Chipotle Founder Bets on Automation to Reinvent Fast-Casual Dining

[00:00:00] Meet Claude, the AI assistant by Anthropic. Claude can help with any project, from brainstorming your campaign to building software. Just share the context and Claude brings expert-level results to every task. Join teams around the world already working with Claude. Learn more at anthropic.com slash team.

[00:00:22] Welcome to Tech News Briefing. It's Wednesday, July 10th. I'm Zoe Thomas for The Wall Street Journal. Commercial web browsers weren't built for business. New enterprise browsers, however, offer capabilities specifically designed for the workplace. We'll tell you why more companies

[00:00:40] are turning to them and what their main drawback is. And then, the founder of Chipotle Mexican Grill, Steve Ells, says his new highly automated restaurant chain has two major benefits, better food and a better economic model. He shared

[00:00:56] details during WSJ's Global Food Forum. We'll bring you highlights from his conversation with our reporter Heather Hadden. First up, commercial internet browsers like Chrome, Safari and Firefox are free and most of us use them every day to visit websites. More companies, though, are rethinking the

[00:01:19] internet browser as they connect to a greater array of workplace applications. Here to tell us more about this shift is WSJ CIO Journal reporter Isabel Busquet. So, Isabel, what concerns are making some companies rethink the internet browsers they're using?

[00:01:36] Browsers have become a really important and critical part of how people work in a variety of jobs. And as that's happened more and more, companies and IT departments have had to do

[00:01:50] a lot of work to keep those apps secure and deliver those apps in a way where, yes, although company data is being delivered to this employee via an internet browser, it's totally safe and secure. And so they've had to do things like virtual private networks or virtual desktops,

[00:02:10] just lots of security software. And in some cases when you're working with that setup, it might sacrifice user experience for security in some instances. Who's making these more enterprise-grade browsers and what features do they offer?

[00:02:27] Giants like Google and Microsoft, they operate big browsers like Chrome and Edge, are thinking through how to offer more enterprise-grade capabilities on those. And then there are some startups that are popping up that are essentially offering different browsers that

[00:02:41] are just standalone browsers completely designed to be enterprise browsers. And those are companies like Island, which was founded in 2020 and a company called HERE, which was founded about 10 years ago, but just released their first enterprise browser this year. So for an example

[00:03:00] of capabilities that you might have on an enterprise browser that you wouldn't on a regular browser is just better control-based access or role-based access. The enterprise browser can tell who you are, they know what role you have in the organization and then based on that, they can

[00:03:17] either grant or restrict access to certain pieces of data within an app you're running. Or based on who you are, it might allow you to copy and paste sensitive data from one application into another,

[00:03:31] or it might not allow you to do that. Or it might allow you to use chatGBT but not allow you to upload certain pieces of information to chatGBT. So just a lot of control around what you're able

[00:03:46] to do with sensitive data is sort of a big benefit there. And then they've also sort of been making this shift towards just a sort of better work interface for employees. Isabelle, what are some of the drawbacks to these browsers? The main drawbacks would essentially just

[00:04:04] be around cost. Browsers are free to use and that's always been the case and so it might be a little bit of a hard sell trying to get companies to pay for something that in the past has always been free.

[00:04:20] That was our reporter Isabelle Bousquet. Coming up, the founder of Chipotle is looking to upend the fast casual dining sector. We'll hear about his plans and what he thinks it could mean for the restaurant industry. After the break.

[00:04:39] Meet Claude, the AI assistant by Anthropic. Claude can help with any project from brainstorming your campaign to building software. Just share the context and Claude brings expert level results to every task. Join teams around the world already working with Claude. Learn more at anthropic.com

[00:04:57] slash team. Chipotle founder and former CEO Steve Ells is moving beyond burritos. His new fast casual dining chain, Kernel, is highly automated with a limited number of human workers in the restaurants. After temporarily closing to refresh its interior and make changes to the menu, the New York spot

[00:05:21] is expected to reopen today. Ells says Kernel is a reinvention of the way restaurants work. He spoke with WSJ reporter Heather Hadden at WSJ's global food forum last month. Here are highlights from their conversation starting with Heather.

