McDonald's to end AI drive-through test with IBM

McDonald's is changing course on its artificial intelligence plans.

The fast-food giant will end a test run of its AI drive-through technology partnership with IBM in more than 100 restaurants. The so-called Automated Order Taker will be shut off no later than July 26, according to a memo sent to franchisees late last week, obtained by CNBC.

The global AI partnership began in 2021. The combination of technologies from the two companies aimed to simplify and speed up operations with voice-activated ordering.

"While there have been successes to date, we feel there is an opportunity to explore voice ordering solutions more broadly," said the franchisee memo from Mason Smoot, senior vice president and chief restaurant officer for McDonald's U.S. "After thoughtful review, McDonald's has decided to end our current partnership with IBM on AOT. … IBM remains a trusted partner and we will continue to utilize many of their other products across our system."

Two sources familiar with the technology told CNBC that among its challenges, it had issues interpreting different accents and dialects, which affected order accuracy. McDonald's declined to comment on accuracy or technology challenges, while IBM did not immediately respond to a request to comment on the tool's accuracy.

The decision comes as restaurants from Del Taco to Wingstop to Panera and more have been testing out various ways to use AI, from front to back of house as a way to streamline operations. Chipotle and Yum Brands have also been leaders in both robotics and AI investments in recent years.

In a statement, McDonald's told CNBC it is not ruling out potential AI drive-through plans in the future, even though it ended the IBM partnership.

"As we move forward, our work with