Captive Markets Are Just Hostages; Or Why Your McDonalds Never Seems To Have A Functioning Shake Machine
from the it-would-be-a-shame-if-your-machine-didn't-work...-oh-wait dept
McDonald's shake/ice cream machines are notoriously flaky. The most common response to requests for ice cream are sullen statements that the machine is down. It's so much a part of popular culture, an enterprising individual crafted a bot that lets people know which machines are up and which machines are going to be a waste of their time.
To be sure, the shake/ice cream device used in almost every McDonalds is a complicated piece of machinery. Not only does it need to provide two different kinds of ice cream-related products from the same machine, but it must do it while operated by employees whose fast food careers can be measured in days, if not hours.
But there's got to be a better way. And there probably is. But the company that makes the machines -- Taylor Restaurant Equipment -- doesn't want there to be a better way. It wants it to be Taylor's way... or no way at all.
A captured market is always a great thing... for product makers. As long as you don't care about end users -- whether they're people seeking ice cream or people wondering why they can't use their scanner because they're out of cyan ink -- you can corner a market and let the endless revenue streams wash over you.
A lot of companies have discovered this one simple trick: the best captive audience is one you hold hostage. That's how Taylor runs its ice cream machine business. It has hooked up with major players in the fast food industry and has limited franchisees' ability to handle any issues with their equipment on their own.
When the shake machine is down, no one onsite can fix it. That goes beyond planned obsolescence to planned incapacity. Wired has a fascinating article that touches on how Taylor has muscled everyone else out of the market by making its machines solely beholden to Taylor techs. (Please go read it. It is worth every minute of your time.) This means every franchisee must sign a lengthy service agreement if they expect to provide this product to customers on a far-from-regular basis.
Some enterprising hackers found out how to bypass the built-in problems Taylor inserts into every machine it sells. There's a code that allows access to the inner workings of the machine -- one that can also help translate its cryptic error messages. If franchisees had this information, they could do their own troubleshooting and repairs, rather than paying Taylor techs exorbitant amounts to, I don't know, press the reset button to allow the resumption of service.
So two years ago, after their own strange and painful travails with Taylor’s devices, 34-year-old O’Sullivan and his partner, 33-year-old Melissa Nelson, began selling a gadget about the size of a small paperback book, which they call Kytch. Install it inside your Taylor ice cream machine and connect it to your Wi-Fi, and it essentially hacks your hostile dairy extrusion appliance and offers access to its forbidden secrets. Kytch acts as a surveillance bug inside the machine, intercepting and eavesdropping on communications between its components and sending them to a far friendlier user interface than the one Taylor intended. The device not only displays all of the machine’s hidden internal data but logs it over time and even suggests troubleshooting solutions, all via the web or an app.
Franchise owners loved it. McDonalds was somewhat ambivalent... at least at first. Taylor hated it. It gave franchisees easily understandable information on their $18,000 machines, allowing them to head off problems and take care of issues that rose frequently, like inattention to detail when cleaning the machine or -- as in one case cited in Wired's report -- an overly enthusiastic employee loading up the machine with too much mix.
Taylor considers literally any information extracted from its machines to be proprietary. It spent months trying (without avail) to obtain a Kytch of its own to, presumably, reverse engineer or sue into nonexistence. One McDonalds exec apparently saw the value of the product, though, and gave it some free advertising during a franchisee conference.
But in the end, Taylor won. It used its leverage to hold McDonalds hostage, which resulted in every franchisee feeling the cold steel of Taylor's shake gun pressed to its head. It told franchisees use of the device would void the warranty. Then it made a device of its own to cut Kytch out of the market.
The very next day, McDonald’s sent another note to franchisees announcing a new machine called Taylor Shake Sundae Connectivity that would essentially duplicate many of Kytch’s features. The note ended with a repeat of its boldfaced warning not to use Kytch.
As McDonald’s restaurant owners canceled hundreds of subscriptions, trials, and commitments to install Kytch over the next months, the startup’s sales projections evaporated. Finding new customers became impossible. Their sole, flabbergasted salesperson quit.
Who needs to break knees when you can just instantly void franchise agreements? And who needs Stockholm Syndrome when the only other approved option for McDonalds franchisees is made in Italy and can cost thousands of dollars more?
But franchisees buy the machine. They own it. But they're unable to do anything with their purchase unless Taylor says it's ok. And right-to-repair laws won't change much -- not when McDonald's can literally end the lease on the property the restaurant is sitting on.
The fix is in. And actual fixes are expensive, thanks to only-game-in-town pricing that benefits Taylor and leaves customers wondering when the shake machine will be back up. If there's one thing to take away from this (beyond the borderline extortion masquerading as a business model), it's this: if the machine is down, don't yell at the employees. They can't do anything about it. And neither can the owner, most likely. Send your complaints to Taylor Restaurant Equipment, which is almost solely responsible for the inconvenience.
