How I Built This with Guy Raz - When a robot cooks your lunch with Steve Ells of Chipotle and Kernel

Episode Date: November 9, 2023

Steve Ells changed the restaurant industry once when he founded Chipotle in 1993. His idea for fast, freshly prepared food became the model for today’s “fast casual” format. It’s a st...ory he told when he was first on the show back in 2017. Now, he hopes to revolutionize the industry again with a new chain of small, highly automated, vegan restaurants called Kernel. This week on How I Built This Lab, Steve Ells returns to reflect on stepping away from the company he spent decades building and how his concern for climate change inspired his new restaurant concept. Plus, how he thinks that robotic restaurants could be good for workers, customers, owners and the environment. This episode was produced by Chris Maccini with music by Ramtin Arablouei.It was edited by John Isabella with research by Casey Herman. Our audio engineer was Neal Rauch.You can follow HIBT on X & Instagram, and email us at hibt@id.wondery.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript
Discussion (0)
Starting point is 00:00:00 This podcast is brought to you by Squarespace. I talk to entrepreneurs all the time who are looking for a way to upgrade their digital footprint. Well, whether you're just starting out or you're scaling your business, Squarespace is the easiest way to build a great website that stands out. It's an all-in-one website platform that gives you everything you need to claim your domain, showcase your products, and get paid. Anyone can use Squarespace's cutting-edge design tools to build an online presence that truly reflects what makes your business special.
Starting point is 00:00:30 There are templates, intuitive drag-and-drop editing, and even an AI-enhanced website builder. Then, Squarespace's built-in analytics tools help you make smarter business decisions. Review website traffic, learn where to focus engagement, and track revenue all in one place. Looking to grow your business, Squarespace even offers fast, easy business financing
Starting point is 00:00:53 through Squarespace capital. Go to Squarespace.com slash built for a free trial. And when you're ready to launch, use offer code built to save 10% off your first purchase of a website or domain. Loans issued by Celtic Bank and serviced by Stripe, all loans subject to credit approval. This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb.
Starting point is 00:01:31 It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. 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 guest for an update.
Starting point is 00:02:27 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, and if you haven't heard it, I definitely recommend that you go back in your podcast feed and give it a listen.
Starting point is 00:02:52 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,
Starting point is 00:03:17 Chipotle was dealing with a pretty major crisis, A string of foodborne illness outbreaks had caused some customers to get sick. And 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 know, you're only thinking about how to solve the problem. What caused the problem? How can we make sure
Starting point is 00:04:12 it never happens again? How can we make sure that Chipotle will be, you know, the safest place for people to eat. So 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, you know, it was taking a while for sales to come back. Yeah. 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 you know, 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 to, this was in the fall of 2017. And I guess at the time, you were you were already having conversations about your future as the CEO of Chipotle. And I think just like just about a month after that interview aired in November of 2017, you stepped down.
Starting point is 00:05:17 as CEO and you became executive chairman. Was that, I mean, I mean, everything I've read about your statements, you know, you were super supportive of Brian Nicol who took over and, you know, very kind of gracious. But I would 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? To 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, you know, it's the right decision.
Starting point is 00:06:11 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, you know, speaking to the public and gaining confidence through great communications. And so he did a fantastic job. But, you know, sitting on the board as executive chairman, it's not what I do.
Starting point is 00:07:00 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 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. You know, I remember a few times these sort of big transitions in my life. after college deciding to go to cooking school. I said, dad, I want to go to cooking school.
Starting point is 00:07:44 He said, well, are you going to be a chef? I said, no, I just, I'm really interested in cooking. I think I'd have a lot of fun. I think I'd learn a lot. He said, maybe that's risky. Maybe decide what you want to do first. I remember working at stars and telling my dad, hey, I'm going to leave. I'm going to go start this burrito place.
Starting point is 00:08:05 I'm going to move back to Colorado and do it. He's like, well, tell me, what is the, what is 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. And, you know, one of the things I read was Bill Gates, how to avoid a climate disaster.
Starting point is 00:08:52 And what struck me was this scientific consensus that if we don't address the amount of greenhouse gases were emitting and bring them down to zero by 2050 that we, we go over the tipping point. And whether you believe, you know, those are exactly the numbers, I think conceptually it's right that we have, you know, 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, what could I do about it? And I come to understand that, you know, 25 or 30 percent or so of the greenhouse gases that we emit come from what we eat. And the vast majority of that comes from animal sources. So I thought, well, what if I started a plant-based restaurant?
Starting point is 00:09:44 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.
Starting point is 00:10:12 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? Oh 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.
Starting point is 00:10:48 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 And Dress has like a plant-based fast casual place. When you start to think about it, what were you thinking like this would be like plant-based fast food kind of restaurant? So 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.
