Presto Automation Inc. provides enterprise grade AI and automation solutions to the restaurant enterprise technology industry. The company offers its AI solution, Presto Voice, to quick service restaurants (QSR) and its pay-at-table tablet solution, Presto Touch, to casual dining chains. Some of the most recognized restaurant names in the United States are among the company’s customers, including Carl’s Jr., Hardee’s, Del Taco and Checkers for Presto Voice and Applebee’s, Chili’s and Red Lobster...
Presto Automation Inc. provides enterprise grade AI and automation solutions to the restaurant enterprise technology industry. The company offers its AI solution, Presto Voice, to quick service restaurants (QSR) and its pay-at-table tablet solution, Presto Touch, to casual dining chains. Some of the most recognized restaurant names in the United States are among the company’s customers, including Carl’s Jr., Hardee’s, Del Taco and Checkers for Presto Voice and Applebee’s, Chili’s and Red Lobster for Presto Touch.
As of June 30, 2023, the company had shipped over 277,000 Presto Touch tablets to three of the largest casual dining chains in the United States.
The company provides restaurant operators with solutions to these challenges. First, the company’s solutions allow restaurants to operate efficiently with fewer staff in drive-thrus and in-store restaurants. Second, customers report that the company’s solutions allow them to improve staff retention rates by reducing the cognitive load and stress on them.
Solutions
Presto Voice
The company’s Voice AI solution, Presto Voice, completes complex orders, including large orders with multiple menu modifications and add-ons, with limited on-site restaurant staff intervention. Presto Voice greets the guest, takes her or his order, populates the order in the restaurant’s point of sale (POS) system and delivers the order to the restaurant’s Kitchen Display System (KDS). The company’s end-to-end solution is designed to integrate with a restaurant's existing technology and not require the restaurant operator to make major changes to its existing technology stack.
Presto Voice enables orders to be processed with improved accuracy and improves the guest experience by allowing the restaurant staff to build the order using the KDS while Presto Voice finalizes the order with the guest. Presto Voice strives to increase check sizes with automatic upselling functionality. Presto Voice offers upsells on nearly 80% of orders in the drive-thru, with upsells accepted by the guest nearly 35% of the time, resulting in additional revenues to the restaurant. Presto Voice benefits the restaurant staff as well. The platform removes one of the restaurant staff’s previous responsibilities (taking the order through the headset), allowing them to enhance their performance in other areas, including order assembly.
Presto Touch
The company’s Presto Touch pay-at-table tablet solution enables self-serve ordering, payment processing, personalization and gaming experiences for restaurant guests. Presto Touch provides significant value to restaurant operators and guests alike by allowing restaurants to operate dining rooms with fewer staff, personalizing guest experiences and providing more guest insights to the restaurant’s marketing team. Presto Touch increases the server’s efficiency, thereby increasing the number of tables each server can service and, therefore, tips available per server.
Presto Touch provides guests with the opportunity to purchase premium gaming content during the dining experience. The company controls the associated gaming licenses and work with its restaurant customers to establish the end price charged to the guest. The company also generates revenue from professional services, consisting primarily of fees from installing its products and from developing premium content used on the pay-at-table devices. Presto Touch offers Wi-Fi and LTE connectivity. Its front and rear cameras enable coupon scanning. Presto Touch hosts a wide range of payment options and is PCI-DSS compliant. In addition, Presto Touch offers the latest EMV and mobile payment technologies, as well as the ability to split checks.
In 2023, the company launched a next generation hardware solution that enhances the capabilities of Presto Touch. This new solution has multiple batteries and removes the pin pad which will assist in the device’s longevity.
Technology
Voice AI Technology
The company began developing its own AI technology platform, Presto Voice, in 2020. As of June 30, 2023, the company had implemented this technology at Del Taco, Carl’s Jr. and Hardee’s, as well as other restaurant brands that are currently in pilot. Like most AI systems, Presto Voice relies on a combination of machine learning and human collaboration to achieve optimal outcomes for the customer, including order accuracy, improved operating efficiencies and consistent upselling.
The key elements of the company’s AI solution consist of:
Automatic Speech Recognition (ASR) and Text-To-Speech (TTS) Engines: ASR engines decipher spoken orders from guests and convert the spoken orders into text for further processing. Following the processing, TTS engines convert the output into a human-like voice for interaction with guests. The company’s ASR and TTS engines are based on a widely licensed third-party platform that it has customized significantly.
Natural Language Understanding (NLU) Technology: NLU technology analyzes the text generated by the ASR engine and deciphers the meaning of a particular phrase. Because there are usually multiple ways to express a single request, the NLU will generally improve its effectiveness over time as the system adapts to restaurant-specific menus and food items and learns from past successful and failed orders.