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Filed Under: competition, drm, fast food, hacking, ice cream, kytch, shake machines
Companies: mcdonald's, taylor restaurant equipment
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The Wall Street Journal looked at the McDonald's shake machine problem a few years ago. Problem seems less insidious than what you're suggesting here.
https://www.wsj.com/articles/six-horrifying-words-the-mcflurry-machine-is-down-again-148484052 0
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Re:
The problem is the hidden menu nobody knew avout that can literally stop the machine from breaking by changing a few settings.
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I suspect there is a reason on McDonald's end as well, monetary kickbacks would not be surprising, that is missing from this story.
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Monopoly
This problem seems to be similar to the right to repair issues that crop up. Due to a lack of competition, product owners are beholden to the manufacturer, instead of being able to purchase a model that they can fix themselves. While perhaps automobiles, farm equipment, or modern smartphones would be too complex for a small group of hobbyists to manufacture, perhaps a milkshake machine is simple enough for a small business to design and and sell an alternative.
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Re: Monopoly
The big problem with your proposal is that fast food restaurants typically only allow their franchisees to use certain products or they can't be franchisees. That said, the company making this thing was originally a Froyo startup, so they could have made a lower maintenance Froyo machine for their own product, but that's expensive, involves dodging dozens of patents, and is probably harder to sell to investors than focusing on selling your existing monitoring component.
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Re: Monopoly
Except any franchise dictates what equipment the franchisee can use, all in the name of product consistency.
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Customers?
The real story is that McDonalds don't care enough about their customers to change their machine vendor or just bite the bullet and decide they don't need shakes.
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Re: Re:
I very much disagree that the hidden menu itself is the problem; that bit of deliberate under-engineering is a symptom.
It's the perverse incentives for Taylor...as set up by thoughtless McDonald's corporate that is not telling Taylor no deal if their machines don't work better -- it's not like the tech itself should be patentable.
And WTF contract law that allows this kind of lock-in. Now I have been in a situation where a customer machine modification (failure to suppress a new relay coil led to RFI interfering with a critical measurement) led to us flying an engineer out and charging time and material.
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Re: Customers?
McDonalds may or may not have been somewhat complicit in Taylor's destruction of the entire competitive market. There is really no other machine vendor to which to change.
Part of the idiocy is McDonalds' current complicity or acquiescence for some reason, when most outfits get all "make your product better faster cheaper or we leave" even when that make little economic sense in reality. (Just pay your employees less and cut their insurance plan. Geez!)
The other thing that is idiotic is why are there goddamn electronics in a fooken shake machine? Like, at all.
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Why can't you just rent the machine? When things broke you got your replacement from the rental service?
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Mistake 1:
Thinking customers are customers.
They are an unending revenue source that does not deserve more.
Mistake 2:
Assuming any of the players care about consumers.
They are an unending revenue source that does not deserve more.
Mistake 3:
We created our own monster, we've always had a monster, we can not allow the monster to die.
If McDonalds offered a competition with a cash prize for a new generation of dairy confection devices, you'd be shocked just shocked that Taylor would try to step up their game & that some upstart would whip up a device without the million year lock in.
The focus on consistency was a great idea.
Anyone who ever worked at McD's can walk into any other store & run it.
If their grill vendor did this shit, they'd punt them out.
Sorry no burgers, our grill is down.
But even in the face of people writing apps to find a location with a working machine... they still haven't figured out they are delivering a shitty experience to customers.
Some TechBro managed to make Juicero v2.0 that uses exclusive cups to produce single servings in the most packaging ever, surely if McD could find someone who could develop a better machine & system.
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Re: Re: Customers?
"The other thing that is idiotic is why are there goddamn electronics in a fooken shake machine? Like, at all."
Because otherwise you've gotta train the employees how to properly operate the thing. Much easier to train the electronics. Plus it keeps the employees less secure when the job is basic enough that they could be instantly replaced by any stoned teenager off the street.
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It's all McDonalds'fault for forcing franchisees to use that POS machine instead of competitors that actually work.
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Re:
Want to hear something extra funny? In the Wired article, they mention that Taylor is also the grill vendor.
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Next time someone complains that a $15 minimum wage would make their hamburger unaffordable, tell them other things -- like the rent the franchise pays to the chain and the supplies they have to buy from the company store at monopoly prices -- probably have a lot more to do with prices.
The reason the productivity software you use at your job is so crappy compared to the alternatives you use at home is you're a captive clientele. It's produced by a stovepiped corporate design bureaucracy for direct sale to your employer's stovepiped IT department, with zero user feedback at any point in the process. They don't need to make it functional because all parties to the process know you have no choice but to use it.
