5 days What does fast food want with Nvidia? Fast Company

Fast food giant Yum Brands has worked for years to distance itself from third-party tech partners. Last week, it made the ultimate power move: a development deal with Nvidia, a tech giant consistently ranked among the most valuable companies in the world.

“We want to own the intellectual property. We want to own the technology,” Yum Brands chief digital and technology officer Joe Park told the Wall Street Journal. “That’s a shift in our strategy as we think about AI.”

In other words: Yum knows its strength and wants full control over its own data. The company will build more services for its 61,000 restaurants with Nvidia’s tech with the goal of quickly processing and understanding critical information about store-level performance and giving managers personalized action plans.

Yum Brands owns fast food powerhouses Taco Bell and KFC along with delivery stalwart Pizza Hut and its more recent acquisition, a less-known burger concept called Habit Burger. It says it’s Nvidia’s first restaurant partner, an important distinction in what could become a restaurant-tech land grab.

The restaurant industry has been historically slow to deploy new tech, but seems to be excited about AI. According to data from the National Restaurant Association, about a third of restaurant operators plan to invest in AI for operations this year — a significant increase from the year before.

Of course, Park is quick to tell the WSJ, all of this new tech won’t replace human workers. Instead, he says, they’ll be trained on “a different form of service and hospitality than I think we’ve seen in the past.”

(This is a common refrain from industry execs who promise employees will augment new tech, freed up to provide additional human connection inside restaurants. In tandem, the execs celebrate the efficiency and reduced labor costs that tech brings to their operations.)

Yum hasn’t been shy about its desire to use tech to win. In 2023, it shared an aggressive sales target, albeit without a timeline: it wants all of its sales to come through digital channels. Digital ordering carries a host of benefits, including a restaurant’s ability to collect real-time data. Additionally, consumers tend to spend more when they place orders digitally thanks to smart upsells and better order accuracy.

It’s made some progress toward that goal. In 2024, the company’s system-wide digital sales were up 15%, representing over half of sales. In the fourth quarter alone, it processed $9 billion in digital sales.

Given the huge growth potential (and massive amount of money involved), Yum’s right to hold its own ordering data close. It’s a lesson the company may have learned the hard way. In 2018, Yum signed an exclusive deal with Grubhub, the onetime national leader in online ordering and delivery. Grubhub would power delivery at both Taco Bell and KFC, and Yum invested $200 million in Grubhub, a 3% stake.

The deal flamed out rather spectacularly just two years later. Yum, realizing the delivery tailwind thanks to the onset of the pandemic, started working with competing delivery services like Uber Eats, which Grubhub said violated the terms of their agreement.

In hindsight, this was Yum’s first big digital flex: We’re too big and powerful to be constrained by your platform, it seemed to say. When Grubhub moved to increase the fees it charged Yum’s restaurants, Yum sued Grubhub for breach of contract, eventually offloading its investment for a reported $208 million.

The Nvidia deal, on paper at least, should accelerate Yum’s next transition. To start, it will use the tech to add voice AI to its drive-thrus and phone lines, targeting a relatively modest 500 restaurants in the second quarter of this year. Eventually, Park says, they’ll use the tech to optimize all ordering channels, including the company’s mobile apps, and hone in on in-store productivity and accuracy with Nvidia-powered computer vision.

—Kristen Hawley