Starbucks retires – Starbucks is retiring an AI inventory-counting tool after inaccurate counts and mislabeled products, while a Pizza Hut franchisee has sued over an AI delivery system that allegedly pushed wait times above 45 minutes and contributed to lost business worth at le
On Monday, an internal Starbucks message told employees that an AI tool meant to automate inventory counts would be taken out of service. The reason was blunt: it was generating inaccurate counts and mislabeled products.
“Starting today, Automated Counting will be retired,” Starbucks told employees, in an internal company newsletter verified by Reuters. “Beverage components and milk will now be counted the same way you count other inventory categories in your coffeehouse.”
Starbucks framed the decision as part of its approach to artificial intelligence—testing ideas in stores. listening to partner feedback. and then changing course when results miss expectations. In a statement to Fast Company. a spokesperson said the company is “based on trial and error. ” adding that it “test[s] ideas in our coffeehouses. listen closely to partner feedback. and make changes to deliver a better. more consistent experience.”.
That retirement does not mean the company is stepping away from AI entirely. Starbucks said it is still investing in internal AI applications. including an AI assistant for baristas called Green Dot Assist and an AI-powered order-sequencing system called Smart Queue. The company is also experimenting with an integrated Starbucks app within ChatGPT.
Pizza Hut’s AI trouble, however, is not coming from a corporate memo. It began with a franchisee who says an AI system was forced into its operations and backfired.
In a lawsuit filed on May 6. franchisee Chaac Pizza Northeast—an operator of more than 100 Pizza Hut locations—alleged that Pizza Hut required it to adopt an AI tool called Dragontail. The franchisee claims the system inadvertently pushed average wait times from under 30 minutes to over 45 minutes in more than half of all orders.
The complaint argues that the problem wasn’t Dragontail itself, but the information the tool provided to DoorDash drivers. Dragontail is meant to optimize food delivery by giving delivery drivers real-time updates on order preparations and timing. Yet the lawsuit says its implementation in 2024 triggered “cascading operational breakdowns and customer dissatisfaction. ” contributing to “more than an estimated $100 million in lost business and enterprise value.”.
The filing describes a specific failure mode: once DoorDash drivers could see real-time status updates for multiple orders through Dragontail. the drivers would wait inside restaurants until several orders were ready. That. according to the lawsuit. meant some orders were being held for up to 15 minutes after they were ready for delivery.
Because Chaac Pizza Northeast relies on DoorDash for all deliveries, the franchisee said the impact showed up in sales. At its New York City locations, Chaac alleged, sales shifted from positive 10.19% to negative 9.78% after implementing Dragontail.
“With the intention to improve efficiency and service to the customer, Dragontail did the exact opposite,” the lawsuit stated. “It caused significant delays and pummeled consumer satisfaction.”
Pizza Hut did not respond to Fast Company’s request for comment.
In the span of a week, the two stories—one corporate, one legal—have turned into a talking point online. Social media users are connecting Starbucks’s decision to retire an AI tool and Pizza Hut’s fight with a franchisee over an AI delivery system. arguing that the incidents may signal a broader shift.
One X user wrote that “over the next 1-2 years we’re going to start hearing more reports about companies pulling back from AI than adopting AI. and markets aren’t ready.” Another said “the AI bubble might burst quicker than I thought.” A third user argued that “you’re going to be hearing a lot more about forced AI integration and what a disaster it is for businesses and consumers.”.
Others focused on the basic premise of the failures: that problems might have been avoided if the tasks hadn’t been handed to AI in the first place. “To err is human,” one person quipped, “but to really screw things up, you need a computer.”
The common thread running through both incidents is not that AI exists. or that it is inherently useful. but that real-world operations—counting inventory accurately. coordinating delivery timing across platforms—leave little margin for error. For Starbucks. the response was immediate: an AI inventory tool was retired and counting reverted to a method employees use for other inventory categories. For Pizza Hut. the response is far less clean: a franchisee is in court alleging that an AI-driven delivery workflow cost time. customer trust. and substantial business value.
Starbucks Pizza Hut artificial intelligence AI inventory tool Automated Counting Green Dot Assist Smart Queue Dragontail DoorDash franchise lawsuit consumer dissatisfaction delivery delays business impact
So basically AI counting was trash and mislabeled milk?? I knew it.
Smart Queue sounds like it would help but then they’re still messing up. If the AI can’t even count inventory right, what are we doing.
I don’t get it, Starbucks retires one AI tool but says it’s still investing in AI for baristas. Like… won’t the rest mess up too? Also Pizza Hut lawsuit because wait times hit 45 min… isn’t that just delivery being delivery? Feels like they blame the robot when it’s the workers.
Wait, Pizza Hut “forced” them to use Dragontail? Sounds like corporate trying to control everything again. If AI order sequencing makes your wait times longer, that’s on the system not the franchisee. But knowing lawsuits, they’ll probably still settle and nothing changes, just more software names.