- Pizza Hut introduced Dragontail, an AI delivery system, to improve pizza delivery efficiency
- Chaac Pizza Northeast sued Pizza Hut, claiming Dragontail caused delays and customer dissatisfaction
- Before Dragontail, over 90% of deliveries were under 30 minutes with strong sales and satisfaction
With artificial intelligence (AI) entering almost every aspect of daily life, many companies are turning to AI tools to improve speed and efficiency. So, Pizza Hut introduced an AI-powered delivery system to modernise pizza delivery, but it did not go as they expected.
In a lawsuit filed on May 6 in the Texas Business Court, as reported by Business Insider, franchisee Chaac Pizza Northeast accused Pizza Hut of forcing stores to use Dragontail, an AI-based delivery management system designed to “optimise” deliveries. However, the new system allegedly turned the once-speedy deliveries into long waits, customer dissatisfaction and potential loss of millions of dollars.
Chaac, which operates around 111 Pizza Hut restaurants across New York, New Jersey, Maryland, Washington DC and Pennsylvania, said more than 90% of its deliveries were completed within 30 minutes before Dragontail was introduced in 2024. Sales and customer satisfaction also remained strong. However, the franchisee now said that the performance dropped sharply after the rollout.
They mentioned that the system caused “cascading operational breakdowns and customer dissatisfaction” after it provided DoorDash drivers with real-time visibility into kitchen operations and order timing. This has caused them a loss of around $100 million.
ALSO READ | Google to Create AI Cloud Business With Blackstone
In the lawsuit, the franchisee alleged that DoorDash drivers began waiting to combine multiple orders rather than delivering completed pizzas immediately. The drivers could reportedly see when pizzas would be ready and waited “up to 15 minutes” for additional deliveries before leaving the store. This led to delays in deliveries, customer dissatisfaction, and a major drop in sales.
"With the intention to improve efficiency and service to the customer, Dragontail did the exact opposite. It caused significant delays and pummeled consumer satisfaction," the franchisee said in the lawsuit.
According to the lawsuit, Pizza Hut failed to properly train franchise operators, ignored requests for help, and continued to require stores to use the software. In New York City alone, the franchisee said yearly sales growth dropped from positive 10.19% to negative 9.78% after the system launched.
Chaac is now seeking more than $100 million in damages, plus fees for attorneys. In a statement shared with the aforementioned outlet, Pizza Hut said it is reviewing the claims and would respond "through the appropriate legal channels” but declined to comment further.
ALSO READ: HCL Tech Warns 43% Enterprise AI Initiatives May Fail
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.