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podcasts.
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Hello and welcome to How I Built This
0:38
Lab. I'm Guy Raz. So this is
0:40
the place where we tell the stories of companies
0:43
that are working on big, world-changing
0:45
ideas, and it's also where we
0:47
bring back previous How I
0:49
Built This guests for an update. Steve
0:52
Ells was first on the show way back
0:54
in 2017, and at the time,
0:57
he told the story of how he built Chipotle
0:59
from a single restaurant in Denver
1:02
to a massive chain that really
1:05
changed the restaurant industry and kind
1:07
of created this whole concept of fast, casual
1:09
dining. It's actually an amazing episode,
1:12
and if you haven't heard it, I definitely recommend
1:14
that you go back in your podcast feed and give
1:16
it a listen. But we invited Steve
1:18
to come back on the show this week because
1:21
he's now working on a new concept that
1:23
he also believes could revolutionize
1:25
the industry. Essentially, it's
1:27
a chain of very small, highly
1:30
automated restaurants that will serve
1:32
a vegan menu. It's called
1:35
Kernel, and he's planning to open the first locations
1:37
in New York City very soon.
1:39
And when we left off with Steve back
1:41
in 2017, Chipotle was dealing with a pretty
1:44
major crisis. A string of foodborne
1:46
illness outbreaks had caused some customers
1:49
to get sick, and things got so
1:51
bad that Steve would actually end
1:53
up stepping down from his role as CEO of
1:55
the chain that he started back
1:58
in 1993.
1:59
When the foodborne
2:02
illness issues were going
2:05
on, I mean, this was some of our toughest,
2:08
toughest times at Chipotle. And coming off
2:10
of extraordinary success and kind
2:12
of nothing but success, it's
2:15
quite a shock. It's quite
2:17
a slap in the face. And when people
2:20
are getting ill from
2:22
what you're feeding them, you take
2:24
that very personally. It's
2:27
nothing you want to see happen. And
2:29
so, you know, you're only
2:32
thinking about how to solve the problem.
2:34
What caused the problem? How can
2:36
we make sure it never happens again? How
2:38
can we make sure that Chipotle will
2:41
be, you know, the safest place for people to eat?
2:43
So that's what's on your mind, not
2:46
thinking about my position. However,
2:50
after we got through reinventing
2:54
our safety protocols and making sure that we
2:56
were putting the best practices in
2:58
place, you know, it was taking
3:00
a while for sales to come back. The
3:02
public was wary. And
3:05
I can't blame them. For so
3:07
long, we had promised food with integrity
3:09
and then something like this happened. So
3:12
I knew, you know, it was
3:14
pretty obvious to me that we needed to jumpstart
3:17
the company and new leadership is
3:19
one of the things that needs to be part of that.
3:22
Yeah. Steve, the last time
3:24
we talked, this is in the fall of 2017,
3:26
and I guess at the time, you
3:30
were already having conversations about
3:33
your future as the CEO of Chipotle.
3:36
And I think just like just about a month after
3:38
that interview aired in November of 2017, you
3:42
stepped down as CEO and you became executive
3:44
chairman. What's
3:47
that? I mean, everything I've read about your statements, you
3:49
know, you were super supportive
3:51
of Brian Nickel who took over and, you
3:54
know, very kind of gracious. But I was just
3:56
from a personal perspective,
3:58
right? Like from the Steve L. Scales is
4:01
the guy who like saw mission
4:03
burritos in San Francisco and the steaming, you
4:05
know Plates of beans to
4:07
the guy who starts this restaurant in Denver and then scales
4:09
it How did it feel to
4:12
stop running it?
4:14
That process is you know gut
4:16
wrenching right to have allowed
4:19
Under your watch a foodborne illness Is
4:23
is not easy Yeah, looking in the
4:25
mirror and knowing that having
4:27
new leadership to sort of restart
4:30
the brand You
4:33
know It's the right decision.
4:36
These are not easy things to
4:38
have to face You know
4:41
all said and done after doing
4:43
it for at that time. It would have been 25 years
4:47
Having someone else come in to take the
4:49
CEO position is a sense of
4:51
relief really and so yeah I'm
4:54
not gonna say it was easy because it wasn't And
4:57
when and when I handed it over to Brian,
5:00
you know, I felt comfort in his ability
5:02
to rebuild the team to
5:05
build excitement about the
5:07
safety protocols the new
5:09
procedures and also his way
5:11
of You know speaking to the public and
5:14
gaining confidence through great communications.
