When a robot cooks your lunch with Steve Ells of Chipotle and Kernel

0:00Wondery Plus subscribers can listen to How I Built This Early Early and Ad Free right now. Join Wondery Plus in the Wondery app or on Apple Podcast. I love traveling with my family. We did an awesome trip this summer. And one of the things that made the trip so special were the Airbnb experiences we did. Immersive tours, cooking classes, a chance to get coffee with a world-class barista. I had so much fun on those experiences that I decided to host my own Airbnb original experience in San Francisco, designed to help you think about how to unlock your next big move in your career or even in your life.

0:41To learn more about my Airbnb original experience, head to Airbnb.com slash Guy. Listening on Audible helps your imagination soar. And no matter what you like, Audible's romance collection has something to make you swoon. Here's your invitation to have it all. Find a book boyfriend in the city and another on the hockey field. Or if nothing on this earth touches your heart, you can always find love in another realm. Hear modern rom-coms from authors like Lily Chu and Allie Hazelwood, the latest romantic-y series from Sarah J. Maas and Rebecca Yaros, and Regency favorites like Bridgerton and Outlander.

1:19And that's only the beginning. Audible has an incredible selection with over 1 million audiobooks, podcasts, and Audible originals all in one easy app. And you can enjoy Audible anytime while doing other things. Household chores, exercising, on the road, commuting, you name it. Audible makes it easy to drop into your fantasies during your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Your first great love story is free when you sign up for a free 30-day Audible trial. Visit audible.com slash built.

2:19Omaha, Nebraska, and in New York, Pacific Life and Annuity, Phoenix, Arizona. Hello and welcome to How I Built This Lab. I'm Guy Raz. So this is the place where we tell the stories of companies that are working on big, world-changing ideas. And it's also where we bring back previous How I Built This guests for an update. Steve Ells was first on the show way back in 2017. And at the time, he told the story of how he built Chipotle from a single restaurant in Denver to a massive chain that really changed the restaurant industry and kind of created this whole concept of fast casual dining. It's actually an amazing episode.

3:01And if you haven't heard it, I definitely recommend that you go back in your podcast feed and give it a listen. But we invited Steve to come back on the show this week because he's now working on a new concept that he also believes could revolutionize the industry. Essentially, it's a chain of very small, highly automated restaurants that will serve a vegan menu. It's called Colonel, and he's planning to open the first locations in New York City very soon. And when we left off with Steve back in 2017, Chipotle was dealing with a pretty major crisis. A string of foodborne illness outbreaks had caused some customers to get sick.

3:39And things got so bad that Steve would actually end up stepping down from his role as CEO of the chain that he started back in 1993. When the foodborne illness issues were going on, I mean, this was some of our toughest, toughest times at Chipotle. And coming off of extraordinary success and kind of nothing but success, it's quite a shock. It's quite a slap in the face. and when people are getting ill from what you're feeding them, you take that very personally. It's nothing you want to see happen. And so you're only thinking about how to solve the problem, what caused the problem, how can we make sure it never happens again, how can we make sure that Chipotle will be the safest place for people to eat.

4:33So that's what's on your mind, not thinking about my position. However, after we got through reinventing our safety protocols and making sure that we were putting the best practices in place, it was taking a while for sales to come back. The public was wary and I can't blame them. For so long, we had promised food with integrity and then something like this happened. So I knew, it was pretty obvious to me that we needed to jumpstart the company. And new leadership is one of the things that needs to be part of that. Yeah, Steve, the last time we talked, this was in the fall of 2017. And I guess at the time, you were already having conversations about your future as the CEO of Chipotle.

5:25And I think just about a month after that interview aired in November of 2017, you stepped down as CEO and you became executive chairman. And was that, I mean, everything I've read about your statements, you know, you were super supportive of Brian Nickel, who took over and, you know, very kind of gracious. But just from a personal perspective, right, like from the Steve Ells as the guy who like saw Mission Burritos in San Francisco and the steaming, you know, plates of beans to the guy who starts this restaurant in Denver and then scales it. How did it feel to stop running it? That process is gut-wrenching, right?

