A new lawsuit is just the latest example of why AI probably shouldn’t be used for everything. A Pizza Hut franchisee claims the chain’s AI-powered delivery system, meant to optimize orders and speed up deliveries, instead backfired and cost it more than $100 million.

Earlier this month, in the Texas Business Court, Chaac Pizza Northeast sued Pizza Hut after its restaurants were forced to use an AI delivery management platform known as Dragontail.

Pizza Hut’s parent company, Yum! Brands, acquired Dragontail Systems in 2021. 

Chaac Pizza Northeast operates more than 100 Pizza Hut locations in New York, New Jersey, Maryland, Washington, D.C., and Pennsylvania. The company alleges that before it adopted Dragontail, more than 90% of its pizza deliveries arrived within 30 minutes of an order being placed and that it consistently received high satisfaction scores from customers.

But Chaac claims the system’s rollout caused “cascading operational breakdowns and customer dissatisfaction.” 

The main issue appears to be that Dragontail gave DoorDash delivery drivers access to real-time status, workflow, and order timing. Chaac alleges that some drivers used that information to wait up to 15 minutes in the restaurant for additional orders, leaving pizzas sitting out after they came out of the oven and resulting in longer delivery times.

Those delays and disappointed customers allegedly caused sales to nosedive.

Chaac Pizza Northeast claims its year-over-year sales growth in New York City fell from 10.19% to -9.78% after the system was implemented.

The company is now seeking more than $100 million in damages.

Pizza Hut did not immediately respond to a request for comment from Gizmodo.

The lawsuit comes as Pizza Hut has been struggling nationally. Yum! Brands announced in February that it plans to close 250 Pizza Hut locations. The company also said it was considering selling the chain last year.

Pizza Hut isn’t the first fast-food chain to adopt AI tech with mixed results.

Burger King made headlines earlier this year when it rolled out a new AI-powered management platform in its restaurants that keeps an eye on everything from when menu items are running low to complaints about dirty bathrooms, and even how employees interact with customers. The system even gave locations and shifts “friendliness scores.” 

McDonald’s, Wendy’s, White Castle, and Taco Bell have also tested or used AI in drive-thru ordering in recent years. Taco Bell quickly decided to retreat from the strategy after it found the public really liked messing with the AI by doing things like asking for “18,000 cups of water, please.”

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Burger King is rolling out a new AI-powered management platform in its restaurants that keeps an eye on everything — and we mean everything — from when menu items are running low to complaints about dirty bathrooms, and even how employees interact with customers.

The BK Assistant platform pulls together data from across restaurant operations, including food inventory, kitchen equipment, the point of sale system, employee schedules, and drive-thru conversations. It also includes a voice-enabled chatbot called Patty that workers can interact with directly through their headsets.

“At the core of BK Assistant is ‘Patty,’ a voice AI that lives inside cloud-connected headsets and is powered by an OpenAI base model with the brand’s proprietary in-house architecture,” a Burger King spokesperson told Gizmodo in an emailed note about the new assistant.

During an investor presentation on Thursday, the President of Burger King U.S. & Canada, Tom Curtis, tried to frame the platform as an assistant for managers and employees that leverages “real-time data in our restaurants to improve the lives of our team members.” But the tech admittedly sounds like it could veer into dystopian big brother terrority very quickly.

For instance, the system always seems to be listening for specific phrases during customer interactions to generate a friendliness score.

Burger King Chief Digital Officer Thibault Roux told The Verge the company collected feedback from franchisees and guests about how to measure friendliness. Using that data, the AI assistant was trained to recognize phrases such as “welcome to Burger King,” “please,” and “thank you.”

With this tech, managers can ask Patty for a friendliness score for a specific location or shift. But whether employees will embrace an always-listening, Alexa-like bot that follows them all day and dishes out a friendliness score to their boss remains an open question, especially when the metrics behind that score are pretty unclear. The phrase “friendliness score” itself sounds like something lifted straight from an authoritarian regime.

Still, Roux told The Verge, “This is all meant to be a coaching tool.”

Burger King demonstrated the system in a video shown at its parent company, Restaurant Brands International’s investor event, showcasing the range of tasks the BK Assistant can handle and everything it monitors.

In the video, Patty alerts workers when the soda machine is low on Diet Pepsi, flags that the women’s bathroom needs cleaning, and helps a worker assemble an Ultimate Steakhouse Whopper. It also notifies staff when they are one order away from hitting an upsell goal.

The system can also automatically remove items from in-store menus, drive-thru boards, and delivery apps when ingredients are out of stock or when equipment, like a milkshake machine, is down for maintenance.

Curtis said the BK Assistant platform is already operational in roughly 500 restaurants and will roll out to all 7,000 locations by the end of the year.

It remains to be seen how well the platform will work at scale and how workers will adapt to an omnipresent digital manager that seems able to keep an eye on everything going on in the restaurant.

This also isn’t the first time fast-food chains have experimented with AI. Companies including McDonald’s, Wendy’s, White Castle, and Taco Bell have been using AI in drive-thru ordering in recent years, often with mixed results. Last year, Taco Bell said it was retreating from the strategy after it found the public really liked messing with AI by doing things like asking for “18,000 cups of water, please.”

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