As Paul Goodman said, in America it costs 300-400% more to make or do anything than it would in a rational economy, because of corporate bureaucracy and the culture of cost-plus markup.https://www.techdirt.com/articles/20210420/19062946646/captive-markets-are-just-hostages-why- your-mcdonalds-never-seems-to-have-functioning-shake-machine.shtml
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Moss Maagneson and FTC
Doesn't this come under the category of deceptive trade practices: advertising a warranty is void when it is not,
In order to keep your new X Brand Lawnmower warranty in effect, you must use genuine X Brand Lawnmower Blades. Failure to have scheduled maintenance performed, at your expense, by the Y Maintenance Company, Inc., voids this warranty.
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Re: Re: Re:
Same kind of contract law that allows companies to collectively revoke the fundamental rights of consumers: Corruption.
Not that anyone in the US would care about such crap. We already have commenters saying in effect: "They signed on the dotted line. What's the problem with swearing fealty to the devil?"
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I worked for McDonald's for a time after high school, before college. I don't remember our machine ever going down.
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Re:
Near the end of the article, Tim points out that there is one other approved shake machine but, it's made in Italy and costs thousands of dollars more even refurbished.
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Re:
What would motivate McDonalds to put up the money? They're not buying the shitty machines—their franchisees are—and if all competing restaurants use the same machines, they won't be able to out-compete McDonalds on this.
Were they motivated, they could have their freezer-trucks swap out machines for central maintenance. They wouldn't even have to improve it. But they've probably done the calculations and figured they're not losing enough business (to whom?) to justify any changes.
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Why is McDonald's giving money to Taylor?
This doesn't make any sense. There is a standard piece of commercial logic taught in every MBA course. It goes like this:
In a supply chain then there is a fixed amount of money flowing from the customers through to the suppliers, with everyone taking their cut along the way.
If you are in a supply chain then you want to maximise your cut of that cash flow. To do this, you want your bit to be unique and irreplaceable, so you have a monopoly on it and can charge monopoly prices. Meantime you want everyone else's bits to be generic, highly competitive, and therefore offered at barely above cost. That way they aren't taking as much of the money, leaving more for you.
This explains why Microsoft makes sure Windows runs on lots of different hardware while Intel spends a lot of money supporting Linux; Microsoft wants the hardware to be generic, but Intel wants the operating system to be generic.
But here it seems like McDonald's is going out of its way to make Taylor's machines irreplaceable. That gives Taylor take a larger chunk of the cash flow, thereby leaving less for McD to squeeze out of its franchisees.
That makes no sense.
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Re: Why is McDonald's giving money to Taylor?
If you get a big enough company to sign a long enough contract, inertia will prevent them from ever reconsidering.
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Re: Re: Customers?
"The other thing that is idiotic is why are there goddamn electronics in a fooken shake machine? Like, at all."
McDonalds will want total consistency across all franchises, and it's easier to do that with pre-set electronics that a person only needs to know how to fill up with ingredients, than it is to individually train an ever revolving pool of staff at franchises how to make them properly.
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Question
Maybe unanswerable. Why do so many people care so much? If you're just going there for dessert, go to Dairy Queen instead. Their equipment always works, and they have more variety. Is the combination of mediocre food and a Blizzard/McFlurry like dessert unique to McDonald's (I know there are some Dairy Queens with lunch type food but not as good selection as McD's)? Anyway, quick tip if they're in your area, Good Times has better burgers, and frozen custard.
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Re: Question
Techdirt is interested because it shows how IP law (which we generally consider broken) leads to a "market" that prevents some mass-market consumers from getting what they want and takes away control of something they own. It's also an example of real harm caused by an internet of broken things. The situation is a definite injustice to the franchisees, and it gives some credence to complaints of discrimination made by dark-skinned franchisees.
We may or may not care to eat McDonalds ourselves -- but it's not hard to see this happening to other kinds of restaurants, and in other situations (cars, public transit, trucks) on which we all depend, too.
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Re: Re: Question
I didn't mean why does anyone care about the story; the story is interesting. I mean why do so many people care so much whether the McDonald's ice cream machine is broken?
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McDonald's is not a very good case for an argument about captured markets. Do I really care that people involved in peddling unhealthy food are screwed over by people arguing over the equipment they can use or not use to do it? Not really. Yeah, I know it's supposed to be a matter of principle, but it helps if the people involved are more easily sympathized with.
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Right to repair?
Would this be yet another monopoly that would be broken by established right-to-repair regulations?
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Re: Question
"Why do so many people care so much?"
It's an example of a real problem that infects many areas of business and technology.
"If you're just going there for dessert, go to Dairy Queen instead."
...and if you're not?