6:06To have allowed under your watch a foodborne illness is not easy. Looking in the mirror and knowing that having new leadership to sort of restart the brand, it's the right decision. These are not easy things to have to face. you know, all said and done, after doing it for, at that time, it would have been 25 years, having someone else come in to take the CEO position is a sense of relief, really. And so I'm not going to say it was easy because it wasn't. And when I handed it over to Brian, you know, I felt comfort in his ability to rebuild the team, to build excitement about the safety protocols, the new procedures, and also his way of speaking to the public and gaining confidence through great communications.

7:06And so he did a fantastic job. But sitting on the board as executive chairman, it's not what I do. I mean, it was a fine job, but it's not what energizes me. And so I took the opportunity to retire and think about what was next. You stepped down officially, it was announced, right as the pandemic was unfolding in March of 2020 as executive chairman. And when you stepped down, did you have a sense of what you wanted to do next? Did you kind of have an idea in your mind of where you would go? I didn't. um you know i remember well i remember a few times these these uh sort of big transitions in my life uh after college deciding to go to cooking school uh i said dad i want to go to cooking school he said well are you going to be a chef do you i said no i just i'm really interested in cooking i think i i think i'd have a lot of fun i think i'd learn a lot he said ah maybe that's risky maybe decide what you want to do first i remember uh working at stars and telling my dad, hey, I'm going to leave.

8:16I'm going to go start this burrito place. I'm going to move back to Colorado and do it. He's like, well, tell me, what does the plan look like? I said, I don't really know yet. I just have this hunch. And so, you know, I'm not afraid to try new things without sort of having a full plan in place. The change just felt like it was going to be right. I knew that I needed to do something different. I just didn't know what. So what did you, I mean, during the pandemic, did you kind of hunker down and just start to think? So it was in the winter. So I was in Colorado and I was skiing a lot, but also reading and spending time with friends and family.

9:00And one of the things that I read was Bill Gates, how to avoid a climate disaster. And what struck me was this scientific consensus that if we don't address the amount of greenhouse gases we're emitting and bring them down to zero by 2050, that we go over the tipping point. And whether you believe those are exactly the numbers, I think conceptually it's right that we have a long way to go to reduce our greenhouse gases. so that we're not affecting negatively our planet. And I thought, well, what could I do about it? And I come to understand that 25 or 30 % or so of the greenhouse gases that we emit come from what we eat.

9:49And the vast majority of that comes from animal sources. So I thought, well, what if what if I started a plant-based restaurant? Might that help? And of course, if I start a plant-based restaurant, that's really not going to move the needle. But I thought, well, what if it's a chain the size of Chipotle? Might that help? And still probably not. These are big problems that we have. And so I thought, well, what if everybody copied this restaurant like they copied the Chipotle model. Might that do something? And I thought, well, quite possibly. And so why not give it a shot? When you were sort of experimenting with this, I'm assuming that when you left Chipotle, you couldn't open another chain of Mexican restaurants, but it was okay for you to get back into the food business?

10:43Oh, yeah. No, I was speaking with Chipotle. Of course, I have a non-compete in place, But I asked them, I said, well, what do you think if I started a plant-based restaurant? Have nothing to do with Chipotle or the fast casual format, certainly something completely different. And they said it would be fine to open a handful of restaurants. And so you thought, okay, a plant-based restaurant. There have been some attempts to do this. I think even in Washington, D.C., Jose Andres has a plant-based fast casual place. When you start to think about it, what were you thinking? This would be like plant-based fast food kind of restaurant?

11:30So I don't really like categories. I never really liked the categories that people threw at Chipotle. But I wanted to create a menu that people felt good about eating every day. So the name of this restaurant is Colonel, and we have two sandwiches. One's sort of like an engineered patty that's meant to taste like chicken. It's a fried chicken sandwich that's not chicken, but tastes every bit as much of like a fried chicken sandwich. And then we have the Colonel Burger, which is grains and legumes. But we also have two big salads. We have a kale Caesar that's, of course, plant-based. And we have a salad of chicories with white bean and chickpea schmear and lentils and a mustard vinaigrette.

