Presto Automation (NASDAQ: <a href="https://seekingalpha.com/symbol/PRST" alt="Presto Automation Inc.">PRST</a>) just had its Q3 2024 earnings call, and while the focus was understandably on the company's financial situation, there was a bombshell dropped that seems to have whizzed past most analysts. It's a subtle detail, almost an aside, buried within CEO Gee Lefevre's discussion of their Voice AI product evolution. This detail, however, has the potential to be a seismic shift for Presto's profitability and could catapult the company to a position of dominance in the automated restaurant space.

The Bombshell: Pure AI Exceeding Expectations

The bombshell? <strong>Presto Voice Pure AI is not just working, it's exceeding all expectations.</strong>

Lefevre casually mentions that Pure AI, their new AI-driven drive-thru ordering system with <strong>no human intervention</strong>, has seen AI efficiency skyrocket from 50% to a staggering 80% at their initial test location. Let that sink in for a moment. Their AI, left to its own devices, is successfully handling 80% of all drive-thru orders, a feat previously considered years away.

This is not just a technological marvel, it's a financial game changer. Presto's biggest cost has always been the "human in the loop" element of their Voice AI, the remote agents who assist the AI and ensure order accuracy. By achieving this level of AI efficiency, Presto is on the verge of slashing its largest expense, clearing a direct path to profitability.

The Financial Impact: Millions in Savings

Let's delve into the potential numbers. Assuming an average agent cost of $15 per hour and a conservative estimate of 10 orders processed per hour, completely eliminating human intervention could save Presto $1.50 per order. With 80% AI efficiency, that's a saving of $1.20 per order on 8 out of every 10 orders. This translates to significant margin expansion, even at current deployment levels.

But the real magic happens when you combine Pure AI's success with Presto's aggressive deployment plans. The company aims to be in over 1,200 drive-thru locations by the end of 2024, growing to more than 2,600 by the end of 2025. If Pure AI maintains its 80% efficiency (and with further data collection and refinement, that number could even increase), we're looking at millions upon millions of dollars in annual savings, turning Presto into a cash-generating machine.

A Multi-Pronged AI Strategy

Now, it's worth noting that Lefevre also discusses other AI configurations, like "Unsupervised AI" where agents are available on standby but only intervene when the AI encounters a problem. This suggests a nuanced approach where Pure AI might be strategically deployed during non-peak hours or for simpler menus, while Unsupervised AI handles more complex ordering scenarios. This multi-pronged strategy further strengthens Presto's cost optimization and ensures both efficiency and accuracy, crucial elements for customer satisfaction and retention.

Presto's Competitive Advantage

The implications of this "Pure AI" revolution extend far beyond Presto's balance sheet. It positions the company to rapidly outpace competitors who are still struggling with the human-in-the-loop bottleneck. Imagine a world where Presto can offer their AI-powered drive-thru solution at a fraction of the cost of competitors, with faster deployment times and consistently high accuracy. This is the disruptive force Presto is poised to unleash.

A Turnaround Story in the Making

While the financial challenges facing the company are undeniable, this Pure AI breakthrough is a beacon of hope, a signal flare indicating a dramatic shift in Presto's trajectory. If the company can successfully navigate its current financial hurdles and capitalize on this technological advantage, the future for Presto Automation might be far brighter, and far more profitable, than anyone anticipated.

It's the kind of story that reminds you why Wall Street loves a good turnaround. It's the story of a company teetering on the brink, suddenly discovering a hidden superpower, and with it, the potential to rewrite the rules of an entire industry. It's the story of Presto Automation, and the quiet revolution that just began in a drive-thru somewhere in America.

Deployment Growth and AI Efficiency

* Based on a range of $1.20 - $1.44 savings per order, assuming 80% AI efficiency and an average of 10 orders per hour per location.

"Fun Fact: Did you know that the first drive-thru restaurant in the US was a Red's Giant Hamburg in Springfield, Missouri, opening in 1947? Talk about a long way from an AI taking your order!"