A lot goes into getting that warm pizza to your doorstep. Dough is kneaded, toppings are sprinkled, ovens are fired up, and cars hit the road. Did we mention there’s an AI pulling all the strings?
That’s the case at Pizza Hut, at least, and not everyone’s happy about it. One of the pie-slinging chain’s largest franchisees in the country is suing the parent company over its mandatory deployment of an AI-powered kitchen management and delivery system that’s been so disastrous that it’s allegedly caused the franchisee to lose over $100 million, according to the lawsuit.
The franchisee, Chaac Pizza Northeast, operates 111 Pizza Hut locations on the East Coast, including in New York, New Jersey, and Washington, DC. In the suit filed earlier this month, Chaac accused Pizza Hut HQ of forcing stores to adopt Dragontail, a back-of-house management system that the company boasts is powered with “true AI throughout” and provides “AI scheduling for delivery/service.”
But Chaac claims that its operations are more jumbled than ever because of the AI system. Before adopting Dragontail, more than 90 percent of its deliveries arrived on a customer’s doorstep within 30 minutes, it claimed in the lawsuit, per Restaurant Business. After adopting it in 2024, that dropped down to just 50 percent, and the “rack time,” the amount of time a pizza spends outside of an oven in the store, jumped from less than five minutes to up to 20. That led to the two most chilling words in the pizza delivery biz: “colder product,” the lawsuit said.
A lot of this comes down to the way the AI system handles DoorDrash drivers, the suit argues. Before, the franchisee manually inputted orders into DoorDash for deliveries and had its own contract with the delivery app. Now, Pizza Hut has an official national partnership with DoorDash. Paired with the AI-powered Dragontail system, DoorDash drivers get to see real-time info on the kitchen workflow, according to Business Insider’s coverage. As a result, the suit alleges, drivers will wait up to fifteen minutes so they can take multiple orders, delaying deliveries and chilling the chain’s precious pies.
Chaac claims Pizza Hut breached its franchise agreement by forcing its restaurants to keep using Dragontail despite it “materially degrading delivery metrics” and customer satisfaction, per Restaurant Business. After adopting Dragontail, it says, its year-over-year revenue growth in New York City inverted on itself from over 10 percent to around negative 10 percent.
Shoddy “AI” implementation mandated from above that turns exploited gig workers into the enemy — it’s a timely reflection of our current optimization- and automation-obsessed moment. It’s also another chapter in the idiotic saga of restaurants trying to adopt AI that they don’t need, like Taco Bell’s flubbed AI drive-thru. If Pizza Hut is ever to return to its salad-bar days, its weird insistence on using AI probably won’t be the reason why.
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