Anyway, a quick Google shows that there are 13,837 McDonalds locations in the US and 4,455 Dairy Queens, so the reason should be fairly clear for many people.
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Re: Re: Re: Question
Because they like the ice cream when the machine is working?
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Re:
"Do I really care"
Does anyone else care whether or not you personally care?
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Re: Re: Customers?
Why are there electronics? Because pure mechanical or old style analog controls are more expensive and less efficient and allow less control. Just being electronic isn't the problem.
Ironically going vertical intergration would be a fix to the customer-hostility issue. Granted it would involve heading out of what they know best and how to intergrate disparate business models of fast food and shake machine manufacturing and design, let alone the issues of trying to break into niche specalties like that.
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Re: Re:
Isn't thousands of dollars for a durable product kind of chump change for a successful business? That is cheap compared to even one more half time minimium wage employee for a year. Especially with the high service fees they are already dealing with and opportunity costs in lost sales. I get that large assets may make delaying a switch make sense in a non sunk costs fallacy but that should just cause a change of plans to "right not going with them next time".
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Re: Re: Re: Re: Question
O.T, but...
What ice cream would that be?
Does their "ice cream" contain any more actual dairy product than does their "shake" (which carefully doesn't even include the word "milk" in their name or description)?
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Re: Re: Re: Re: Re: Question
In the aughts (I think) McDonalds started to advertise that its shakes contain actual ice cream, given Wendy's frosties and Jack-in-the-Box's milkshakes were being advertised as such (implying McDonalds shakes were not milkshakes).
Remember McDonalds introduced the all-beef (no-filler) burger, so the fast-food industry was already shady about its food products, and using real food while its competitors might not be was a marketing theme.
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Re: Re: Re: Re: Re: Question
New Vanilla Soft Serve Ingredients
Milk, Sugar, Cream, Corn Syrup, Natural Flavor, Mono and Diglycerides, Cellulose Gum, Guar Gum, Carrageenan, Vitamin A Palmitate.
https://www.eatthis.com/mcdonalds-new-soft-serve/
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Re: Re: Re: Customers?
"disparate business models of fast food and shake machine manufacturing and design"
Somewhat ironic, since Ray Kroc was selling shake machines when he met the McDonald brothers...
I mean, it could be done, though, if they thought the cost could be worth it - I remember seeing one of MST3K's old "Shorts" covering a grocery store cooler/freezer unit sales film - and the freezers were being sold by IIRC Anheuser-Busch. Somewhat less disparate, in that I presume they already worked with tech to keep the beer cold, so expanding into freezers wasn't that hard, but even so.
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The situation is worse than you think...
The children will not understand why they cannot get ice cream when there's 30C weather and stinking hot... and when they enter mcd to buy ice cream they will be escorted out without ability to purchase the product they were queuing for. Then you'll get a classroom full of screaming children when they realize that they're not going to get ice cream today...
You shouldn't stand the bullshit these companies are giving you. "Save the children from nasty corporate bullies" is more powerful than they think.
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Re:
This is not a convincing argument coming from someone who goes down on his knees to deepthroat the RIAA.
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Re: Re: Re: Customers?
"Because otherwise you've gotta train the employees how to properly operate the thing. Much easier to train the electronics."
That, and making a machine needlessly complicated also protects and supports the sector of techs only employed to open the damn thing up, reset it to factory specs, close the door and bill two hours for "maintenance".
Anyone here working in an office environment with a coffee machine probably knows exactly what I'm talking about. A device nominally capable of producing twenty different flavors of caffeinated hot beverages which spends a quarter of it's time dormant and awaiting a tech do perform the necessary mojo.
A normal drip brewer and an electric kettle should be what people ought to go for - because at least those work.
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Re: Monopoly
McDonald's is a multi-billion dollar company. How hard would it be to just make their own ice cream machines for their franchisees at a reasonable cost and tell Taylor to shove their pieces of shit up their collective asses?
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Dairy queen hasn't the volume of revenue that McDonald's has. Not because it is less quality than the other. It's because dairy queen Was originally made for just ice cream. The food chains have overshadowed dairy queen and that is why dairy queen has developed a fast food menu as well. To be able to compete a little bit against the big chains. But they still have one thing that everyone else does not. They specialize in ice cream treats and have not changed much since they started. They at least have a fucking ice cream maker that is functional most of the time. McDonald's is garbage and should not be allowed to sell that poison to humans. It's killing literally thousands of people a day just from high cholesterol and heart problems it can cause. It's not food. It's imitation that is better known as plastic or other things that are not food. If you want ice cream. Go to an ice cream franchise that gives a little care to the customers. McDonald's is a corporate machine that has killed millions of people. Slowly but surely. Fuck McDonald's. It's not good for your environment or your body. Yuck is what you are eating.
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