> No kidding. It's a coin flip every time I pull into a McD's for a chocolate
> shake whether they'll tell me no shake for you because the machine is broken.
> (I actually prefer the Wendy's Frosty, but they're so thick you have to eat
> them with a spoon, which is problematic while driving.)
>
> The article says the machines are manufactured and maintained by a separate
> company which basically holds the franchisees hostage, forcing them into
> expensive maintenance contracts.
>
> McDonald's isn't exactly a tiny burger joint with a razor-thin profit margin.
> If I was running this multi-billion dollar multi-national company, I'd tell
> this other company to screw off and just start manufacturing the shake
> machines in-house. A machine that makes soft-serve ice cream is hardly the
> world's most complex technology. Just set up a manufacturing plant and make
> ice cream machines for your franchisees and then teach them how to do basic
> maintenance on them so they can fix the damn things themselves when they go
> off-line.
UPDATE:
McDonald's Sued for Thwarting Third Party's Solution to Its Broken Ice Cream
Machine Problem
https://www.techdirt.com/2022/03/07/mcdonalds-sued-for-thwarting-third-partys-solution-to-its-broken-ice-cream-machine-problem/
The ice cream machines used by a majority of McDonald's franchise owners are
notoriously flaky. Produced by Taylor Restaurant Equipment, the machines are
so unreliable even the McDonald's corporate Twitter account has made jokes
about them:
@McDonalds: We have a joke about our soft-serve machine we're worried it won't
work.
This unreliability has created a (very small) cottage industry of solutions.
One solution is web-based: it simply tells you which ice cream machines are
down, allowing customers to avoid wasting a trip to their local franchise in
search of a product that can’t be acquired at the moment.
Another solution was created by Melissa Nelson and Jeremy O'Sullivan. It’s
called "Kytch". It’s a phone-sized gadget that unscrambles the purposely
inscrutable error codes generated by Taylor Restaurant Equipment ice cream
machines, allowing franchisees to troubleshoot issues without having to call
in a Taylor service tech at their own expense. It also allows franchisees to
track problem over time to head off future problems and/or address recurring
problems.
Taylor doesn't like this. It has a lucrative contract with McDonald's that
pretty much ensures franchisees are locked into both the machines and their
service contracts. The worse the machines perform, the more money Taylor
makes. McDonald's ensures Taylor's profitability by only allowing certain
equipment to be purchased and used by franchise owners. If owners decide to
use unapproved equipment, McDonald's has the power to terminate contracts and
eject franchisees. In most cases, McDonald's owns the land under the
restaurant, which gives it considerable leverage when it comes to enforcing
contracts.
Kytch had the potential to change the game for franchise owners by saving
money on unneeded service calls and generating more revenue with increased up
time. Taylor didn't care for this at all. It managed to secure a device from
Kytch through some (alleged) subterfuge and set about making its own
(presumably much more expensive) version to sell to franchise owners. It also
secured a lawsuit from Kytch over its anti-competitive behavior and (again,
alleged) deliberate deception. And that lawsuit has resulted in a temporary
restraining order against Taylor-- something that followed the Federal Trade
Commission opening up a preliminary investigation of McDonald's and Taylor's
inability to produce soft-serve ice cream on a regular basis.
Now, it's time for McDonald's to get sued. Kytch's co-founders have filed a
lawsuit against the company, again alleging anti-competitive behavior and
other shady dealings by the most recognizable fast food franchise in the
world. This news comes via Andy Greenberg, writing for Wired:
"Late Tuesday night, Kytch filed a long-expected legal complaint against
McDonald's, accusing the company of false advertising and tortious
interference in its contracts with customers. Kytch's cofounders, Melissa
Nelson and Jeremy O'Sullivan, are asking for no less than $900 million in
damages."
$900 million is a big ask, no matter what the claims are. But Kytch had a
potential market of nearly 20,000 franchises in North America alone. And that
market has been completely destroyed by Taylor Restaurant Machines and its
primary enabler, McDonald's. Rather than allow a third-party to address a
problem Taylor obviously feels is more profitable to ignore, McDonald's and
its soft-serve machinery provider of choice colluded to lock Kytch out of the
market.
