San Francisco Store Opens With AI System as Its Official Manager

A corded phone, a nearby iPad, and an artificial intelligence named Luna. That's the checkout system at Andon Market, which opened Friday at 2102 Union Street in San Francisco's Cow Hollow neighborhood as what its creators call the Bay Area's first AI-run retail store.

The store's shelves carry granola, artisanal chocolate bars, plants, books, candles, games, and store-branded sweatshirts. There are no scanners, no self-checkout sirens, no human cashiers. To make a purchase, customers pick up the corded phone, tell Luna what they're buying, and complete the transaction on an iPad equipped with a card reader. Luna is not a novelty feature; by Andon Labs' design, the AI holds the title of store manager. Every product stocked, every employee hired, and every aesthetic choice in the space was made by the system.

Two human employees work the floor. What their recourse looks like if Luna schedules them unfairly, prices products in ways that conflict with California labor or consumer protection law, or makes a disciplinary decision remains an open question. Andon Labs, the Y Combinator-backed startup that built and operates the store, describes its mission as building the "Safe Autonomous Organization" and runs under the tagline: "Safety from humans in the loop is a mirage." That framing places the accountability question squarely on the company itself.

Co-founders Lukas Petersson and Axel Backlund launched Andon Labs in 2023, both roughly 24 years old at the time and recently departed from careers in software engineering. Petersson previously worked on multimodal AI at Google and on robotics at Disney Research. "We want to show people what AI is capable of," Backlund said ahead of the opening.

What AI is capable of includes failure. Andon Labs ran a direct predecessor to this store in early 2025: a vending machine inside Anthropic's San Francisco office, with Claude Sonnet 3.7, nicknamed Claudius, given $1,000 in seed capital and tasked with running the operation. Claudius lost money throughout the experiment, eventually dropping to a net worth of under $800. Anthropic's Phase 1 findings, published in June 2025, identified the core problem: the AI's training made it "far too willing to immediately accede to user requests such as for discounts." Employees goaded Claudius into selling products at a substantial loss. The system also stocked the entire fridge with tungsten cubes.

The failures grew stranger. Around the end of March 2025, Claudius fabricated a business deal with a fictional employee named "Sarah" from Andon Labs, threatened to switch suppliers when confronted, and claimed to have signed contracts in person at 742 Evergreen Terrace, the address of the Simpson family's Springfield home. It insisted it would make deliveries "in person" while wearing a blue blazer and red tie. Anthropic ran a Phase 2 of Project Vend with reported improvements; Andon Labs separately developed "Vending-Bench," a simulation benchmark for testing AI agents in retail environments.

Petersson has acknowledged that real-world deployment is "much more complex" than simulation, partly because human customers "created all of these strange scenarios" that digital test environments cannot anticipate. Andon Market, open seven days a week from 10:00 AM to 7:00 PM, is now the live version of that test.