5:16
And so so he did a fantastic job, but
5:19
you know Sitting on
5:21
the board as executive chairman,
5:24
it's not what I do I mean it was
5:26
a fine job, but but it's not
5:29
what Energizes me and
5:32
and so I took the opportunity to
5:34
retire and think about what
5:36
was next
5:38
You step down Officially,
5:40
I was announced and right as
5:42
a pandemic was unfolding and in March
5:44
of 2020 as executive chairman And
5:47
when you step down, did you have a sense of what you
5:49
want us to do next? Did you kind of have an idea
5:51
in your mind of what
5:53
where you would go? I didn't You
5:58
know, I remember what I remember
5:59
I remember a few times, these big
6:02
transitions in my life, after
6:05
college, deciding to go to cooking school, I
6:08
said, Dad, I want to go to cooking school. I said, well,
6:10
are you going to be a chef?
6:10
I said, no, I'm really
6:13
interested in cooking. I think I'd
6:15
have a lot of fun. I think I'd learn a lot.
6:18
Maybe that's risky. Maybe decide
6:20
what you want to do first. I remember
6:22
working at Stars and telling
6:25
my dad, I'm going to leave. I'm going
6:27
to go start this burrito place. I'm
6:30
going to move back to Colorado and do it. He's like, well, tell
6:32
me, what does the plan look like? I said, I
6:35
don't really know yet. I just have
6:37
this hunch. And so, you
6:39
know, I'm not afraid to try
6:42
new things without sort of having
6:44
a full plan in place. The
6:47
change just felt like
6:49
it was going to be right. I
6:52
knew that I needed to do something different. I
6:54
just didn't know what. So
6:57
what did you, I mean, during the pandemic, did you
6:59
kind of hunker down and just start to think? So
7:02
it was in the winter. So I was in Colorado
7:04
and I was skiing a lot, but
7:06
also reading and spending time with friends and
7:09
family. And, you
7:12
know, one of the things I read was Bill Gates, how
7:14
to avoid a climate disaster. And
7:18
what struck me was this scientific
7:21
consensus if we don't address
7:24
the amount of greenhouse gases we're
7:26
emitting and bring them down to zero
7:29
by 2050 that we
7:31
go over the tipping point. And whether you
7:33
believe, you know, those are exactly
7:35
the numbers, I think conceptually
7:38
it's right that we have, you know, we
7:40
have a long way to go to reduce our
7:42
greenhouse gases so that
7:44
we're not affecting negatively
7:46
our planet. And I
7:48
thought, well, what could I do about it? And
7:52
I come to understand that, you know, 25
7:54
or 30% or so of
7:56
the greenhouse gases that we emit come
7:59
from what we eat. And
8:01
the vast majority of that comes
8:03
from animal sources. So I thought, well,
8:06
what if I started a plant-based
8:08
restaurant, might that help? And
8:12
of course, if I start a plant-based restaurant,
8:14
that's really not gonna move the needle. But
8:16
I thought, well, what if it's a chain
8:18
the size of Chipotle, might that help? And
8:21
still probably not. These are big
8:25
problems that we have. And
8:28
so I thought, well, what if everybody copied this
8:31
restaurant like they copied the Chipotle
8:33
model? Might that do something? And
8:36
I thought, well, quite possibly. And so why not
8:38
give it a shot? When you
8:40
were sort of experimenting with this, I'm
8:43
assuming that when you
8:45
left Chipotle, you couldn't open another
8:47
chain of Mexican restaurants, but it was okay
8:50
for you to get back into the food
8:52
business? Oh yeah, no,
8:55
I was speaking with Chipotle. Of
8:57
course I have a non-compete in
9:00
place. But I asked them, I said, well,
9:02
what do you think if I started a plant-based
9:05
restaurant, have nothing to do with Chipotle
9:08
or the fast casual format?
9:11
Certainly something completely different. And they
9:13
said it would be fine to open a
9:15
handful of restaurants.
9:17
And so you thought, okay, a
9:20
plant-based restaurant, there
9:23
have been some attempts to do
9:25
this. I think even in Washington,
9:27
D.C., Jose Andres has
9:29
a plant-based casual place. When
9:33
you started to think about it, what were you thinking, like, this
9:36
will be like plant-based fast food kind
9:38
of restaurant?
9:40
So I don't really like categories.
9:43
I never really liked the categories that
9:45
people threw at Chipotle.
9:48
But I wanted to create
9:50
a menu that people
9:53
felt good about eating every day. So
9:55
the name of this restaurant is Colonel. We
10:00
have two sandwiches. One's
10:02
sort of like an engineered patty that's
10:05
meant to taste like chicken. It's like a fried chicken
10:07
sandwich that's not chicken, but
10:09
tastes every bit as much of
10:11
like a fried chicken sandwich. Then we
10:14
have the carnal burger, which is grains and legumes.
