Sarah Travers
Fast-casual dining giant, Chipotle Mexican Grill, is making waves in the industry with its latest venture into robotic food preparation technology.
In an effort to further streamline its operations and enhance efficiency, the popular restaurant chain has begun testing a robot that assembles bowls and salads at its California-based test kitchen.
Embracing Food Tech for Efficiency
In the second quarter of 2023, Chipotle achieved a remarkable $2.5 billion in food and beverage sales, with 38% of these sales being digital orders. To cater to the growing demand for digital orders and reduce wait times, Chipotle had already invested in a separate food preparation line dedicated to handling these orders.
However, a significant portion of their digital orders, approximately 65%, consists of bowls and salads. To optimize their efficiency further, Chipotle has turned to robotics.
The Robot Revolution at Chipotle
In a strategic move, Chipotle invested in a start-up named Hyphen in July 2022, which has now borne fruit in the form of an automated food assembly machine.
Developed by Hyphen, this robot specializes in crafting Chipotle’s signature bowls and salads. The machine operates discreetly below the main food prep line for digital orders, allowing Chipotle employees to focus on preparing other menu items.
A Growing Portfolio of Food Tech
This is not Chipotle’s first foray into food tech. In March 2022, the company unveiled “Chippy,” a robot dedicated to making their famous chips. Later, in July, they introduced “Autocado,” a robot designed to handle the labor-intensive task of prepping avocados for guacamole.
These investments in food automation underscore Chipotle’s commitment to efficiency and innovation in the ever-competitive fast-casual dining landscape.
Potential Impact on Chipotle Stock
While Chipotle’s stock has traditionally traded at a premium valuation, its current price-to-earnings (P/E) ratio of 46 is relatively more affordable compared to its historical averages. However, with expenses on the rise in the restaurant industry, Chipotle is looking for ways to manage costs without passing them onto customers through higher menu prices.
Robotic automation presents a solution. Already, labor expenses as a percentage of revenue have reduced from 25.6% in the first half of 2022 to 24.5% in the first half of 2023.
Embracing Automation for a Brighter Dining Future
Though the implementation of robots across Chipotle’s nearly 3,300 locations may take time, these investments in food tech hold the promise of maintaining profitability in the long term. While the robots may not be an immediate game-changer, they represent a step forward in the fast-casual dining industry’s evolution toward greater efficiency and innovation.
Chipotle is certainly embracing the future of dining with open arms, and it remains to be seen how these technological advancements will impact the company’s bottom line in the years to come.
