Your next job interview could be scheduled over text message. And the next time you place a food order, a high-tech twist may have been added to your guacamole.
In an interview with The Washington Post, Niccol says technology will be instrumental in the future of the restaurant industry. Chipotle is using vision sensors to identify in real time how much guacamole is made and offer predictions for how much will be needed in the future. The company is also experimenting with streamlining job applications through text messages and automated scheduling. And Niccol invites tech companies seeking to pilot restaurant innovations to call Chipotle.
But the future model for the restaurant industry won’t be just about machines and technology with no human interaction, Niccol says, but will require a sensitive balance.
“[Technology] is going to be something that’s going to continue to accelerate because the cost of doing business is going up,” he said. “We’re going to have to figure out how we can be more efficient going forward.”
And Chipotle is in a financial position to do just that, Niccol says. It had $1.2 billion of cash and investments and no debt as of Sept. 30. It generated revenue of $5.6 billion for the first nine months of 2021, an increase of nearly 28 percent from 2020.
That doesn’t mean the past few years have been easy for Chipotle. Like others in the restaurant industry, it has been struggling to staff its more than 2,900 restaurants. It’s also investing $2 billion, which includes a 2021 wage increase to an average of $15 an hour, in nearly 100,000 employees. In 2020, the restaurant agreed to fork over a record $25 million for criminal charges over tainted food it served between 2015 and 2018 that sickened more than 1,100 U.S. customers. And it’s dealing with the growing cost of ingredients and supplies, keeping up with the demand of online and takeout orders, and adapting to the ever-changing coronavirus pandemic.
Niccol shared his vision on the future of work and the role technology will play as the restaurant industry evolves. The following interview has been edited.
Q: What’s the biggest change Chipotle is making to its business this year?
A: One of the things we’re starting at our support centers is a 50 percent return to the office. It’ll probably end up being two to three days a week you’re in the office. We’re allowing the teams to figure out what are the right days for them. The collaboration is going to be more driven by the projects. We’ll get that started probably in March.
Then in our restaurants, we’re getting ourselves back to being fully staffed. My hope is, as levels of safety appear to be going up, people will be comfortable working back in the restaurants as well as coming back to the office. I think we can put all the right protocols in place and use technology to also keep people effective when they’re not in restaurants or in their respective offices.
Q: What have you learned since raising workers’ wages — has it helped with employee retention? Is there still more work to be done there?
A: We need more people, and the only way that works is if we’re investing correctly — that’s starting wages, career development and benefits. I don’t think this is a one-and-done situation.
Changing the starting wage was something that we thought was the right thing to do and has proven to be very effective to get applicant flow. [Previously] we didn’t spend enough time explaining to folks that when you start with us, you have the ability to move from one of these crew member roles to a service manager role, a kitchen manager role, a general manager in not that long of a horizon. So the combination of getting the starting wage correct with the opportunity to grow from that wage has proven to be pretty darn effective.
Q: What role will technology play in Chipotle’s business moving ahead — and has that changed since the pandemic?
A: It accelerated some of the technology we’ve been working on.
We’re using vision technology to help us understand how much ingredients to prep for lunch and dinner. What happens is, over time, through machine learning [and vision sensors that in real time identify the amount of an ingredient], is the restaurant understands that on a Tuesday, you need to prep X amount of guacamole [based on historical demand]. The way it works currently is, [workers] just don’t really realize that they went through more guacamole until they get to dinner. Then it’s 7 o’clock when they run out, and then we disappoint customers. It puts our employee in a bad place.
Q: How can technology help retain or recruit workers in the restaurant industry, which has lost so many workers during the pandemic?
A: We’re getting ready to pilot a process in which job recruitment gets done via text. It does an automatic scheduling of the interview for our manager and the potential employee. We’re setting this up to where it doesn’t have to be an in-person interview. You can [use] Zoom or Webex. That changes what was a couple of weeks process to a couple of days. [Niccol says this will be the future of hiring.]
On the retention side of things, it’s just making the process of doing the job day to day easier. Emerging ideas that we’re working on [include asking things like] are there better ways to cut the vegetables in the restaurant? Our team members are cutting everything by hand. Is there equipment that could help them?
Q: Are there any tech protocols in place to help restaurant workers feel safer as they go about their jobs?