Starting point is 00:11:30 So the name of this restaurant is Colonel and we have two sandwiches. One sort of like an engineered patty that's meant to taste like chicken. It's like it's a fried chicken sandwich that's not chicken, but tastes every bit as much of like a fried chicken sandwich. And then that 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 chickerys with white bean and chickpea smear and lentils and a mustard vinaigrette. We have some sides that are not typical for fast food.
Starting point is 00:12:09 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.
Starting point is 00:12:49 chicken. But most of the menu is, you know, 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 a vegan diet. But I wonder, I mean, you know, here in California, the line to in and out burger from 11 a.m. to 2 a.m. is always long. There's always people there, you know, and and five guys, burger joints, taco plus Chipotle. You know, probably the vast majority of people eat Chipotle are still ordering the meat proteins. Why do you think that a vegan concept like this
Starting point is 00:13:45 is going to appeal in scale. So, Guy, I'm not, 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.
Starting point is 00:14:15 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. And 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, how Steve Ells is using robots to rethink the entire restaurant experience. That's in just a moment. Stay with us. You're listening
Starting point is 00:15:06 to How I Built This Lab. There hasn't really been a whole lot of innovation in the deodorant space. That is until now. Lumi is a full-body, pea, balanced aluminum-free deodorant created by an OBGYN to keep you smelling fresh literally for days, up to 72 hours in fact. Loomi'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. Loomi is also excited to announce the launch of their men's line, Mando, with more masculine
Starting point is 00:15:50 sense and packaging, but still outrageously effective. effective. I actually have a stick of Mando Pro Sport Deodorant right here. Here 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 Lumi Deodorant.com or shopmando.com. That equates to over 40% off your starter pack when you visit Lumi Deodorant.com or shopmando.com and use code. built. Hi, guy. My name is Grace, and I'm from Reston, Virginia. I have too many favorite episodes. I can't possibly pick just one, but I will never forget where I was when I heard Jamie Simanov from Ring talk about the crisis that almost crushed his company, and then how his wife responded.
Starting point is 00:16:42 I learned how moments of grace and the darkest of times can make all the difference in the world. So, thank you. 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.Wondry.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.
Starting point is 00:17:24 Welcome 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 plant-based menu, and that's one way that Kernel's going to be different from like a typical fast food or casual restaurant. But I understand that you're also planning to operate these locations, these kernel locations in a different way.
Starting point is 00:17:50 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 basically, on a hub and spoke model. So 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.
Starting point is 00:18:30 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. And 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.
Starting point is 00:19:34 And so where a typical fast casual restaurant might have, you know, 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, essentially 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,
Starting point is 00:20:55 hand them a credit card or cash and have a POS transaction because there is no menu board. There 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.
Starting point is 00:21:21 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 buildout 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, we don't need any of that. So my question, what 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 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,
Starting point is 00:22:15 a lot of the food prep is done at the individual restaurants. Yeah. And so before that, in typical fast food restaurants, you know, 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. Well, we're doing the same thing except in a central kitchen that's only a few minutes away from the restaurants.
Starting point is 00:22:40 And what's exciting about this model is that you can really focus on. 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,
Starting point is 00:23:07 so you're constantly producing freshly prepared vegetables, patties, buns, everything that, that the restaurant needs. And 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.
Starting point is 00:23:33 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 you had to be custom made? So 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?
Starting point is 00:24:08 Well, there's a lot of automation. There is robotics. You know, you order from a digital environment, right, 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. We 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.
Starting point is 00:25:12 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 the plans are to have like 15 locations within the next two years. So imagine that, I mean, the ambitions are big here. Well, well, 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 it will, 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, you know, almost for sure. 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
Starting point is 00:26:27 make in a given time. But 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 friars, that's very appealing because that is a huge challenge for many people who want 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?
Starting point is 00:27:17 Well, 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 of themselves. You know, it's interesting. I wonder, in terms of the cost, a startup cost, I'm curious about it.
Starting point is 00:28:00 Like the other day, I was at a William 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 this 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 are, I mean, if you had a restaurant with a grease, you know, 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 is, are the startup costs, just the initial cost higher to get it off the ground or not?
Starting point is 00:28:46 Well, you know, I have spent a good amount of money and I just completed my Series A round and raised 36 million. And so, you know, that'll take us through the next couple of years. And that will be a lot to open up 15 restaurants. The investment cost in these individual restaurants, though, is much less than a typical fast casual restaurant. Wow. So there is a lot that has gone into developing the technology, but the actual amount that you spend to open one of these units is substantially less than a typical fast casual restaurant. So you could apply the same model to any kind of food, essentially. Well, I wouldn't say any kind of food. I couldn't see our system making spaghetti bolognazza today.