12:19We have some sides that are not typical for fast food. Of course, we have crispy potatoes, but we also have roasted carrots, and the carrots have a green hummus and spicy toasted almonds. We have roasted beets with quinoa and a salsa verde and a seed crunch. So we take a bunch of different seeds and make like a savory granola. And lastly, for the vegetables, we have a crispy cucumbers with chili jam and roasted cashews. So when some people think about these plant-based menus, they think about these highly processed items that are meant to taste like meat. And yes, we have one chicken sandwich that's meant to taste like chicken.

13:04But most of the menu is whole sort of grains, legumes, vegetables. And so my big question is about – obviously, you were inspired to do this because you want to do something that has a net positive benefit or impact on the planet. But why do you think that this kind of food will work? I'm a huge fan of this food. I love vegan food, and I mostly eat a vegan diet. But I wonder, I mean, you know, here in California, the line to In-N-Out Burger from 11 a.m. to 2 a.m. is always long. There's always people there, you know, and Five Guys, Burger Joints, Taco Plus, Chipotle. You know, probably the vast majority of people eat at Chipotle are still ordering the meat proteins.

13:55Why do you think that a vegan concept like this is going to appeal in scale? So Guy, I don't adhere to a plant-based diet. I still eat meat. I still eat fish. But I've noticed over the years I eat less and less meat. And when I find really great plant-based options, I find myself drawn to them. And I notice a lot of people are acting in a similar way. And I think people choose more plant-based options for a number of reasons. Some people understand that there's an environmental implication. Some people care about animal welfare issues. Other people think that plant-based menus offer a better health.

14:47And for me, it's probably all of those things personally. And I think I'm not alone. I think people will eat more plant-based diets and make that part of their life if there are better options. And if we offer something that's really compelling, that's really delicious, that's something that you want to eat often, I think this could be a wildly successful business. We're going to take a quick break, but when we come back, Steve Ells is using robots to rethink the entire restaurant experience. That's in just a moment. Stay with us. You're listening to How I Built This Lab.

15:30There hasn't really been a whole lot of innovation in the deodorant space. That is, until now. Lumi is a full-body, pH-balanced, aluminum-free deodorant created by an OBGYN to keep you smelling fresh literally for days, up to 72 hours, in fact. Lumi's starter pack is perfect for new customers. It comes with a solid stick deodorant, cream tube deodorant, two free products of your choice like mini body wash or deodorant wipes, and free shipping. Lumi is also excited to announce the launch of their men's line Mando with more masculine scents and packaging, but still outrageously effective. I actually have a stick of Mando Pro Sport deodorant right here.

16:12Here it is in the studio with me. It's really awesome and incredibly effective. And as a special offer for our listeners, new customers get$5 off a Lumi or Mando starter pack with code BUILT at LumiDeodorant.com or ShopMando.com. That equates to over 40 % off your starter pack when you visit LumiDeodorant.com or ShopMando.com and use code BUILT. If you've been listening to the show these last couple of episodes, you've probably heard me mention the Airbnb original experience that I'm hosting. And I'm so excited to have a chance to connect with listeners in a completely new way. It's called the Reinvention Lab, and it's designed to help you think about how to unlock your next big move in your career or even in your life.

17:02I'll help you discover your own story in ways I do on this show with my guests. and attendees will get a chance to take a deeper dive with me on so many lessons I've learned from this show, lessons that have transformed how I work and think about the future. All proceeds from the event will go to support the Ronald McDonald houses that helps families stay near their children who are being treated at nearby hospitals. It's going to be really fun and I can't wait to meet you. So come join me in San Francisco and take your idea to the next level. To grab your spot, visit airbnb.com slash guy. It's going to be great.

17:41The holidays are upon us and businesses are hiring for seasonal roles. Everything from haunted corn maze workers to snowplow drivers. This means that people with certain skills, experience, or even a special license are in high demand and not easy to find. Whether you're hiring for one of these roles or any other role, the best way to find the perfect match for your role is on ZipRecruiter. And right now, you can try it for free at ziprecruiter.com slash built. ZipRecruiter's matching technology works fast to find top talent, so you don't waste time or money. You can find out right away how many job seekers in your area are qualified for your role.

