Eye on AI - June 4th, 2021
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
This week, our focus returns to the fast food industry’s tech transition as we unpack a recent AI-driven purchase by Yum Brands, owner of KFC, Pizza Hut, Taco Bell, and Habit Burger, that may soon propel the fast food conglomerate to the front of the tech race.
Yum Brands Purchase Solidifies Position Among Top Fast Food AI Players
To begin, let’s unpack the Restaurant Business article “Yum Brands Is Buying the Artificial Intelligence Company Dragontail”, which details a recent purchase agreement made by the controlling company of Taco Bell, KFC, and Pizza Hut meant to help bolster kitchen flow automation and delivery driver dispatches.
“... [Dragontail] uses artificial intelligence to automate the kitchen flow process, combined with a process for dispatching drivers,” writes Restaurant Business contributor Jonathan Maze. “The technology can be used with outside food delivery companies—important given that Yum works a lot with third-party delivery providers. Once the deal is complete, Yum will bring Dragontail’s technologies in-house and offer them to its brands around the world over time.”
Yum Brands had already purchased two other AI-driven tech companies just this past year before the Dragontail acquisition. In early March, it bought Kvantum, a digital marketing company that uses machine learning to understand human behavior. Later that month, it purchased a second AI-driven digital marketing company called Tictuk Technologies, which enables online ordering and marketing through chat platforms like WhatsApp. On top of that, these purchases came after record-breaking drive-thru sales by Taco Bell and KFC.
With Dragontail Systems, Yum Brands will have a more complete AI ecosystem for marketing, online order processing, and delivering for all of its major fast-food brands. The big question I have is how effectively Yum will be able to consolidate the data collected across its entire brand portfolio. The combined sales of Taco Bell, KFC, and Pizza Hut barely surpass half of McDonald’s sales. Yet one advantage Yum Brands has is the diversity of the data it’s collecting––it can utilize data from not just one type of fast food location, but can track customers across three different fast-food brands. That could potentially give them more data points to create better-defined customer profiles to target.
Fast Food Game Continues to Evolve with AI
With so many fast-food AI announcements these past few years, it can be difficult to discern which brands have the strongest hold on the market. Many people seem to assume that better tech leads to more sales, which is often true but isn’t always the case. Chick-fil-A had the second-highest fast-food sales in 2020 despite its limited AI capabilities, relying most heavily on its customer loyalty program for sales.
Still, Chick-fil-A seems to be the exception rather than the rule. True modern mastery of customer markets seems to come from a combination of things, from customer loyalty to enhanced tech and, of course, the quality and need of the products or services being sold. Take McDonald's, for example, the Amazon equivalent of the fast-food industry. McDonald’s has been on the cutting edge of fast food AI since the beginning. In 2019, it made its largest acquisition in twenty years with the purchase of a big data voice-tech startup and has spent millions more since transforming itself into an AI company. But it has also maintained a steady customer loyalty program throughout that time, which is likely part of the reason it more than tripled Chick-fil-A’s total sales last year.
So is there actually a formula for company success viable to the moment? Who knows. If there is one, my guess is it’s the embracing of tech + customer loyalty = most likely path. That seems to be the formula Amazon, Apple, and others used to dominate retail. Why not every other industry as well?
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