Renowned fast food brand Domino's is recently involved in a serious legal dispute. Its top U.S. franchisee, "Chuck Northeast Pizza Company," has formally filed a lawsuit against the brand, accusing it of forcing stores to adopt an AI delivery management platform called "Dragontail," which causes serious operational conflicts.

This franchisee operates about 111 stores in key regions and previously outperformed its competitors. However, after being forced to introduce this AI delivery system, store performance plummeted, resulting in business losses and asset shrinkage exceeding $100 million.

System flaws lead to rider order accumulation, delivery efficiency decreases instead of improves

Before the Dragontail system was introduced, more than 90% of the franchisee's takeout orders were delivered within 30 minutes, with high customer satisfaction. However, due to the system synchronizing kitchen cooking processes and order times with delivery riders in real time, unexpected chain failures occurred.

Delivery riders, for their own benefit, began using the system to deliberately accumulate and merge multiple orders, sometimes waiting up to 15 minutes to collect orders before departing. This directly caused widespread delivery delays, and customers often received cold pizzas, leading to increased dissatisfaction.

Riders choose to reject orders based on tips, brand faces multiple operational difficulties

The complaint also revealed another critical flaw: delivery riders can directly view the tip amount and payment method of each order through the AI system, leading to selective rejection of certain takeout orders. This phenomenon significantly reduced customer satisfaction, causing the sales growth rate in core markets such as New York to turn negative from positive.

Currently, Domino's spokesperson said they will respond through formal legal channels. In fact, Domino's is facing a general downturn in the U.S. market, and its parent company, Yum Brands, had previously planned to close 250 Domino's stores in the United States this year.