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McDonald's Moves Closer to Robot Drive-Through Lanes

The fast-food giant is expanding its AI experience by adding automated drive-through lanes to more locations.

People cost money and they make mistakes. Automation has a big upfront cost, but once it's in place, it generally costs much less to maintain than hiring human workers.

That's why McDonald's (MCD) - Get McDonald's Corporation Report made installing ordering kiosks and building out mobile ordering via its app a key part of its Experience of the Future program. People can input an order into a tablet or their phone making it as complicated as they want without having to hope that an actual human being gets it right.

And, of course, while McDonald's never cites this as a reason for automating, people may order more when they don't have to verbalize what they're getting to another person. 

Digital ordering takes shame out of the equation and likely explains why the fast-food chain has higher tickets for orders placed for delivery and via kiosks.

Now, McDonald''s plans further automation as part of its partnership with IBM (IBM) - Get International Business Machines Corporation Report as it plans to expand a pilot program to automate its drive-through lanes.

The two iconic brands began working together in October with the technology being rolled out at just a few locations in and around Chicago. Automated drive-through lanes are now being tested at more McDonald's locations, Popculture reported.

McDonald's With a Side of IBM Watson

IBM acquired McDonald's McD Tech Labs in October, with the two companies saying that the sale made sense as part of a plan to "to further accelerate the development and deployment of its Automated Order Taking (AOT) technology," according to a joint statement.

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McDonald’s development and testing of AOT technology in restaurants has shown substantial benefits to customers and the restaurant crew experience. Moving forward, IBM’s expertise in building customer care solutions with AI and natural language processing will help scale the AOT technology across markets and tackle integrations including additional languages, dialects, and menu variations.

As part of the deal, the McD Tech Labs team joined IBM.

More Robots Equal Fewer Workers

McDonald's automation efforts are ramping up as the company faces a fierce battle for a relatively limited pool of available workers. That has forced the chain to raise wages at its company-owned stores, which it detailed in a press release.

McDonald’s will be raising hourly wages for more than 36,500 hardworking employees at McDonald’s-owned restaurants by an average of 10 percent. These increases, which have already begun, will be rolled out over the next several months and include shifting the entry-level range for crew to at least $11 - $17 an hour, and the starting range for shift managers to at least $15 - $20 an hour based on restaurant location.

That still leaves wages below many of its rivals for workers which includes not just other fast food brands, but also Walmart (WMT) - Get Walmart Inc. Report and Target (TGT) - Get Target Corporation Report, which have adopted higher entry-level pay across the board. 

McDonald's also does not control what its franchisees pay workers. 

Automating the drive-through could lead to the need for fewer workers in its stores. That, however, is not always the case — Starbucks (SBUX) - Get Starbucks Corporation Report has greatly increased automation in its stores over the past few years but has not reduced employee headcount. Instead, it has shifted workers into customer service and drink production.