18:21Let ZipRecruiter find the right people for your roles, seasonal or otherwise. Four out of five employers who post on ZipRecruiter get a quality candidate within the first day. And right now, you can try it for free at ZipRecruiter.com slash built. Again, that's ZipRecruiter.com slash built. ZipRecruiter, the smartest way to hire. It seems like every day we hear about how AI is coming for our jobs and people are getting anxious and fearful. But a recent survey from Miro reveals that 76 % of us believe that AI can actually benefit their role, while 54 % struggle to know when to use it. Well, enter Miro's Innovation Workspace.

19:08It's an intelligent platform that brings people and AI together in a shared space to get great work done. Miro has been empowering teams to transform bold ideas into the next big thing for over a decade. We've recently started a new project using Miro, and it's a really awesome creative partner. It helps us develop better processes for organizing. It even generates new ideas. You don't have to be an AI master or toggle to yet another tool. The work you're already doing on Miro's canvas is the prompt. Help your teams get great done with Miro. Check out Miro.com to find out how. That's M-I-R-O dot com.

20:15you. If you want to share your favorite episode of How I Built This, record a short voice memo on your phone telling us your name, where you're from, what your favorite episode is, and why. A lot like the voice memo you just heard. And email it to us at hibt at id.wondery.com. And we'll share your favorites right here in the ad breaks in future episodes. And thanks so much. We love you guys, you're the best. And now back to the show.

20:50Welcome back to How I Built This Lab. I'm Guy Raz. And I'm talking with Steve Ells, the founder of Chipotle, and now a new restaurant concept called Kernel. Okay, so you come up with this, this plant based menu. And that's, that's one way that Kernel is going to be different from like a typical fast food or or casual restaurant. But I understand that you're also planning to operate these locations, these Kernel locations in a different way. Can you tell me a little bit about that? Like how is Kernel going to be run differently than a typical restaurant? So the main difference is that it's based on a hub and spoke model.

21:28So one of the most difficult parts of making a great meal is the prep. And what we've decided to do at Kernel is centralize the prep. So we do all of our preparation, all of the food prep in a central kitchen. And that will service a couple of handfuls of restaurants within a five to 10 minute bicycle ride. And we'll put this prepped food into totes and load the totes onto a wagon and pull them by bicycle to the restaurants every hour. So when the restaurant receives their tote, they load the prep food into the system. When you, Guy, want to order food at Kernel, you take out your device and you go through our app or our web app and see the offerings and decide what you want and do the little double click and pay and agree upon a time to pick it up or have it delivered.

22:34And the system takes it from there. The system knows what time it needs to start cooking the food, what time it needs to start toasting the buns, and then hands that to the second person who puts that all together for you and then hands that off to a person who bundles and puts the items in a bag and places them in a cubby. And so where a typical fast casual restaurant might have a dozen folks at peak period, Colonel would have three. When you come into the restaurant, you unlock your cubby with your SMS and off you go. So this concept, I guess, is to completely reinvent our relationship with restaurants.

23:25Essentially, that it is going to be delivered exactly on time and it's going to be hot because we're picking it up. It's ready exactly when we pick it up and much of it will be automated. Each of these kernel locations will only need three humans to operate them. Exactly. So we've taken a lot of what I'll call the waste out of the experience. And so if you think about all of the energy that's expended in a typical restaurant, and you just sort of study all the extra steps and the power and the space, it's extraordinary. So for instance, customers will not walk into the restaurant, look at a menu board, talk to somebody behind a counter, place their order, hand them a credit card or cash and have a POS transaction because there is no menu board.

24:28There is no counter. There is no person behind the counter. There is no POS. All of that takes place on your device before you even go into the restaurant. And you go into the restaurant only when your order is ready. And you'll know precisely when your order is ready. Your app will tell you. We also operate out of a much smaller footprint. We can operate out of 800 square feet where a typical fast casual might be 2 ,500 square feet. And our build-out cost is a lot less. A typical fast casual restaurant will have a grease hood, fire suppression systems, gas lines, grease traps, all of these sort of infrastructure pieces.

25:15We don't need any of that. So my question, I'm still wondering about is why do you need the hub and spoke model? Like, why can't you just make all of the food like, you know, like McDonald's does, for example, in one central location and send everything frozen to each location and just keep it in a freezer? What is special about the Chipotle model or the fast casual model is that a lot of the food prep is done at the individual restaurants. Yeah. And so before that, in typical fast food restaurants, the food would come in highly processed or frozen. The new fast casual model has allowed fresh ingredients to come into restaurants and are prepared on site.

