Chipotle is about to get some robotic help to cut both costs and avocados. News of a Autocado robot first arose last summer, as the fast-food company looked to robots to cut, core, and peel avocados before a human takes on the mashing part for Chipotle’s signature guacamole. And the robot unveiling is imminent, according to the company’s first-quarter earnings.
CEO Brian Niccol led a pretty chipper call, saying company sales “grew by 14% to reach $2.7 billion,” boosted by the return of popular menu items like chicken al pastor. Earlier this month, some speculated fast-food companies would be in hot water following California’s new $20 minimum-wage law, but Chipotle’s recent earnings shows companies can afford to maintain profits and pay workers well, they just have to be smart about how they adjust.
One such effort is using robots alongside workers. “In our restaurants, we continue to explore technology tools that could drive higher productivity and improve the overall experience for our teams,” Niccol said. This avocado masher could be one such way to reduce costs and increase productivity while paying workers more. The company is looking to use “robotics and AI and finding other ways to do productivity,” he added.
Niccol also said he’s “feeling really good about getting those into a restaurant probably in the back half of this year.” So get ready for some robot-human hybrid guac. Currently, the CEO boasted some of the lowest turnovers the company has seen.
Of course, such tools can sometimes make workers nervous about their jobs being outsourced or encroached upon as managers look for a deal rather than pay their team what they’re worth. For instance, Wendy’s recently implemented AI in their drive-thrus and vegan takeout company Kernel hired a six-axis robot arm to add veggie burgers to the assembly line. Of course, it doesn’t always go without a hitch as Chipotle itself stopped using its tortilla-chip AI machine because it was too difficult to clean. But, in general, fast-food companies are on the frontline of adding in these AI services, and many have found a way to keep both humans and robots living in peace.
“It’s not that they are necessarily reducing the number of people,” Bank of America analyst Sara Senatore told Fortune’s Sasha Rogelberg of these AI tools. “It’s more that they’re making those people more productive and happier,” she added, explaining in a note that automated tools cut down on labor costs, which account on average for 36% of restaurant’s costs.
Embracing new technological innovations is just one way a chain can stay afloat under new state laws. They also can afford to raise their prices a bit, as Chipotle said it raised its menu prices by 6% to 7% in California.
Over this past year, in-store sales at Chipotle soared by 19% as the brand saw gains with consumers of all income brackets. It seems as if while some people might grumble a bit at an extra dollar for queso, the demand is still there and customers are willing to pay more.
“We think Chipotle will stay in the budget,” Jack Hartung, chief financial and chief administrative officer at Chipotle, said on the call. To wrap it all up, the burrito company’s success marks early good signs for chains worried about implementing the new workers’ rights law. CEOs can serve themselves an extra helping of guac and their employees, too, as long as they really think creatively about how to cut costs and enhance productivity.
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