Pizza Hut’s rollout of an artificial intelligence-based delivery system has caused a franchisee to lose $100 million, according to a recent lawsuit.
Chaac Pizza Northeast filed a lawsuit earlier this month, alleging that Pizza Hut’s mandatory Dragontail rollout to restaurants in 2024 caused “cascading operational breakdowns,” according to multiple reports.
The franchisee, which operates more than 100 Pizza Hut restaurants in Maryland, Pennsylvania, New York, New Jersey and Washington, D.C., said more than 90 percent of its deliveries arrived within 30 minutes before the new AI system.
But the implementation of Dragontail created “slower delivery times, colder product (caused by delays), and reduced customer satisfaction,” the lawsuit said, per Restaurant Business.
Chacc accused Pizza Hut of forcing stores to continue to use Dragontail despite “materially degrading delivery metrics.”
With the AI rollout, DoorDash delivery drivers were able to see when pizzas would come out of the oven, the lawsuit said, per Business Insider.
The drivers would then wait up to 15 minutes for multiple orders to be ready before grabbing them, slowing down delivery, the lawsuit alleges.
Chaac said it generated double-digit sales growth before Dragontail, but with the AI system, sales declined.
Year-over-year sales growth in New York City went from a positive 10.19 percent to a negative 9.78 percent, according to the lawsuit.
A Pizza Hut spokesperson told several outlets that it was reviewing the lawsuit and will respond “through the appropriate legal channels.”
The Independent has reached out to Yum! Brands, the parent company of Pizza Hut, as well as Chaac and DoorDash for comment.
The lawsuit comes after Yum! Brands, which also owns Taco Bell and KFC, announced its plans in February to close 250 underperforming restaurants across the U.S. The stores are set to shutter during the first half of 2026.
Yum! CEO Chris Turner said last November that the company launched a “formal review of strategic options” for Pizza Hut.
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