10:16
But we also have two big salads. We
10:18
have a kale Caesar
10:20
that's of course plant-based, and
10:22
we have a salad of chicories with white
10:25
bean and chickpea, schmear, and
10:28
lentils and a mustard vinaigrette. We have
10:30
some sides that are not typical
10:33
for fast food. Of course we have crispy
10:35
potatoes, but we also have roasted
10:38
carrots, and the carrots have a green
10:41
hummus and spicy toasted almonds.
10:45
We have roasted beets with
10:48
quinoa and a salsa verde
10:50
and a seed crunch. So we take a
10:52
bunch of different seeds and make like a savory granola.
10:56
Lastly, for the vegetables, we have a crispy cucumbers
10:58
with chili jam and roasted cashews.
11:02
When some people think about these plant-based
11:04
menus, they think about these
11:07
highly processed items that are meant
11:09
to taste like meat. And yes, we have one
11:11
chicken sandwich that's meant to taste like
11:14
chicken, but most of
11:16
the menu is whole grains, legumes, vegetables.
11:21
And so
11:24
my big question is about, obviously
11:26
you were
11:27
inspired to do this because
11:30
you wanna do something that has
11:32
a net positive benefit or impact on the planet,
11:35
but why do you think that this kind
11:37
of food will work? I'm a huge
11:39
fan of this food. I love vegan food and I mostly
11:41
eat a vegan diet, but
11:44
I wonder, I mean, you know, here in California,
11:47
the line to In-N-Out Burger from 11 a.m. to 2 a.m.
11:50
is always long. There's always
11:52
people there, you know, and five guys, burger
11:55
joints, taco, chipotle. You
12:00
know probably the vast majority people eat
12:02
at Chipotle are still ordering the meat
12:05
proteins Why do you think
12:07
that a a vegan concept
12:09
like this is gonna appeal
12:12
in in scale?
12:13
So guy I'm I'm not I
12:16
don't adhere to a plant-based diet I still
12:18
eat meat I still eat fish, but
12:21
I've noticed over the years I
12:23
eat less and less meat and
12:26
when I find Really great
12:28
plant-based options. I
12:30
find myself drawn to them and I notice
12:33
a lot of people are Acting
12:36
in a similar way and I think
12:38
people choose more plant-based
12:41
Options for a number of reasons some
12:44
people understand that there's an environmental
12:47
implication some people care about
12:49
animal welfare issues other other
12:51
people think that plant-based
12:54
menus offer, you know Better
12:57
health and for me, it's probably all of
12:59
those things Personally, and I think and
13:01
I think I'm not alone. I think people
13:03
will eat more plant-based Diets
13:06
and and make that part of their life if
13:09
there are better options And if we
13:11
and if we offer something that's really compelling,
13:13
that's really delicious Something
13:15
that you want to eat often. I think
13:17
this could be a wildly successful business
13:20
We're
13:22
Gonna take a quick break But when we come back
13:24
of Steve L's is using robots
13:26
to rethink the entire restaurant
13:29
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16:48
Welcome back to How I Built This Lab. I'm
16:50
Guy Raj and I'm talking with Steve
16:53
Ells, the founder of Chipotle and
16:55
now a new restaurant concept called
16:57
Kernel. Okay, so you come up with
16:59
this plant-based menu and
17:02
that's one way that
17:04
Kernel's going to be different from like a typical fast food
17:06
or casual restaurant. But
17:09
I understand that you're also planning to operate
17:11
these locations, these Kernel locations in a
17:14
different way. Can you tell me a little bit about
17:16
that? How is Kernel going to be run
17:18
differently than a typical restaurant? So
17:22
the main difference is that it's
17:24
based on a hub and spoke model. So
17:27
one of the most difficult
17:29
parts of making a great
17:31
meal is the prep. And
17:34
what we've decided to do at Kernel is
17:37
centralize the prep. So
17:39
we do all of our preparation,
17:42
all of the food prep in a
17:44
central kitchen. And that will service
17:47
a couple of handfuls of restaurants
17:50
within a five
17:52
to ten minute bicycle ride.