25:59Well, we're doing the same thing except in a central kitchen that's only a few minutes away from the restaurants. And what's exciting about this model is that you can really focus on the central kitchen doing prep all day long. If you look at most fast casual restaurants, prep will be done before lunch, and then you stop and you switch over to lunch rush. And then after lunch, you go back to prep, and then you go back to cooking again for the dinner rush. With the kernel model, prep is done all day long, so you're constantly producing freshly prepared vegetables, patties, buns, everything that the restaurant needs.

26:43and you're delivering them frequently, we'll open with a cadence of about a delivery every hour. All right. So you mentioned that it's going to take just three people working in each of these restaurants at a time and a lot of automation. So let me see if I understand this because I think what you're talking about is robotics, right? And I've read a little bit about it. And I guess there's going to be like a robotic arm and an electric oven that's automated that actually does a lot of the cooking. So was that equipment that you were like, did you just find it off the shelf or was that equipment that had to be custom made?

27:22So what I knew I wanted to do was have a team that was smaller than the typical restaurant team. And so how do you reduce the number of people from let's say a dozen down to three? Well, there's a lot of automation. There is robotics. You know, you order from a digital environment. instead of a person-to-person environment. The equipment varies. So the robot arm, we didn't develop that. We bought an off-the-shelf KUKA robot. It's a robot that's typically used on assembly lines. They work 24-7 for years. They're very reliable. Of course, we custom program that. We use an impingement oven that we took and modified.

28:14We have special pans that we custom made that go into the oven and a special way that the robot arm engages with those pans. But a lot of the equipment is off the shelf. It's just used in a novel way. So if you look at the equipment, you might recognize some things, but some things for sure are custom. And tell me about – I mean because this model, if this works – and I mean I don't see why it wouldn't. I mean I think you're going to open up the first location in the fall of 2023. And I read that plans are to have like 15 locations within the next two years. So imagine that – I mean the ambitions are big here.

29:01Well, yes. I mean, we will go fast. You know, the operating platform has been working now for well over a year, and we're now in the process of building the final version of it. And I expect that we will open up and it'll be highly reliable. I think that we will learn, though, as we observe it in the first few months, and almost for sure, we will tweak it before the second restaurant opens. And so I see over the next couple of years, as we build out 15 restaurants, we will continue to refine the system. And I think we will be able to operate out of a smaller footprint and increase the number of items that we can make in a given time.

29:55But for sure, the first restaurant, the platform works. It works well. And it's just very exciting to watch. I mean, the idea of opening a restaurant with no grease hoods or grease traps, no ventilation, no deep fryers, that's very appealing because that is a huge challenge for many people who want to open restaurants. I mean, the barriers to entry are high when you can't bring all those things in. They're expensive. So let me – I mean, I'm curious. I mean, do you see this model, right? Do you see it being replicated by other – like the Chipotle model was replicated? Do you see that as part of your business, like maybe even licensing the technology?

30:43Well, I think that's exactly it, Guy. When people come in to look at the system, I think they will notice that there are fewer people working in the restaurant. They'll notice the efficiencies. They'll notice the reduced square footage. they'll notice that it probably is a much lower investment than a typical restaurant. And so people will be interested in copying or borrowing that model. I think an opportunity, though, it would be to license this platform or parts of the platform to others for cheaper than they could build it themselves. It's interesting. I wonder in terms of the cost, the startup costs, I'm curious about it.

31:27Like the other day I was at a Williams-Sonoma and I was eyeing this beautiful espresso machine and it was like$4 ,000. I'm not going to buy it. But I was like, how many cups of coffee do I have to buy for this to pay off? And actually you can do the math and you can figure it out and say, you know, in a couple of years, not going to Starbucks, this thing's going to pay itself off. So just applying that principle to this restaurant, I mean, if you had a restaurant with a grease trap and the hood and all that stuff and you had like five or six employees, you could get that up and running. But to have this restaurant with the special oven and the technology and only three employees, are the startup costs, just the initial costs higher to get it off the ground or not?