[00:05:38] I know you have strong opinions about how restaurants are run today. Labor costs, turnover, it's just too high. What do you think about how restaurants are run and how they could

[00:05:47] be improved? So, you know, I think back 31 years and we all knew what the fast food format looked like. We knew how they operated and then Chipotle came along and we did everything differently and

[00:06:01] it turned out to be a platform that's quite popular. Now you see fast casual restaurants opening very successfully bringing really great food to the eating public and I think that's awesome. The platform that we have at Kernel is another complete change, a complete reinvention

[00:06:18] of the way restaurants work and it has so many benefits but to name a couple of highlights, the food can be much, much better. You can really elevate the food through very, very careful and

[00:06:30] intricate and precise preparation which accounts for most of the success of any particular dish or menu. And we have a production system that requires fewer people to operate so there's a lot of automation, there's some robotics, it's digital first. Normally when you see maybe a dozen people

[00:06:49] at peak period at a typical restaurant we would have three and they're working alongside this automated robotic production system. And the precision and the consistency and the reduction of the monotony for producing large orders throughout the day is extraordinary. So the

[00:07:11] platform is really working and I'm very, very proud of it. So really this new Kernel platform does two things, better food, better economic model. You're calling it kind of a beta phase of Kernel. What

[00:07:22] have you learned so far? I think we got the platform right. We have a central kitchen that will service lower Manhattan and call it a 1 to 15 or so hub-and-spoke model. And freshly prepped food is constantly delivered to the restaurants throughout the day. So there's

[00:07:39] very, very low inventory and the freshness very, very high. And the reduction of stress on the three employees is extraordinary. I got some things wrong though. The way the restaurant presented to the

[00:07:51] customer was a little bit too future. People opened the door, they came in and they're like, what is this? I'm like, well it's our restaurant. And it's not obvious it's a restaurant. You see a robot arm, you see

[00:08:02] seafoam green cubbies with lights on them and things and people were a little confused. So we're going to do a little refresh in the front of the house and have some things that typical restaurants

[00:08:13] have like some seating and some softness and some pictures. And again we're in beta. I started out with a strict vegan diet and we've meandered into vegetarians. And we'll probably explore a chicken

[00:08:24] sandwich, a real chicken sandwich. The part of the menu that I got wrong is that I had a fried chicken sandwich that was not chicken. It was very good but it was more of an engineered product. And I

[00:08:36] would be much more proud of a real chicken coming from of course a really great source. How are sales and margins so far? And what do you think in the future? Yeah so we deliberately started

[00:08:47] off very very slow. We didn't do any marketing. It was a very quiet opening because the platform was really not tested. And so I didn't want to have lines out the door and having this thing fail.

[00:08:57] And the system crashed in the first month we had crashes where it could close down the restaurant for the whole lunch period. It's been very very stable lately. So now we've started to do some

[00:09:08] more marketing and we're driving customers in. Too early to talk about margins but I will say that the overall economic model wins for a number of reasons. We are in a space that's you know less

[00:09:20] than a thousand square feet. There's no gas or hood or venting and the power requirement is less than 200 amps. Our labor of course is only three people. Now we pay them a lot more. We pay them

[00:09:33] a handsome hourly wage plus benefits plus paid vacation. And our HR team now is working on an equity program designed for hourly employees because we want to share a piece of the action

[00:09:46] with them. And so margins are going to be great. We just need to build a business and I'm ready. So you're a futurist of sorts. When do you think you could see widespread automation in restaurants?

[00:09:57] In five years? In ten years? You know when could we really see the benefits of automation helping this labor intensive industry? You're starting to see it creep in already. I think many people are

[00:10:09] going to dabble in different kinds of automation and robotics that might work for them. Kernel is really from the ground up different and it's a platform that's built for the technology that we

[00:10:21] know is coming. It's going to be very easy for us to plug in new technology into the platform and then the folks who are working there will probably move more toward the customer facing positions, focusing on hospitality, maybe monitoring a dashboard just to make sure the

[00:10:38] systems are working. But we're really reinventing the fast food work. I mean you hear numbers like 150 percent annualized turnover in these restaurants and it's very difficult to operate with that kind of instability. There's two parts of it, the pay and the work and you've got to

[00:10:53] reinvent both of them. Steve thank you so much for being with us. Heather thanks for having me. Thank you. That was Chipotle founder and former CEO Steve Ells speaking with WSJ reporter Heather

[00:11:06] Hadden at WSJ's Global Food Forum last month. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Catherine Millsop. I'm Zoe Thomas for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

[00:11:29] Meet Claude, the AI assistant by Anthropic. Claude can help with any project from brainstorming your campaign to building software. Just share the context and Claude brings expert level results to every task. Join teams around the world already working with Claude. Learn more at anthropic.com slash team.