17:55
And we'll put this prepped food into
17:57
totes and load the totes onto
17:59
a wheelbarrow. wagon and pull them by bicycle
18:02
to the restaurants every hour. So
18:05
when the restaurant receives their
18:07
tote, they load the prep
18:09
food into the, into
18:11
the system. When you
18:14
guy want to order food at Colonel, do
18:17
you take out your device and you
18:19
go through our app or our web app and
18:22
see the offerings
18:24
and decide what you want and do
18:26
the little double click and pay and
18:29
agree upon a time to pick it up or
18:32
have it delivered. And the
18:34
system takes it from there. The system
18:36
knows what time it needs to start
18:38
cooking the food, what time it needs to start
18:41
toasting the buns and,
18:43
and then hands that to the second
18:46
person who puts that all together for you
18:48
and then hands that
18:50
off to a person who bundles
18:53
and, and puts the items
18:55
in a bag and places them
18:57
in a cubby. And so where
19:00
a typical fast casual restaurant
19:02
might have, you know, a dozen
19:04
folks at peak period, Colonel
19:07
would have three. When you
19:09
come into the restaurant, you unlock your cubby
19:12
with your SMS and,
19:14
and off you go.
19:16
So, so this concept, I
19:18
guess is to completely reinvent
19:21
our relationship with restaurants. Essentially
19:24
that it is going to be delivered
19:27
exactly on time and it's going to be
19:31
hot because we're picking it up. It's ready
19:34
exactly when we pick it up and much
19:36
of it will be automated. Each of these Colonel locations
19:39
will only need three humans to operate
19:41
them.
19:43
Exactly. So, so
19:45
we've taken, um, a lot
19:48
of the, of what I'll call the, the,
19:50
the waste out of the experience.
19:54
And so if you think about all of
19:56
the energy that's expended in
19:58
a typical restaurant, uh, and you
20:00
just study
20:02
all the extra steps and the power
20:05
and the space. It's extraordinary.
20:09
So, for instance, customers will not
20:11
walk into the restaurant, look
20:14
at a menu board, talk
20:16
to somebody behind a counter, place
20:19
their order, hand them a credit
20:21
card or cash, and have a POS
20:23
transaction because there is no menu board.
20:26
There is no counter. There is no
20:28
person behind the counter. There is no
20:30
POS. All of that
20:32
takes place on your device before
20:34
you even go into the restaurant. And
20:37
you go into the restaurant only
20:39
when your order is ready. And you'll know precisely
20:41
when your order is ready. Your app will tell you.
20:46
We also operate out of a much smaller
20:48
footprint. We can operate out
20:50
of 800 square feet where a typical fast
20:53
casual might be 2,500 square feet. And
20:56
our build out cost is a
20:58
lot less. A typical
21:01
fast casual restaurant will have a grease
21:04
hood, fire suppression systems,
21:07
gas lines, grease traps,
21:10
all of these sort of infrastructure pieces. We
21:13
don't need any of that.
21:15
So my question I'm still wondering
21:17
about is why do you need the hub and
21:19
spoke model? Like why can't you just
21:22
make all of the food like
21:25
McDonald's does, for example, in one
21:28
central location and send everything frozen to each
21:30
location and just keep it in the freezer?
21:32
What is special about the
21:34
Chipotle model or the
21:37
fast casual model is that
21:39
a lot of the food prep is done at
21:41
the individual restaurants. And
21:44
so before that, in typical fast
21:46
food restaurants, the food
21:48
would come in highly processed or frozen.
21:51
The new fast casual model has
21:53
allowed fresh ingredients to come
21:55
into restaurants and are prepared on
21:57
site. Well, we're doing the same
21:59
thing. except in a central kitchen
22:01
that's only a few minutes away from the
22:04
restaurants. And what's exciting
22:06
about this model is that you
22:09
can really focus on the central
22:11
kitchen doing prep all day
22:13
long. If you look at the most
22:15
fast casual restaurants, prep will
22:18
be done before lunch and then you stop
22:20
and you switch over to lunch rush
22:23
and then after lunch you go back to prep and
22:25
then you go back to cooking again for the
22:28
dinner rush. With the kernel model
22:30
prep is done all day long so
22:33
you're constantly producing freshly
22:35
prepared vegetables,
22:37
patties, buns, everything
22:40
that the restaurant needs
22:42
and you're delivering them frequently. We'll
22:45
open with a with a cadence of about a
22:48
delivery every hour.
22:50
Alright so you mentioned that it's gonna take just three
22:52
people working in each of these restaurants
22:55
at a time and a lot
22:58
of automation. So let me see if I understand
23:00
this because I think that what you're talking about is robotics
23:02
right and I've read a little bit about it and I
23:04
guess there's gonna be like a robotic
23:07
arm and an electric
23:09
oven that's automated that actually does a lot
23:11
of the cooking. So was
23:14
that equipment that you were like
23:16
could did you just find it off the shelf or was
23:18
that equipment that you had to that had to be
23:20
custom-made?