Starting point is 00:29:38 Right, but like grab and go food, I mean, for example. Well, there are some things that I think it could do very well. There are others that it probably can't do yet. But for sure, there's no question that robotics will have a lot more dexterity, and they will be a lot easier to program. And through AI, they will learn and get better. And so what we've done is we've developed a platform and a format that will allow us to avail ourselves of the new technology. and sort of plug it in to what we've already created. And I think a legacy restaurant might have a harder time doing that
Starting point is 00:30:18 or might not gain as much advantage of the new technology coming out. And so I think it's exciting for people to come in and be involved in something that has this kind of technology. We're going to take another quick break, but just ahead, more from Steve Ells on the Future of Food Service. Stay with us. you're listening to How I Built This Lab. Welcome back to How I Built This Lab.
Starting point is 00:30:58 My guest is Steve Ell, the founder of Chipotle, and now a new, highly automated vegan restaurant called Kernel. So one of the things, you know, there have been a few articles about what you're doing, but not much information yet because it's still, I was still, you know, I guess in sort of stealth mode. But one of the things that I've read that I think is very interesting is you suggested that the current system, the current model of, of the fast food or fast casual, even the restaurant industry is broken. And if you think that this is the case, I think you're right, right? You can see this with restaurants are struggling to find employees. Employees are struggling. Many people don't want to work in the space.
Starting point is 00:31:41 The pay is low or can be low. And some restaurants have to, you know, like in San Francisco, pay a lot because the cost of living is so high. Is this, in a sense, also an attempt to kind of address. that sort of broken labor system within restaurants? Well, so I wanted to be able to have an experience for the team that is better than the typical fast food experience. One of the problems is that we see extraordinarily high turnover in the industry. I think it's something like 165 percent is typical. And so the folks are never there long enough to get really good at their jobs.
Starting point is 00:32:29 And I think the manager who has probably a team of 40 people, if they have lunch and dinner shifts of a dozen, I mean, this is hard for someone to manage a team of 40 people. And so I'm excited about having these very, very small teams. So if we need three people at a shift, maybe we have a team of eight, maybe nine. and you can really pay attention and mentor and train. And it's also different work. I mean, yes, they're cooking. Yes, it's a restaurant. But there's a lot of technology.
Starting point is 00:33:05 And understanding that technology and caring for that technology, maintaining the technology, it's a sort of an elevated position. It's going to take a lot of training and will command higher wages. And since we only have three people, we'll be able to afford those higher wages. Plus, I think our purpose is bigger than our product, being able to address global warming, being able to address some of the inequality with pay for folks in the world of fast food and restaurants in general to be able to pay them much higher wages and give them full benefits, give them vacation time, give them predictable schedules, give them a stock option program
Starting point is 00:33:49 so that they can participate in the upside of the venture. This is all very, very exciting, and it's much more doable when you have smaller teams that you can really mentor and pay a lot of attention to. I'm curious, Steve, I'm sure you've seen this at San Francisco Airport. I'm sure a lot of people who've been to the airport have seen it, but there's a fully automated barista there, right? And I think there's another one in the city. In fact, I saw a fully automated cotton candy machine recently, which, which was absolutely amazing because it shapes the cotton candy of different shapes. It's incredible. It seems like just a few more steps, this can be entirely automated, that you wouldn't need any humans involved.
Starting point is 00:34:33 Well, I think that it's certainly possible in the future. But I think we're many, many, many, many years away from that. how technology evolves with robotics and eventually how much dexterity these these robots can have you know i'm not sure but i think there's there will always be a place you know for for our teams to operate the the kernel model for the foreseeable future and i'm talking about the next decade at least right yeah and so um i just want to make sure sure that we're creating a system that has the potential to create a really great work environment and reward our folks appropriately. And I think that's tough with some of the current fast food models out there. I think you see depressed wages because margins are so tight, right?
Starting point is 00:35:33 And I think these operators would love to pay their folks more, but the model just can't afford to do it. Over the last 20 years, we've become more and more used to fewer and fewer human-to-human interactions, right? Like we order stuff through Amazon or we get our food delivered through DoorDash, and, you know, it just kind of happens. And for many people, that's better. It's a better option. But there are still lots of people who do like that face-to-face interaction. You go into a Chick-fil-A, and they're famously extremely friendly. Same with In-N-N-Out. It's part of their training.
Starting point is 00:36:08 you will not encounter human at colonel right you will go in and there will be no sort of human face and so is there how do you create a sense of warmth a feeling of hospitality welcome you know without the human what what are you doing to kind of i don't know bring that sensibility in so a lot of people ask ask me this question and um and ask me if it's ultimately a good thing, you know, we'll have to see how it unfolds. Yeah. I know for sure that continuing to operate these systems that's heavy, heavy, heavy on numbers of employees who turn over very frequently is not sustainable. It says to me that people don't want those particular jobs under those conditions with that pay.
