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Ice cream machine hackers sue McDonald's

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Re: Ice cream machine hackers sue McDonald's

#51

Post by mod »

tfvlrue wrote: post #26

I've been following this story for a while. When people say the soft serve machine is "broken", they really mean "unavailable to serve ice cream to customers". That could mean something as innocuous as performing a pasteurization cycle during the day (because it failed to run at night for some reason, perhaps the machine's clock is set wrong). It could also mean there is a physical problem with some part of the machi…

Honestly, in my area they usually say the machine is "down."

It's always down.

Re: Ice cream machine hackers sue McDonald's

#52

Post by sircastor »

daenz wrote: post #18

>Kytch has argued that Taylor was incentivized to keep its machines broken; repair and maintenance contracts across its business lines accounted for a quarter of the company's revenue stream in 2018, according to a document Taylor published at the time. But Kytch cofounders Nelson and O'Sullivan admit that doesn't explain why McDonald's would similarly seek to prevent a fix for its embarrassing—and expensive—ice crea…

I think the critical relationship here to understand is that it's 3 parties: McDonald's corporation, A McDonald's Franchisee, and Taylor. MCD Corp dictates franchisees must use this machine, which is very unforgiving in it's offline modes the machine may only be fixed by Taylor. McDonald's isn't losing the business, the franchisee is, and they are supposedly getting a kickback of some sort from Taylor. The party that gets the short end of the stick is the Franchisee.

Re: Ice cream machine hackers sue McDonald's

#53

Post by chongli »

tfvlrue wrote: post #26

I've been following this story for a while. When people say the soft serve machine is "broken", they really mean "unavailable to serve ice cream to customers". That could mean something as innocuous as performing a pasteurization cycle during the day (because it failed to run at night for some reason, perhaps the machine's clock is set wrong). It could also mean there is a physical problem with some part of the machi…

It also needs to be said that similar machines provided by Taylor to McDonalds' competitors do not have anywhere close to the amount of downtime that McDonalds' machines have. There's also ample evidence that software updates to Taylor's McDonalds machines have made the error codes more cryptic and the machines more unreliable over time.

I think there's a pretty strong legal case to be made that these machines are deliberately designed to break down in order to drive repair service revenue for both Taylor and McDonalds at the expense of franchisees. Unfortunately, franchisees seem to be locked up under binding arbitration clauses in their franchise agreements. Luckily for consumers, 3rd party vendors aren't subject to these contracts.

Re: Ice cream machine hackers sue McDonald's

#54

Post by m0llusk »

Macdonald's wants to own the machines and owning maintenance is part of that. They do roughly the same thing with McCafe machines that arguably compete with Starbucks and others. The most likely explanation is that these ice cream machines have turned out to have serious reliability problems that have so far not been addressed.

Re: Ice cream machine hackers sue McDonald's

#55

Post by gorkish »

daenz wrote: post #14

Kytch built a device that gave the ice cream machines remote debugging. They sold them to franchises. McDonalds got weird about this and told franchises that they weren't safe, and that they've got a new ice cream machines that already has that feature. Then McDonalds reached out to other companies and said not to use the startup's device. The startup wants $900M because "that's what we would've been worth" if McDona…

> How can a startup afford this? Do they work out some agreement with lawyers to only pay when they win?

On a case like this it's probably even more sophisticated than that; they probably ran a process where many law firms pitched to represent them and competed on their contingency fees.

Re: Ice cream machine hackers sue McDonald's

#56

Post by cletus »

I really don't understand how McDonald's board and leadership has let this situation happen and continue.

These ice cream machines are the printer cartridges of McDonald's. Pointless DRM and obfuscation designed to maximize authorized call outs (with associated costs). Now you can argue taht McDonalds gets a cut of that (which may or may not be true; I just don't know) but all of this comes at the cost of customer experience and brand perception, which are two things McDonald's very much does care about. That's why I'm surprised they've let this go on for so long.

I really have trouble believing the board is unaware of this issue and have chosen not to resolve it.

Re: Ice cream machine hackers sue McDonald's

#58

Post by RcouF1uZ4gsC »

I am actually on McDonalds’ side in this.

Many of the startups have made a lot of their money by arbitraging regulation and safety (see Uber , AirBnB, Tesla self driving).

McDonalds is a company that literally serves billions of people. If there is any food borne illness, it can literally kill people and it will be front page news all over. As such, McDonalds keeps a very tight lid on what franchisees are allowed to do.

Installing an unauthorized addition to a very safety critical equipment (soft serve can easily harbor very nasty bacteria) which potentially enables people to do unauthorized diagnosis and work on machines they may or may not understand is a recipe for disaster at McDonalds’ scale.

Is this a cool device? Yes. Should you install a hack on something that can make thousands of people very sick? Probably not.

Re: Ice cream machine hackers sue McDonald's

#59

Post by karaterobot »

Huh. I guess I'd be surprised if McDonald's franchise license didn't allow them to just say "stop using Kytch, because we said so". So, why do anything more than that, as is alleged? Is it just that Kytch is mainly suing for discovery and/or settlement rather than because they think they'll win?

Re: Ice cream machine hackers sue McDonald's

#60

Post by daenz »

sircastor wrote: post #52
daenz wrote: post #18

>Kytch has argued that Taylor was incentivized to keep its machines broken; repair and maintenance contracts across its business lines accounted for a quarter of the company's revenue stream in 2018, according to a document Taylor published at the time. But Kytch cofounders Nelson and O'Sullivan admit that doesn't explain why McDonald's would similarly seek to prevent a fix for its embarrassing—and expensive—ice crea…

I think the critical relationship here to understand is that it's 3 parties: McDonald's corporation, A McDonald's Franchisee, and Taylor. MCD Corp dictates franchisees must use this machine, which is very unforgiving in it's offline modes the machine may only be fixed by Taylor. McDonald's isn't losing the business, the franchisee is, and they are supposedly getting a kickback of some sort from Taylor. The party that…

If a kickback exists, that makes sense. But wouldn't the kickback have to be quite high to be worth the risk that McDonalds is opening themselves up to? I haven't looked at the Taylor financials, but the service contracts are supposedly 25% of their business, so a kickback is some % of that... but I'm having trouble seeing how it is worth the risk to McDonalds.

Which is why I think it has more to do with competition, and that there is no kickback. In that scenario, the incentive to McDonalds is that they can have more franchises that are successful, which means more money flowing back into the corporation. I imagine this gain would be higher than any kickback they could receive from Taylor.

EDIT>> I just realized that the competition scenario might not make any sense. Taylor wants service contracts. McDonalds wants the ability to make ice cream, and ideally have the machines work. The only way McDonalds is incentivized to not have the machines work is if there is either some leverage that Taylor has over McDonalds or if there is a kickback.

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