23:21
What I knew I wanted
23:24
to do was have a team
23:26
that was smaller than the typical restaurant team
23:29
and so how do you reduce the number of people from
23:31
let's say a dozen down to three? Well
23:33
there's a lot of automation. There
23:36
is robotics. You know you order
23:38
from a digital environment right instead
23:40
of a person-to-person
23:43
environment. The equipment
23:46
varies so the robot
23:48
arm we didn't develop that we
23:51
bought an off-the-shelf KUKA robot.
23:53
It's a robot that's typically used
23:56
on assembly lines.
23:58
They work 24-7. for
24:00
years. They're very reliable.
24:02
Of course, we custom program that. We
24:06
use an impingement oven
24:09
that we took and
24:12
modified. We have special
24:15
pans that we custom
24:17
made that go into the oven, and a special
24:20
way that the robot arm engages
24:23
with those pans. But a lot of the
24:25
equipment is off the shelf.
24:27
It's just used in a novel
24:29
way. So if you look at the equipment,
24:32
you might recognize some things, but
24:34
some things for sure are custom.
24:37
And tell me about, I mean,
24:39
because this model, if this works,
24:42
and I mean, I don't see why it wouldn't.
24:44
I mean, I think you're going to open
24:46
up the first location in the
24:48
fall of 2023. And I read that
24:50
plans are to have like 15 locations
24:53
within the next two years. Imagine that.
24:55
I mean, the ambitions
24:58
are big here. Well,
25:00
well, yes. I mean, we
25:03
will go fast. You know, the operating
25:05
platform has been working
25:08
now for well over a
25:10
year. And we're now
25:12
in the process of building the final
25:15
version of it. And and
25:17
I expect that it will, we will open
25:19
up and it'll be highly reliable. I
25:22
think that we will learn though, as we
25:24
observe it in the first few months, and,
25:27
and, you know, almost for sure,
25:30
we will tweak it before the second restaurant
25:32
opens. And so I see over
25:34
the next couple of years, as
25:37
we build out 15 restaurants, we
25:39
will continue to refine
25:42
the system. And I think we will
25:44
be able to operate out of
25:46
a smaller footprint and
25:49
increase the number of items
25:51
that we can make in a given time. But
25:54
for sure, the first
25:57
restaurant that the platform works, it
25:59
will. works well and it's just
26:01
very exciting to watch.
26:03
I mean the idea of opening a restaurant with
26:06
no grease hoods or grease traps, no
26:09
ventilation, no deep fryers,
26:12
that's very appealing because that is
26:14
a huge challenge
26:17
for many people who want open restaurants. I mean that the
26:19
barriers to entry are high when
26:23
you can't bring all those things in. They're
26:25
expensive. So let's, let
26:27
me, I mean I'm curious, I mean do you see
26:30
this model right? Do
26:32
you see it being replicated by other,
26:35
like the Chipotle model was replicated?
26:37
Do you see that as part of your business like maybe
26:40
even licensing the technology? Well
26:42
I think I think that's exactly it Guy. When
26:47
people come in to look at the system
26:49
I think they will notice that
26:51
there are fewer people working in the restaurant.
26:53
They'll notice the efficiencies.
26:55
They'll notice the reduced square
26:58
footage. They'll notice that
27:01
it probably is a much lower investment
27:03
than a typical restaurant and
27:05
so people will be interested in copying
27:07
or borrowing that model. I
27:10
think an opportunity though it would be to license
27:12
this platform or parts of
27:14
the platform to others for
27:17
cheaper than they could build it themselves.
27:20
You know it's interesting. I wonder
27:22
in terms of the cost, the startup cost, I'm
27:25
curious about like the other day I was
27:27
at a Williams Sonoma and I was I was
27:29
eyeing this beautiful espresso machine
27:31
and it was like $4,000. I'm not gonna buy it but I
27:35
was like how many cups of this coffee
27:38
do I have to buy for this to pay
27:40
off? And actually you can do the math and you can just figure it out
27:42
and say you know
27:42
in a couple of years not
27:44
going to Starbucks this thing's gonna pay itself off. So
27:47
just applying that principle to this restaurant
27:49
or I mean if you had a restaurant with
27:51
a grease you know trap and the hood
27:54
and all that stuff and you had like five or six employees
27:57
you could get that up and running but to have
28:00
this restaurant with the special
28:02
oven and the technology and
28:04
only three employees is are the startup costs
28:07
just the initial costs higher
28:09
To get it off the ground or or not? Well,
28:12
you know, I have spent a good amount of
28:14
money And um, I just completed
28:16
my series a around and raised 36
28:19
million And so so,
28:21
you know, that'll take us through the next couple of years and
28:24
and that will be a lot to open up 15 restaurants
28:28
the investment cost in these individual
28:31
restaurants though is Much
28:33
less than a typical fast casual restaurant.
