Exclusive: The next wave of AI drive-thrus is here—and a16z and Arc think it finally works

Mike Mac Lennan’s idea of market research as the CEO of a drive-thru AI company is loitering at Burger King. His company’s first dollar was actually given to him by a group of elderly women who believed he was panhandling at the fast food joint. His company, Arc, is a voice AI startup that takes orders and optimizes business performance at drive-thrus. Mac Lennan and co-founder Ali Hussain—both Square and Cash App veterans, where they built payment infrastructure—have raised $10.76 million seed funding, Fortune learned exclusively. Andreessen Horowitz led the round. The company is already working with two major fast-food chains, each with hundreds of locations. Arc’s market is enormous. There are roughly 200,000 drive-thru locations in the U.S., with drive-thrus accounting for approximately 70 to 75% of quick-service restaurant (QSR) revenue. The AI-in-QSR market is projected to reach $12 billion by 2034. But the space is rife with failed concepts. McDonald’s killed its AI drive-thru pilot in 2024 after it couldn’t perform at scale. Presto Automation received an SEC fraud charge for misleading investors about its AI autonomy claims. And Taco Bell is rethinking a 500-plus location rollout after customer complaints went viral (including a prank order for 18,000 cups of water). Arc’s argument is that the previous wave failed for a specific, fixable reason: the players were using “80% good models trying to take out labor,” MacLennan told me. “Chapter two—which I think is just starting now—is 99% good models focused on wins for customers, wins for employees, and wins for businesses.” Arc trains brand-specific models on thousands of real drive-thru interactions (including specific accent and dialect exposure). Then, it runs A/B testing where operators can compare model variants in real-time, measuring accuracy, average order value, and order speed simultaneously. When one Arc customer wanted to test the success of an impromptu milkshake u