Starting point is 00:37:08 And so it takes reinventing the system to do that. I think craving human interaction is not going to go away. I think we might get it in different places. But I see a necessity to create an economic model for serving this food. And that solves some problems. There's always going to be a place, I think, for the kind of human interaction that you, that you describe. It will probably just be different. So when will you know?
Starting point is 00:37:50 Like, what, when will you know, you're talking about 15 restaurants over the next two years? What are your, I mean, obviously your metrics are going to be your sales. But what other metrics are going to be looking for to see whether this is working? Well, we will know a lot about our customers and their have. habits and their frequency and hopefully how they felt about their experience because of our connectivity to them through the app. Success to me means that they love the food, that they tell all their friends about it, that they come often. And if that happens, we know we're in a very good position. Success also means that, you know, enough people are coming and we have the volumes
Starting point is 00:38:32 to achieve the sales levels that we're predicting. And so I think if we have those two things, we're off to the races. So right now you're starting in New York, which is where you live, and do you have a plan of where you wanted to expand next, or will you wait and see what happens in New York first? So, you know, I really like to focus on the problem at hand, and that is over the next two years really refine the system. I think if we have the sales volume and the customer affinity to prove that the brand is is success, then we go to new markets. And yes, there are markets that have the right kinds of
Starting point is 00:39:12 densities and they're close enough to us. And there will be a natural expansion program. Steve, what have you, how have you changed as a leader from the time you ran Chipotle to this? I mean, what are you doing differently, maybe better that you didn't do there or that you learned from there that you're applying to here? So Chipotle is 30 years old. It was 30 years old this summer. And so if I think about my leadership style 30 years ago and what it is today, I mean, it's it's much, much different. You know, thankfully, I've learned from my mistakes, learned from other people who are terrific leaders. and I think the way I'm opening kernels today is much different than I opened Chipotle 30 years ago.
Starting point is 00:40:11 There are some similarities, though. I have a very strong vision for sort of the foundational principles, and those will be really great ingredients, solid cooking techniques, and building teams that believe in our purpose and love to to provide great hospitality. And while hospitality may not be face to face with the customers, it's providing a really good experience through the app. It's providing reliability on service times. It's making sure that everything that we serve is delicious.
Starting point is 00:40:51 And so foundationally, I think I'll operate in a very similar way. but the team that I'm putting in place today is really a team that's so expert and ready to take this to the next level. And I didn't initially build Chipotle with that kind of team. Yeah. You know, Steve, your legacy as a sort of a pioneer in this space is solidified. I mean, so many people have replicated the model of Chipotle. and it's a great restaurant. I probably, you know, my family probably eats there a few times a month.
Starting point is 00:41:29 It's my kids' favorite place to eat. But, you know, I wonder, I mean, you left Chipotle, great reputation, you know, wealthy, you did very well. Why are you doing this? I'm curious what motivates you now. You don't need the money. You don't need the reputational push. You don't need the legacy side. What is it that gets you going about?
Starting point is 00:41:53 about doing this, why? Well, it's not an easy question to answer. You know, I've been around restaurants my entire life, and I see why there is high turnover. I see, you know, why certain restaurants serve certain kinds of food. I think Kernel could be a platform that perhaps solves some fundamental problems. And it's a, it's really hard. But this problem is fun to solve.
Starting point is 00:42:25 And the team that I've put together, they're so smart. And it's been really great to see how they have been addressing some of these challenges that we have. I mean, I just, I have fun doing this. But I also have always loved serving people, like literally serving food. I mean, I used to love to throw dinner parties, you know, in high school, in college. And of course, then when I graduate to college, I go into the, the restaurant business to serve food. So this idea of serving is sort of part of who I am. I think Colonel is just an extension of that, but just in a different way. I also like to
Starting point is 00:43:03 challenge the system. I don't think there's been a lot of innovation in restaurants over the generations. We pretty much have the same kind of equipment, the same kinds of kitchens, the same kinds of cooking techniques. So I think by reinvesting, I don't know. It's exciting. And I think a lot of good could come out of it. That's Steve Ells, founder of Chipotle, and now Colonel. By the way, I wasn't kidding when I said that Chipotle is my kid's favorite place to eat. We were actually in Paris earlier this year on vacation. We're the greatest food cities on the planet. And you know where they ate? That's right. They got burritos at Chipotle in Paris. Hey, thanks so much for listening to the show this week. Please make sure. to click the follow button on your podcast apps, you never miss a new episode of the show,
Starting point is 00:43:56 and as always, it's totally free. This episode was produced by Chris Messini, with editing by John Isabella. Our music was composed by Romporee. Our audio engineer was Neil Rauch, our production team at How I Built This Includes, Alex Chung, Casey Herman, Carla Estevez, J.C. Howard, Carrie Thompson, Neva Grant,
Starting point is 00:44:15 Malia Agadello, and Sam Paulson. I'm Guy Raz, and you've been listening to How I Built This.

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.