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0:36

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

experience That's in just a moment stay with us.

13:31

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16:14

If you want to share your favorite episode

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thanks so much. We love you guys. You're

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the best. And now,

16:40

back to the show.

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

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