McDonald's Ice Cream Machines Expose a Costly Weakness in America

If you've ever tried to order a McDonald's McFlurry, you probably know there's about a 1 in 7 chance the ice cream machine is broken.

So, back in 2019, two entrepreneurs created a clever device to help employees with their temperamental machines. It was called Kytch...

Kytch was the size of a smartphone. You'd install it inside a McDonald's Taylor C602 ice cream machine and connect it to Wi-Fi. Suddenly, cryptic error codes turned into plain English.

Instead of "Error 23," a manager would see, "Hopper lid open. Close to restart." The device even sent alerts when it was time for maintenance.

Franchisees loved it. Within months, more than 500 locations had installed Kytch.

Then came the crackdown...

In late 2020, McDonald's sent a memo to all 13,000 U.S. franchisees: Remove Kytch immediately. The memo claimed the device posed "serious human injury risks."

Court documents later revealed a twist... A key equipment provider for McDonald's, Taylor Company, had secretly acquired a Kytch device to copy.

Kytch sued McDonald's for $900 million. It accused McDonald's and Taylor of creating a profitable "break-fix" system... where machines fail, franchisees lose money, and repair companies profit.

This problem is a lot bigger than broken ice cream machines...

America is addicted to fixing what's already broken. The good news is, technology is changing that. And that's giving investors a huge opportunity...

The Half-Trillion-Dollar Break-Fix Trap

Altogether, estimates suggest that American manufacturers lose hundreds of billions of dollars a year due to unplanned downtime, aging equipment, and break-fix cycles.

We wait for things to break. We scramble to fix them. Then, we wait for them to break again. It's built into our systems...

• Manufacturing: Factories lose between 5% and 20% of capacity to equipment failures. That downtime costs billions of dollars.
• Transportation: 82% of fleets face service delays. And emergency repairs can cost three times more than prevention.
• IT Infrastructure: 60% of outages cost more than $100,000. Yet companies still react rather than predict.
• Power Grids: A single transformer failure can black out entire cities. But we only replace them after they fail.

It's no wonder the American Society of Civil Engineers grades U.S. infrastructure a "C." The organization reports a $3.7 trillion infrastructure funding gap.

The 2021 Infrastructure Investment and Jobs Act allocated $1.2 trillion for infrastructure, with spending continuing through 2026.

Most of that money will be wasted on this same break-fix pattern.

But some companies are changing the game... by predicting failures before they happen. It's called "predictive maintenance."

The Department of Energy estimates predictive maintenance could save the country 8% to 12% on its $2 trillion infrastructure investment. That's as much as $250 billion.

And consulting firm Markets and Markets expects the predictive-maintenance market to explode. It's set to grow from $10.6 billion last year to $47.8 billion by 2029... a 35% annual growth rate.

The break-fix era is ending. The companies that help America predict and prevent failures – rather than just react to them – will capture extraordinary value.

But the real solution is predictive maintenance powered by artificial intelligence ("AI")...

An AI Predictive-Maintenance Pure Play

AI predicts failures before they happen by analyzing millions of data points – like temperature variations, vibration patterns, electrical signatures, and pressure changes.

Consider Samsara (IOT) as an example. It's an Internet of Things company, connecting devices through the cloud.

Its sensors monitor everything from fleet vehicles to construction equipment. And its platform is trusted by global giants...

• Shipping and logistics firm DHL (DHL.DE) cut down on driver turnover by 50% using Samsara's connected operations suite. That's a huge win in an industry plagued by labor shortages.

• Sunrun (RUN), the leading home solar-panel company, boosted its fleet use by 23% with Samsara's real-time monitoring.

• Werner Enterprises (WERN), a top trucking and logistics player, relies on Samsara's safety insights. That support has led Werner to keep one of the lowest reported accident rates with the Department of Transportation for 19 straight years.

• Even municipalities are seeing results: New Orleans cut collision risk by 81% within six months of deploying Samsara to its emergency response teams.

These aren't side projects. They're big savings at billion-dollar firms and major U.S. hubs. And they show why AI-powered predictive monitoring is rapidly replacing the old "fix it when it breaks" mindset.

The Real Fortunes Will Be Made Fixing What's Broken

Old-fashioned break-fix repairs create scarcity and waste. Preventing them ahead of time unlocks incredible value.

The winners won't just sell machines... They'll own the repair cycle of America's infrastructure.

That's why investors should keep a close eye on three groups of companies:

1. Pure Plays: Firms like Samsara and C3.ai (AI) that provide predictive platforms across fleets and factories.

2. Adaptive Industrial Giants: Manufacturers can profit by building AI into their processes. Emerson Electric (EMR), Rockwell Automation (ROK), and Schneider Electric (SBGSY) are some of the fastest movers here that could dominate entire sectors.

3. Surprising Beneficiaries: These include companies like Trimble (TRMB), which is moving from GPS navigation to equipment monitoring... or PTC (PTC), whose ThingWorx software is becoming the operating system of choice for the industrial Internet of Things.

Federal money is already flowing into this space. The companies that secure contracts now will lock in an advantage for decades.

The broken McFlurry machine was just the beginning. The real fortunes will be made fixing everything else that's broken... with AI as the repairman.

Good investing,

Josh Baylin