28:36
Wow So so there there is a lot
28:38
that has gone into developing the technology,
28:41
but the actual Amount that you
28:43
spend to open one of these units is
28:46
substantially less than a typical
28:48
fast casual restaurant
28:50
So you could apply the same
28:52
model to any kind of food?
28:55
Essentially, well, I wouldn't say I wouldn't
28:57
say any kind of food I I
28:59
couldn't see our system making
29:01
spaghetti bolognese today, right?
29:03
Like like grab and go food I mean for example,
29:06
well there there are some things that I think it could do very
29:09
well There are others that
29:11
it probably can't do yet. Yeah,
29:13
but
29:14
For sure. There's no question that
29:17
Robotics will have a lot
29:19
more dexterity and they will be
29:21
a lot easier to program And
29:24
through ai they will learn
29:26
and get better and so What
29:29
we've done is we've developed a platform
29:32
And a format that will allow us to avail
29:34
ourselves of the new technology and sort
29:36
of plug it in to To what we've already
29:39
created and and I think a legacy
29:41
restaurant might have a harder time doing
29:43
that Or or might not gain
29:46
as much advantage of the new technology
29:48
coming out And so I think it's
29:51
exciting for uh for people to
29:53
come in and be involved in something that that
29:55
has this kind of technology
29:58
We're gonna take another quick But
30:00
just ahead more from Steve L's on
30:02
the future of food service stay with
30:04
us
30:04
if you're listening to how I built this lab
30:21
Welcome back to how I built this lab my guest
30:24
is Steve L's the founder of Chipotle
30:26
and now a new highly automated
30:28
vegan restaurant called Colonel
30:31
So one of the things you
30:33
know, there's been a few articles about
30:36
what you're doing, but not much information yet Because
30:38
it's still I was still you know, I guess in stealth
30:40
mode but one of the things that
30:43
I've read that I think is very interesting is you
30:45
suggested that current system
30:47
the current
30:47
model of the Fast
30:50
food or fast gasoline in the restaurant industry
30:52
is broken and I and if you think
30:54
that
30:54
That is a case of I think you're right It's
30:57
you can see this with Restaurants
30:59
are
30:59
struggling to find employees Employees
31:02
are struggling many people don't want to work in
31:05
the space though The pay is low
31:07
and or can be low and some restaurants have
31:09
to you know, like in San Francisco
31:12
pay a lot Because the cost
31:14
of living is so high Is
31:16
this in a sense also an attempt
31:18
to kind of address that sort
31:20
of broken labor system?
31:22
within restaurants well,
31:25
so so I Wanted
31:29
to be able to have
31:31
an experience for the team that is
31:36
better than the typical fast food
31:38
experience
31:39
One of the problems is that we see
31:41
extraordinarily high turnover in
31:43
the industry I think it's something like 165 percent is typical and so The
31:49
folks are never there long enough to
31:51
get really good At their
31:54
jobs and and I think the manager who
31:56
has probably a team of 40 people
31:59
if they have lunch
32:02
and dinner shifts of a dozen. I mean,
32:04
this is, this is hard for someone to manage
32:06
a team of 40 people. And so
32:09
I'm excited about having
32:11
these very, very small teams. So if we
32:13
need three people at a shift, maybe
32:15
we have a team of eight, maybe nine. And,
32:18
and you can really pay attention and mentor
32:21
and train. And it's
32:23
also different work. I mean, yes, they're
32:25
cooking. Yes. It's a restaurant, but
32:28
there's a lot of technology and
32:31
understanding that technology and caring
32:33
for that technology, maintaining the
32:35
technology. It's a sort of an elevated
32:37
position. It's going to take a lot of training
32:39
and we'll command a higher wages. And,
32:43
and since we only have three people, we'll
32:46
be able to afford those higher wages. Plus
32:48
I think our purpose is
32:51
bigger than our product, being able to
32:53
address global warming, being
32:55
able to address some of the
32:58
inequality with, with pay for
33:00
folks in the world of fast food and restaurants
33:03
in general, to be able to pay them much
33:05
higher wages and give them full benefits,
33:08
give them vacation time, give them predictable
33:11
schedules, give them a stock
33:13
option program so that they can participate
33:16
in the upside of the venture. This is
33:18
all very, very exciting. And it's much
33:21
more doable when you have smaller
33:23
teams that you can really mentor and pay
33:25
a lot of attention to.
