For years, small startup Kytch worked to invent and sell a device designed to fix McDonald’s famously broken ice cream machines, only to watch the fast-food Goliath crush their business like the hopes of so many future McFlurry customers. Now, Kytch instead seeks to exact a cold revenge — worth nearly a billion dollars.
Late Tuesday night, Kytch filed a long-awaited legal complaint against McDonald’s, accusing the company of false advertising and tortious interference with its contracts with customers. Kytch’s co-founders, Melissa Nelson and Jeremy O’Sullivan, are seeking no less than $900 million in damages.
From 2019 Kytch sells a phone-sized gadget designed to be installed in McDonald’s ice cream machines. These Kytch devices will intercept the internal communications of the ice cream machines and send them to a web or smartphone interface to help owners remotely monitor and fix the many weaknesses of the machines, which are so widely recognized that they have become full meme among McDonald’s customers. The two-person startup’s new lawsuits against McDonald’s focus on emails the fast-food giant sent to every franchisee in November 2020 instructing them to immediately remove the Kytch devices from their ice cream machines.
Those emails warned franchisees that Kytch’s devices not only violated ice cream machine warranties and intercepted their “confidential information,” but also posed a safety threat and could lead to “serious human injury,” a claim Kytch described as false. and defamatory. Kytch also notes that McDonald’s used those emails to advertise a new ice cream machine built from their long-standing appliance Meanwhile, manufacturing partner Taylor, which would offer similar features to Taylor’s devices, has yet to see public acceptance after several tests installations.
Kytch co-founder Melissa Nelson says the emails haven’t just resulted in McDonald’s ice cream machines being broken around the world. (About one in seven machines in the U.S. remained out of service on Monday, according to McBroken.com, which tracks the problem in real time.) They also hampered Kytch’s fast-growing sales just as the startup was taking off. “They tarnished our name. They scared away our customers and ruined our business. They were anti-competitive. They lied about a product they said was going to be released,” Nelson says. “McDonald’s had every reason to know that Kytch was safe and had no problems. Not as dangerous as they claimed. And that’s why we’re judging them.”
Before finding himself at odds with the superpowers of soft serve, Kytch showed some early success in solving McDonald’s ice cream headaches. Its Internet-connected add-on helped franchisees avoid problems like hours of downtime when Taylor’s delicate daily pasteurization cycle failed. McDonald’s restaurant owners interviewed by WIRED liked the device; one said it saved him “easily thousands of dollars a month” in lost revenue and repair fees. Kytch says that by the end of 2020 had 500 customers and doubled its sales every quarter—all of which evaporated when McDonald’s ordered its franchisees to ditch the Kytch gadgets.
Kytch first hit back at the fast-food ice cream joint last May, suing Taylor and its distributor TFG for stealing trade secrets. Kytch’s founders allege in that lawsuit that Taylor worked with TFG and a franchise owner to obtain a secret Kytch device, reverse engineer it, and attempt to copy its features.
But all along, Kytch’s co-founders have hinted that they intend to use the discovery process in their case against Taylor to dig up evidence for a case against McDonald’s as well. In fact, the 800 pages of Taylor’s internal emails and presentations Kytch has received so far in discovery show that McDonald’s, not Taylor, at many times led efforts to research and develop a response to Kytch in 2020. In February of that year, Taylor’s President Jeremy Dobrowolski wrote in an email that “McDonald’s is very fired up about this,” referring to Kytch’s growing adoption. A McDonald’s executive later requested a conference call with Taylor in June of that year to discuss Kytch. When McDonald’s shared with Taylor a draft of the Kytch-killing email it planned to send to franchisees, a Taylor executive commented to a colleague that “I’m a little shocked they’re willing to take such a strong position.”
