Ice Cream Machine Hackers Sue McDonald's for $900 Million

For years, the tiny startup Kytch worked to invent and sell a device designed to fix McDonald's notoriously broken ice cream machines, only to watch the fast food Goliath crush their business like the hopes of so many would-be McFlurry customers. Now Kytch is instead seeking to serve out cold revenge—nearly a billion dollars worth of it.

Late Tuesday night, Kytch filed a long-expected legal complaint against McDonald's, accusing the company of false advertising and tortious interference in its contracts with customers. Kytch's cofounders, Melissa Nelson and Jeremy O'Sullivan, are asking for no less than $900 million in damages.

Since 2019, Kytch has sold a phone-sized gadget designed to be installed inside McDonald's ice cream machines. Those Kytch devices would intercept the ice cream machines' internal communications and send them out to a web or smartphone interface to help owners remotely monitor and troubleshoot the machines' many foibles, which are so widely acknowledged that they’ve become a full-blown meme among McDonald's customers. The two-person startup's new claims against McDonald's focus on emails the fast food giant sent to every franchisee in November 2020, instructing them to pull Kytch devices out of their ice cream machines immediately.

Those emails warned franchisees that the Kytch devices not only violated the ice cream machines’ warranties and intercepted their "confidential information" but also posed a safety threat and could lead to “serious human injury," a claim that Kytch describes as false and defamatory. Kytch also notes that McDonald's used those emails to promote a new ice cream machine, built by its longtime appliance manufacturing partner Taylor, that would offer similar features to Kytch. The Taylor devices, meanwhile, have yet to see public adoption beyond a few test installations.

Kytch cofounder Melissa Nelson says the emails didn't just result in McDonald's ice cream machines remaining broken around the world. (About one in seven of the machines in the US remained out of commission on Monday according to McBroken.com, which tracks the problem in real time.) They also kneecapped Kytch's fast-growing sales just as the startup was taking off. "They've tarnished our name. They scared off our customers and ruined our business. They were anti-competitive. They lied about a product that they said would be released," Nelson says. "McDonald's had every reason to know that Kytch was safe and didn't have any issues. It was not dangerous, like they claimed. And so we're suing them."

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Before it found itself in conflict with soft-serve superpowers, Kytch had shown some early success in solving McDonald's ice cream headaches. Its internet-connected add-on gadget helped franchisees avoid problems like hours of downtime when Taylor's finicky 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" from lost revenue and repair fees. Kytch says that by the end of 2020 it had 500 customers and was doubling its sales every quarter—all of which evaporated when McDonald's ordered its franchisees to ditch Kytch's gadgets.

Kytch first fired back against the fast-food ice cream establishment last May, suing Taylor and its distributor TFG for theft of trade secrets. The Kytch founders argued in that lawsuit that Taylor worked with TFG and one franchise owner to stealthily obtain a Kytch device, reverse-engineer it, and attempt to copy its features.

But all along, Kytch's cofounders have hinted that they intended to use the discovery process in their lawsuit against Taylor to dig up evidence for a suit against McDonald's too. In fact, the 800 pages of internal Taylor emails and presentations that Kytch has so far obtained in discovery show that it was McDonald's, not Taylor, that at many points led the effort to study and develop a response to Kytch in 2020. In February of that year, Taylor president Jeremy Dobrowolski wrote in an email that "McDonald's is all hot and heavy about this," referring to Kytch's growing adoption. A McDonald's executive later asked for 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 franchisees, a Taylor executive commented to a colleague that "I am a bit in shock they are willing to take such a strong position."