33:27
I'm curious, Steve, I'm sure
33:29
you've seen this at San Francisco
33:31
airport. I'm sure a lot of people who've been to the
33:33
airport have seen it, but there's a fully automated
33:36
barista there, right? And I think there's another one
33:38
in the city. In fact,
33:40
I saw fully automated cotton
33:42
candy machine recently, which was absolutely
33:45
amazing because it shapes the cotton candy
33:47
in different shapes. It's incredible. It
33:49
seems like just a
33:51
few more steps, this can be entirely
33:54
automated that you wouldn't need any humans
33:57
involved.
33:58
Well, I think.
34:00
that it's certainly
34:02
possible
34:03
in the future, but I think we're many,
34:06
many, many, many years away from that. How
34:11
technology evolves with robotics
34:14
and eventually how much dexterity these
34:17
robots can have, I'm not sure,
34:19
but I think there will always be
34:22
a place for our teams to operate the kernel
34:29
model for the foreseeable future,
34:31
and I'm talking about the next decade
34:34
at least. And so I
34:37
just want to make sure that we're creating
34:40
a system that has
34:42
the potential to create
34:44
a really great work environment
34:46
and reward our folks
34:48
appropriately.
34:49
And I think that's tough with some of the current
34:52
fast food models out there. I think
34:54
you see depressed wages because
34:57
margins are so tight, right? And
35:00
I think these operators would love to pay their
35:02
folks more, but the model just can't
35:04
afford to do it.
35:06
Over the last 20 years, we've
35:08
become more and more used to fewer
35:11
and fewer human-to-human interactions, right? Like
35:14
we order stuff through Amazon or we get our food delivered
35:16
through DoorDash and it just
35:18
kind of happens. For
35:20
many people, that's better. It's a better
35:22
option. But there are still lots
35:24
of people who do like that face-to-face interaction.
35:27
You go into a Chick-fil-A and they're
35:29
famously extremely friendly, the
35:31
same with In-N-Out. It's part of their training. You
35:35
will not encounter human at kernel,
35:38
right? You will go in and there will be no sort
35:40
of human face. And
35:43
so is there, how do you create
35:45
a sense of warmth,
35:47
a feeling of hospitality, welcome without
35:51
the human? What are you doing to kind of, I
35:53
don't know, bring that
35:56
sensibility in?
35:59
ask me this question and
36:03
ask me if it's ultimately a good thing. We'll
36:07
have to see how it unfolds. I
36:10
know for sure that continuing
36:12
to operate these systems
36:15
that's heavy, heavy, heavy on numbers
36:19
of employees who turn over very
36:21
frequently is not
36:23
sustainable. It says to me that
36:25
people don't want those
36:28
particular jobs under
36:30
those conditions with that pay.
36:34
It takes reinventing the system to
36:37
do that.
36:38
I think
36:41
craving human interaction is not
36:43
going to go away. I think we might
36:45
get it in different places. But
36:49
I see a necessity to
36:52
create an economic model
36:54
for
36:55
serving this food. That
37:00
solves some problems. There's
37:03
always going to be a place, I think, for
37:06
the kind of human interaction
37:08
that you describe. It
37:10
will probably just be different.
37:13
When will you know? You're
37:17
talking about 15 restaurants over the next two years.
37:20
What are your metrics, your metrics are going to be your sales,
37:23
but what other metrics are you going to be looking
37:25
for to see whether this
37:27
is working? We
37:29
will know a lot about our customers
37:33
and their habits and their frequency and
37:35
hopefully how they felt about their experience
37:37
because of our connectivity to them through
37:40
the app. Success
37:43
to me means that they
37:45
love the food, that they tell all
37:47
their friends about it, that they come often.
37:50
If that happens, we know we're in a very
37:52
good position. Success also means
37:55
that enough people are coming and we have
37:57
the volumes to achieve the sales
37:59
levels. we're predicting. And so
38:01
I think if we have those two things, we're off to the races.
38:04
So right now you're starting in New York, which is where
38:06
you live. And do
38:09
you have a plan of where you want
38:12
to expand next? Or will you wait and see
38:14
what happens in New York first?
38:16
So, you
38:18
know, I really like to focus on
38:20
the problem at hand. And that is over the next two
38:22
years, really refine the
38:25
system. I think if we have the sales
38:27
volume and the customer affinity to
38:29
prove that the brand is a success, then
38:32
we go to new markets. And yes,
38:34
there are markets that have the right kinds
38:37
of densities, and they're close
38:39
enough to us. And there
38:41
will be a natural expansion program.
38:44
Steve, how have
38:46
you changed as a leader from
38:49
the time you ran Chipotle to this?