Apparently, McDonald's and Taylor believe this is an acceptable failure rate.
(Screenshot taken at 11:00 am CST, March 6, 2022.)
https://i0.wp.com/www.techdirt.com/wp-content/uploads/2022/03/Screenshot-2022-03-06-11.04.58-AM.png?resize=768%2C283&ssl=1
Nearly 13% of the soft-serve machines in the nation are down. And that
percentage is likely on the low side. The rate is much higher in major cities
where a higher number of customers means more accurate reporting of machine
downtime. Unbelievably, this 13% is likely an undercount, what with
less-populated areas having yet to discover the machine is down and/or report
it. And it's unlikely many people is time zones further west are seeking ice
cream at 9 or 10 in the morning.
The first lawsuit filed by Kytch, which targeted alleged Taylor wrongdoing,
has given the company access to a large number of internal communications
between McDonald's and the soft-serve machine maker. And those communications
have indicated McDonald's is at least just as culpable in Kytch's ejection
from the market as Taylor is. In fact, it's beginning to look like McDonald's
did more to lock Kytch out than Taylor did:
Kytch's co-founders have hinted that they intended to use the discovery
process in their lawsuit against Taylor to dig up evidence for a suit against
McDonald's too. In fact, the 800 pages of internal Taylor emails and
presentations that Kytch has so far obtained in discovery show that it was
McDonald's, not Taylor, that at many points led the effort to study and
develop a response to Kytch in 2020. In February of that year, Taylor
president Jeremy Dobrowolski wrote in an email that "McDonald's is all hot and
heavy about this," referring to Kytch's growing adoption. A McDonald's
executive later asked for a conference call with Taylor in June of that year
to discuss Kytch. When McDonald's shared with Taylor a draft of the
Kytch-killing email it planned to send franchisees, a Taylor executive
commented to a colleague that "I am a bit in shock they are willing to take
such a strong position."
This is how the lawsuit [PDF] details just a small portion of the allegations
against McDonald's:
Kytch was the only product on the market that was positioned to fix the
soft-serve machines at McDonald's. Kytch soon gained market dominance after
the largest organization of independent McDonald’s operators-- the National
Owners Association-- endorsed Kytch at its national conference.
McDonald's took note and met with Taylor after the endorsement. According to
Taylor's internal emails, "McDonald's [was] putting all of their eggs in this
basket to fight Kytch" because "[t]hey have nothing else ready from their own
IT Team".
In the days that followed, McDonald's Director of Equipment, Mike Zagorski,
directed that "[t]hings need to go much faster" with Taylor's Open Kitchen
development, which was moving at a "turtle[']s pace". McDonald's also warned
Taylor that independent restaurant operators were demanding that McDonald's
integrate Kytch into the McDonald's system. This threatened to undermine
Taylor's longstanding service and repair racket that the new Open Kitchen
device was being designed to protect. McDonald's and Taylor needed to buy more
time to get Open Kitchen to the market.
To that end, McDonald's and Taylor worked together to create a stall tactic.
Together they fabricated bogus "safety" claims to mislead Kytch's customers
into believing that safety testing determined that the Kytch Solution would
cause "serious human injury" to users--claims that are, and that McDonald's
and Taylor both knew at the time to be, demonstrably false.
Emails sent franchisees from McDonald's corporate offices stated two things:
Taylor was coming up with its own version of Kytch (a "strategic connectivity
solution" that would allow operators to receive text notifications when their
machines went down and provide data on products dispensed) and that franchise
owners using Kytch would "completely void any existing OEM equipment
warranty".
The email also claimed-- literally unbelievably-- that Kytch devices allowed
devices to keep running even when opened for cleaning and repair, which could
lead to employees being injured. Kytch calls bullshit on this claim, which its
refers to as disparagement and defamation of the upstart company.