A: We do these wellness checks before everybody is able to clock in and start their job for the day. We have a zero-tolerance policy for working sick. Before, it was a very manual exercise where we would ask the individual questions, and they would sign the book. Now, we’re digitizing a lot of those processes so that it happens like clockwork, and people can have the confidence that nothing slipped through the cracks.
Q: Workers have complained about Chipotle’s online orders that keep coming in despite the overwhelmed staff. Have you made any tweaks to your technology since then?
A: We have done a modification there. When a restaurant does find itself understaffed relative to the demand, we have the ability now in real time to throttle back the amount of digital orders that come in every 10 minutes to allow the restaurant to not get overwhelmed. So we’ll still take your order, but instead of promising you an 11 a.m. [ready time], we may have to tell you it’s not going to be available till 11:30. Then once we get caught up, we can start opening that pipeline again to allow more orders.
Frankly, we just had to do it because we don’t want to overwhelm our employees. It does us no good to burn them out. They get dissatisfied, and then you just create this cycle of being understaffed and providing bad experiences to customers.
Q: What technology do you think will disrupt your industry in the future?
A: Machine learning and automation is going to be a big disrupter because it just allows you to do processes that people didn’t love doing before. As a result, they [will be able to] do them with great accuracy or great consistency. That [will marry] with analytics so you can better forecast, better prep, [and have] better execution. Companies that invest in these areas will end up with hopefully better work for our employees and better outcomes for our customers.
Q: Could there come a day when customers go to Chipotle and never interact with a human but rather solely machines or robots?
A: For Chipotle, I think that would be really hard for the front-line experience because so much of the customization is because of the human interaction. There is something to be said for our employee who scoops the rice into the bowl. You [might] give them a look [like], “how about a little extra?” and our employee just does it without any verbal communication. I think that’s important. There are places where you might have the ability to automate things, but I don’t foresee us going all the way down that path where ultimately, you’re moving down a conveyor belt and there is no human interaction. It’d be tough to lose that human interaction.
Q: What is the answer to luring more workers to your industry, given the health concerns and burnout?
A: In every job — doesn’t matter what industry you’re in — if you feel overworked and underappreciated, you usually don’t stay in that job very long. It’s our job to make sure we’ve got the right leaders in the right team so that people feel appreciated. If we can provide opportunities that match people’s ambitions, we will keep people.
Q: How is Chipotle handling the current supply chain pressures, and will it pass rising costs to customers?
A: The inflation that we’re seeing on just about every item in our supply chain is real. We’re going to continue to figure out how we can be more efficient and absorb as much of the cost as we can. But in some cases, we will have to pass it on to the customer. It’s the last lever I’d like to pull, but it is a lever we will have to pull if the inflation doesn’t start moderating.
Q: Has the current environment impacted your expansion/real estate plans in any way?
A: We really have not had to slow anything down. We are very fortunate to have a strong balance sheet, which gives us the ability to continue to invest in building new restaurants. The reality is, the economics of building new restaurants is still terrific, and we’re getting close to 60 percent returns on our capital. The one thing that has impacted us is, the time [it takes] to build a restaurant has gotten a little bit longer, but I think that’s temporary. I’m optimistic that our timelines will get back to where they were.
Q: What does the future of a Chipotle restaurant worker look like?
A: There’s just going to be more machine learning and automation in the restaurant. Today, we still do a lot of manual calculation, and we’re relying on four-week averages to tell us what to do in the coming week. That is going to require our teams to be a lot more comfortable with technology. [But] as much as robotics and machine learning are great, they still cannot handle all the unexpected events that our leaders in our restaurants deal with. So it’s going to be a combination of using the technology and continuing to have great people in the restaurants.
Q: How do you expect the future of the industry — and Chipotle — to evolve?
A: It definitely is going to have a much bigger off-[premises] opportunity [delivery and takeout]. I don’t think it’s totally at the expense of still having a dining-room experience. A lot of companies are not set up to be able to manage those two lines of business out of a single asset. So it’s creating a lot of bottlenecks. It takes investment, and it takes believing in the technology to pull it off. Some of it is physical [tech], and some of it is software.
Correction: Chipotle CEO Brian Niccol’s name was misspelled in an earlier version of the illustration at the top of this story. It has been corrected.
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