Humans in the Loop (HITL): Given the machine learning associated with AI technology, including the company’s solutions, it uses an approach that is commonly employed in the industry referred to as human-in-the loop (HITL) to ensure that the desired level of accuracy in order taking is achieved. The company’s systems use a human agent (located offsite of the restaurant) to enter, review, validate and correct orders received by Presto Voice and makes sure that restaurant guests receive accurate orders. As Presto Voice evolves and becomes more educated, the company expects that the level of human support in the process will continue to decrease, further improving its economics.
Presto Voice is deployed in Del Taco, Carl’s Jr and Hardee’s, as well as various other restaurant brands under pilot.
Strategy
The key elements of the company’s strategy are to continue to expand the locations in which its solutions are used; seek to attract new customers; continue to train and develop its voice AI technology to improve unit economics; and maintain relationships with existing customers.
Customers
Presto’s customers include some of the most familiar restaurant names in the United States, including Carl’s Jr., Hardee’s, Del Taco and Checkers for Presto Voice and Applebee’s, Chili’s and Red Lobster for Presto Touch. The company’s potential customer base consists of the approximately 330,000 QSR and casual dining restaurants in the United States and Canada it has identified as its accessible market. These restaurants are owned by corporate parents or, in some circumstances, by their franchisees, each of which makes the decision to employ the company’s solutions independently. For example, CKE Restaurants Holdings, Inc., or CKE, owns approximately 243 Carl’s Jr and Hardee’s locations while its franchisees own approximately 2,532 locations.
The company enters into services agreements with its customers ranging in length from 12 to 36 months, which provide visibility into its forward performance.
The service provider agreement governs the ongoing relationship between the company and the customer, as well as the franchisee agreements executed between it and each of the customer’s franchisees. In addition to governing the terms of further purchases of Presto Touch and a revenue sharing arrangement for the provision of premium content to the franchisees’ guests, the franchisee agreements require that the franchisees replace certain existing Presto Touch products with upgraded versions by way of purchasing the new equipment or leasing it. The term of the service provider agreement extends until each of the franchisee agreements has been terminated. The franchisee agreements are scheduled to terminate in December 2023 unless they are extended.
Sales and Marketing
The company has developed a robust sales and marketing process designed to navigate its complex and diverse customer base. The company’s sales and marketing effort is multi-faceted and consists of several phases. To generate demand, the company has developed a library of focused marketing materials which, among other things, describe the benefits of Presto’s solutions, as well as a robust referral network, including many of its customers. Once the company identifies prospective customers, the company works with them to tailor appropriate pricing and packaging options intended to simplify product adoption and provide ease of use.
Research and Development
The company’s research and development expenses included $21.3 million for the year ended June 30, 2023.
Manufacturing and Supply
Presto Voice
In July 2021, the company entered into an agreement with Hi Auto, pursuant to which it uses Hi Auto’s technology in its Voice AI solution. The company refers externally to this solution as Presto Voice powered by Hi Auto. The company’s agreement with Hi Auto terminates on July 28, 2024.
Competition
With respect to its Presto Touch solution, the company primarily competes with OneDine LLC and TableTop Media, LLC, doing business as Ziosk. With respect to Presto Voice, the company primarily competes with ConverseNow Technologies Inc., Alphabet Inc. (Google), Hi Auto, International Business Machines Corporation (IBM), OpenCity, Inc., Synq3 Restaurant Solutions, LLC, SoundHound AI, Inc., and Valyant AI, Inc.
Intellectual Property
As of June 30, 2023, the company had 11 registered domain names for websites that it uses in its business, such as presto.com and other variations, and three trademarks.
Government Regulation
The payment networks and their member financial institutions routinely update, generally expand, and modify requirements applicable to the company’s customers, including rules regulating data integrity, third-party relationships, merchant chargeback standards and compliance with Payment Card Industry Data Security Standards (PCI-DSS).
The company is also subject to the operating rules of the National Automated Clearing House Association (NACHA).
In the ordinary course of its business, the company accesses, collects, stores, uses, transmits and otherwise processes certain types of data, including personally identifiable information (PII), which subjects the company to certain federal and state privacy and information security laws, rules, industry standards and regulations designed to regulate consumer information and data privacy, security and protection, and mitigate identity theft.
In addition, under these laws and regulations, including the federal Gramm-Leach-Bliley Act (GLBA) and Regulation P promulgated thereunder, the company must disclose its privacy policy and practices, including those policies relating to the sharing of nonpublic personal information with third parties.
While personal information that the company processes that is subject to the GLBA is exempt from the California Consumer Privacy Act of 2018 (CCPA), the CCPA regulates other personal information that the company collects and processes.
History
Presto Automation, Inc. was founded in 2008. The company was incorporated in the state of Delaware in 2008.
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