38:51
I mean, what are you doing differently, maybe
38:54
better, that you didn't do there, that
38:56
you learned from there, that
38:58
you're applying to here? So
39:00
Chipotle is 30
39:02
years old. It was 30 years old this
39:07
summer. And so if I think about
39:09
my leadership style 30 years
39:11
ago, and what it is today,
39:13
I mean, it's much,
39:16
much different. You know, thankfully,
39:18
I've learned from my mistakes,
39:22
learned from other people who are
39:24
terrific leaders. And
39:28
I think the way I'm opening kernels
39:30
today is much different than I opened
39:33
Chipotle 30 years ago.
39:36
There are some similarities, though. I
39:39
have a very strong vision
39:41
for
39:42
sort of the foundational principles. And
39:45
those will be really great ingredients,
39:48
solid cooking techniques, and
39:51
building teams that believe
39:53
in our purpose and love
39:55
to provide great hospitality. And
39:58
while hospitality may
40:00
not be face to face with
40:02
the customers, it's providing
40:04
a really good experience through
40:07
the app, it's providing
40:10
reliability on service times, it's
40:12
making sure that everything that we serve
40:15
is delicious. Foundationally,
40:18
I think I'll operate in
40:20
a very similar way, but
40:23
the team that I'm putting in place today is
40:26
really a team that's so
40:29
expert and ready to take this
40:31
to the next level. And I
40:34
didn't initially build Chipotle with that
40:36
kind of team.
40:37
Yeah. You know, Steve,
40:40
your legacy as a
40:42
sort of a pioneer in the spaces is
40:44
solidified. I mean, so many people have replicated
40:47
the model of Chipotle, and
40:49
it's a great restaurant. I probably,
40:52
you know, my family probably eats there a few times
40:54
a month. It's my kids' favorite place
40:56
to eat. But,
40:58
you know, I wonder, I mean, you left
41:02
Chipotle, great reputation,
41:04
you know, wealthy, you did very well.
41:07
Why are you doing this? I'm curious what motivates
41:09
you now. You don't need the money, you don't need the
41:12
reputational push, you don't need
41:14
the legacy side. What is it that gets
41:17
you going about doing this? Why?
41:20
Well, it's
41:23
not an easy question to answer. You
41:25
know, I've been around restaurants my entire
41:28
life, and I see why there
41:30
is high turnover. I see,
41:32
you know, why certain
41:35
restaurants serve certain kinds of food. I
41:37
think Colonel could be a platform
41:40
that perhaps solves some
41:43
fundamental problems. And it's
41:45
really hard, but this
41:47
problem is fun to solve. And
41:50
the team that I've put together, they're
41:53
so smart. And it's
41:55
been really great to see how they have
41:57
been addressing some of these challenges. that
42:00
we have. I mean, I just, I have fun
42:02
doing this, but I also have always
42:04
loved serving people like literally
42:07
serving food. I mean, I used to love
42:09
to throw dinner parties, you know,
42:11
in high school,
42:12
in college.
42:13
And of course, then when I graduated to college, I
42:16
got into the restaurant business to serve food. So
42:18
this idea of serving is, is sort of part of
42:21
who I am. I think carnal is
42:23
just an extension of that, but just
42:25
in a different way. I also, I
42:28
also like to challenge the system. I don't
42:30
think there's been a lot of innovation in restaurants
42:34
over, over the generations. We pretty
42:37
much have the same kind of equipment, the
42:39
same kinds of kitchens, the
42:41
same kinds of cooking techniques. So
42:44
I think, I think by reinventing
42:46
it, I don't know, it's exciting. And
42:49
I think a lot of good could come out of it.
42:51
That's Steve L's, founder
42:54
of Chipotle, and now, Colonel.
42:57
By the way, I wasn't kidding when I said that Chipotle is my
42:59
kid's favorite place to eat. We
43:01
were actually in Paris earlier this year
43:03
on vacation, one of the greatest food cities on
43:05
the planet. And you know where they ate? That's
43:08
right, they got burritos at Chipotle
43:11
in Paris. Hey,
43:13
thanks so much for listening to the show this week. Please
43:16
make sure to click the follow button on your podcast
43:18
app so you never miss a new episode
43:20
of the show. And as always, it's totally
43:23
free. This episode was produced
43:25
by Chris Messini with editing by John
43:27
Isabella. Our music was composed
43:29
by Rontina Rablue. Our audio engineer
43:31
was Neil Rauch. Our production team at How I Built
43:34
This includes Alex Chung, Casey
43:36
Herman, Kari Thompson, Niamh Grant, Malia
43:39
Agadello, and Sam Paulson. I'm
43:41
Guy Raj, and you've been listening to How I Built
43:43
This.
43:50
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