You don’t want to know “it’s AI taking your order”
You won’t hear the friendly voice of Wendy’s ( WEN ) CEO Todd Penegor booming through the burger chain’s new AI-powered drive-thrus.
“You won’t even know it’s AI taking your order, but you’ll be talking in the voice of Wendy’s,” Penegor said on Yahoo Finance Live (video above), saying, “It’s not my voice, God help us . “
But over time, you’ll likely hear a welcoming automated voice from a huge digital screen at the Wendy’s drive-thru. And that could unlock slightly fatter profits – and a higher share price ̵[ads1]1; for the square burger seller.
Wendy’s will officially roll out an automated drive-thru in June at a company-owned location in its home market of Columbus, Ohio. The digital ordering screen will be powered by natural language software made by Google (GOOG, GOOGL).
Google’s software is designed to understand how consumers order from the menu, meaning it makes compelling suggestions to buy more. It’s better known in restaurant land as “upselling” a customer.
The technology will also go a long way toward improving food quality at Wendy’s and drive-thru times, which could prove to be welcome news for hungry, rushed fast-food patrons.
“Now we’re really thinking about how to take some of the friction out and make the experience even more seamless at our restaurants,” Penegor explained of the initiative. “How do we enable our employees to succeed and make their lives a little easier in the restaurant? Get them positioned to work the grill station? Get them positioned to make hot and juicy hamburgers quickly and accurately every time? That’s what we’re trying to do to do.”
Wendy’s will likely look to automate more of its drive-thrus to keep up with technological changes in generative AI and an evolution in how diners interact with Frosty King.
Penegor is of course optimistic about the potential. He said the company is thinking through how to create a smarter digital menu board, connect it to Wendy’s loyalty program, create more personalized menus and get consumers to trade in their purchases.
“It’s all possibilities,” Penegor explained. “A little further away, obviously, but you have to start laying the pipes in the platforms today to really bring all this to life.”
For Wendy’s, its AI initiatives add another good story to tell investors after a mixed year of results in 2022.
Wendy’s said Wednesday that same-store sales in the U.S. rose 7.2% in the first quarter on the back of premium-priced burgers. Higher menu prices also played an important role.
The number of customers increased every month in the quarter. Meanwhile, international same-store sales rose by 13.9%.
Wendy’s stock rose 1% Thursday morning. The stock is up 1.6% year-to-date, compared with a 7% gain for the S&P 500. McDonald’s ( MCD ) is up 11.7% year-to-date amid a sizzling global selloff.
To keep growth going and jump-start its share price, Penegor told Yahoo Finance that Wendy’s will expand its overnight hours this summer, promote breakfast items more and introduce new premium-priced sandwiches.
The Street is on board with all of this as possible share price catalysts.
“One-to-one marketing distribution, digital and loyalty program expansion, increased staffing and service speed, and expansion of late-night part-time are just too attractive to simply yield flat traffic over the next 2 years (guidance), Wendy’s bull and Bernstein- analyst Danilo Gargiulo wrote. “With this outstanding potential, the stock trading at its 5-year low and with a dividend yield of 4.4%, we cannot possibly be neutral on the stock.”
Penegor believes that there are near-term fundamentals where investors should be focused right now, with automated drive-thrus being more of a future earnings driver.
“We are not an AI stock,” Penegor added. “I see us as an innovation company.”
Brian Sozzi is Yahoo Finance’s managing editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Advice on agreements, mergers, activist situations or other things? Email brian.sozzi@yahoofinance.com
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