In headline and paragraph 14, changes description of AI function to "tool"/"assistant" from "coach"

By Waylon Cunningham

March 6 (Reuters) - Tacos with a heavy serving of AI, please.

That's what Yum Brands' YUM.N Taco Bell chain served up to Wall Street this week, the most recent effort by a major fast-food chain to promote newfangled labor-saving technology.

Executives at Yum and Taco Bell showcased their "Byte by Yum" artificial intelligence-powered tools for restaurant managers, disclosing on Tuesday at a Yum investor event in Brooklyn, NY, that it has invested $1 billion into digital and technology.

Use of AI is "already beginning around labor and inventory," said Dane Mathews, Taco Bell's Chief Digital and Technology officer, at the event.

To demonstrate its current and planned use of AI technology, Chief Operating Officer Jason Kidd showed Wall Street analysts a video skit with a restaurant manager talking to a human character playing the role of an AI assistant, which Yum calls Byte AI Restaurant Coach.

"I noticed Brad hasn't clocked in yet for his shift, and you're heading into your last shift crew for the night," an actor playing the AI assistant says, addressing the Taco Bell manager.

"Maybe he's out sick. Don't worry if he is. I can work the drive-through," the AI character tells the manager.

About 500 Taco Bell U.S. locations have AI voice technology to take drive-through orders, according to a slide that the executives showed following the skit. That is up from the roughly 100 locations that Yum cited in July 2024.

One analyst, from Morgan Stanley, called Yum's video skit "very cool and slightly unsettling." Yum's Chief Technology Officer, Joe Park, said Taco Bell does not plan to use AI to reduce its labor costs, but rather to free up its employees to do other tasks.

'LONG ROAD AHEAD'

Fast food corporations are increasingly turning to tech to overhaul a business model that until recently had remained the same since the 1940s. The last decade or so has seen a proliferation of kiosks, digital menus, apps, AI-assisted drive-throughs, and loyalty programs.

Chipotle's CMG.N $100 million venture fund has helped spur its efforts to partially automate its kitchens. McDonald's MCD.N announced in 2023 a partnership with Google Cloud to in part deploy AI tech to its locations, though that backfired for a day in 2024 when system outages made ordering impossible in some of its largest markets.

At Yum, Mathews said there is "still a long road ahead of us." Nearly 25,000 of Yum's 61,000 restaurants globally use one of its in-house "Byte by Yum" tech products, Yum said in a February 6 statement.

In the Taco Bell skit, the character playing the manager's AI-assistant computes that a worker has been scheduled for fewer than her usual weekly hours, and prods the manager to "see if she wants to stick around the next hour" to reduce customer wait times.

Also noting that a "competitor down the street" reduced its hours of operation, the AI assistant suggested that the manager expand his own restaurant's hours, citing a surge in late night sales. The AI assistant offered to help the manager calculate inventory. "Awesome, that's a real time-saver," the manager says in the skit.

A Yum spokeswoman did not immediately reply to a request for comment on whether AI is currently performing these tasks at any Taco Bell locations, or if the skit only showed its future ambitions.

Yum disclosed a projected 8% increase in Taco Bell same store sales in the current quarter.

Yum's in-house software suite "really excited us," Bernstein analysts who attended the event said in a note for investors. Yum could potentially one day sell the software "outside the Yum ecosystem," they said.

(Reporting by Waylon Cunningham; Editing by Muralikumar Anantharaman)

((Waylon.Cunningham@thomsonreuters.com;))