and The Habit Burger Grill, has been testing the AI drive-through service named “Voice AI” at over 100 locations across 13 states in the US. Taco Bell is now expanding the service to more stores in the US and eventually intends to offer the service internationally. Yum! Brands is incidentally testing the service at five KFC restaurants in Australia also.

How Would Taco Bell AI Drive-Through Ordering Work

In the AI drive-through, instead of placing their order with a Taco Bell employee, customers would be talking to a computer. In his prepared remarks, Lawrence Kim, Chief Innovation Officer, Yum! Brands said, “We’re expanding and accelerating our AI capabilities like Voice AI to deliver leading-edge technologies to our franchisees and to enhance the consumer and team member experience.”

He added that the company has tested the idea for two years and is “confident in its effectiveness in optimizing operations and enhancing customer satisfaction.”

While the idea might not sound revolutionary at first thought, understanding the pronunciations, dialects, and ascents of diverse customers is actually quite complicated.

Even McDonald’s unsuccessfully tried its hand with what it called the “Automated Order Taker” which was an AI technology that it tested in partnership with IBM. In June, the company ended the trials and would now look at another vendor instead.

Microsoft Ended the Testing for Its AI Drive-Through

Naturally, AI ordering systems aren’t perfect yet and several customers complained about incorrect orders. While announcing that it would end its AI drive-through testing with IBM, McDonald’s said working with IBM gave it “confidence that a voice ordering solution for drive-thru will be part of our restaurants’ future.”

It added, “We see tremendous opportunity in advancing our restaurant technology and will continue to evaluate long-term, scalable solutions that will help us make an informed decision on a future voice ordering solution by the end of the year.”

Meanwhile, while McDonald’s might not officially admit it, the adoption of its AI drive-through was low and marred by the system taking in incorrect orders. This is where the technology could be a big risk. Mistakes in orders can be very frustrating for customers and can drive even loyal customers away if they are frequent or severe enough.

BTIG analyst Peter Saleh conducted a channel check on the service in June 2022 and found that the accuracy of McDonald’s AI drive-through was around 85% which is below the 95% goal for mass adoption. In his note, he said that franchises expressed “frustration that updates were infrequent and the demonstration at the worldwide convention was underwhelming.” The high operating costs associated with the technology were also cited as a challenge by franchises.

How Would Taco Bell AI Drive-Through Be Better?

Meanwhile, Taco Bell which has tested the technology for two years and gradually scaled up the service, believes its AI drive-through experience would help improve the customer experience. The company said, “The Voice AI technology uses a holistic approach that leverages feedback, data, and insights to enhance consumer relationships with an emphasis on intuitive, user-friendly technology to create a seamless ordering experience.”

More importantly (for Taco Bell), a successful Voice AI system would lower labor costs.

Separately, in an interview with CNN, Kim said it has trained its AI model to not only understand the correct pronunciation but also an incorrect version. He gave the example of quesadilla (kay-sah-dee-ya) and said that its model has been trained to understand not only that pronunciation but “also the incorrect, but still common, “kay-sah-DILL-uh.”

He also categorically denied its voice AI replacing any team members and said that it is meant to “enhance the team member experience so they can focus on other tasks that are a priority for them.”

Kim is quite bullish on the AI opportunity and said, “The technology is emerging and evolving so very quickly that we … as an innovation team as well as a technology team are continuously evaluating what could be next.”

What Are Other Restaurant Chains Doing With AI?

While McDonald’s drive-through AI testing did not yield the desired results, several other restaurants are using AI in their services. Wendy’s for instance has used AI across different functions. Last year, Wendy’s announced its AI drive-through named Wendy’s FreshAI in collaboration with Google Cloud.

It said that the service helps solve problems that traditional AI does not. These include “understanding casual conversation with customers and handling Wendy’s menu full of customizations and configurations.”

In February, Wendy’s announced that it would spend $20 million on digital menu boards but the company clarified CEO Kirk Tanner’s comments during the Q4 2023 earnings call and said that it is not planning to have AI-based surge pricing.

However, while Wendy’s spokesperson said that it has no plans to increase prices when the demand is high at its stores. They told the Washington Post, “Digital menuboards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.”

Among other restaurants, White Castle is also using AI voice systems in drive-throughs. The company uses SoundHound’s AI voice-recognition services and intends to expand the function is 100 outlets by the end of this year as compared to around 15 currently.

AI Is Permeating Many Industries

The world’s AI appetite seems to be only beginning and the term is increasingly featuring in the earnings calls of all kinds of companies. AI is permeating all industries including some which we might not usually associate with technology – pillows, shopping carts, and even spirituality for instance.

As Taco Bell’s AI initiatives show, the restaurant industry – that’s often plagued with labor availability and companies have been under pressure to cut costs to keep their menu competitive – is also turning to technology to improve customer service.