In April, Chipotle formed what it labeled “Cultivate Next,” a venture intended to make early stage investments into “strategically aligned companies.” The aim was to support seed to Series B stage operations that could accelerate the brand’s goals, such as tech and innovation. It started at $50 million, financed solely by Chipotle.
The first investment arrived Thursday, with Chipotle announcing it’s funneling funds into Hyphen, a foodservice platform designed to help “restaurant owners, operators, and budding chefs move their business forward by automating kitchen operations.” Also, Chipotle invested in Meati Foods, a plant-based protein company that makes product from mushroom root.
Chipotle said these investments fit into Cultivate Next’s broader blueprint. “As a people-first company, Chipotle is seeking opportunities that will elevate the human experience for its teams as well as increase access and convenience for its guests,” the company said in a statement. “Investments may include innovations in farming and supply chain, advanced robotics like Hyphen, alternative proteins like Meati, and more.”
San Jose, California-based Hyphen’s first product, “The Makeline,” is an automated system that uses robotics and a customized operating system to give kitchens a “reliable and precise way to make a fulfill orders,” Chipotle said. The hallmark is it assembles all digital orders under the counter via automated production while allowing staff to assemble in-house orders from the top of the counter.
“Hyphen is reimagining the intersection between makelines and digital kitchens, with a focus on improving speed and order accuracy,” Curt Garner, Chipotle’s chief technology officer, said in a statement. “Their use of robotics to enhance the employee and guest experience to find efficiencies in the restaurant industry aligns with our mission of leveraging emerging technology to increase access to real food.”
Stephen Klein, co-founder and CEO of Hyphen, said the investment would accelerate the company’s hiring plans and allow it to invest heavily in R&D, “all while providing the necessary infrastructure to scale sustainability.”
“We’re thrilled to work with Chipotle to find more innovative solutions by removing repetitive tasks from the employee experience so they can focus on creating delicious dishes and providing outstanding hospitality,” he said.
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Chipotle said it’s committed to “ongoing exploration” for systems to ease pain points experienced by restaurant employees, including its current “Chippy” pilot, announced in March. Chippy, an autonomous kitchen assistant from Miso Robotics—the creators of “Flippy”—makes tortilla chips. It uses AI to replicate Chipotle’s recipe—corn masa flour, water, and sunflower oil—to cook chips, season with salt, and finish with a hint of lime juice
The brand also has a concierge chat bot, “Pepper,” which is live on its app and website and fields questions from guests.
Automation has surged throughout the sector in recent months as labor challenges persist. The industry added 40,800 jobs in June and now employs 11,938,000 workers—a figure that’s climbed 27 percent since June 2020 yet remains roughly 700,000 below per-COVID marks, according to Bureau of Labor Statistics data. Overall employment in “leisure and hospitality,” a category that tacked on 67,000 jobs in June, is down 1.3 million, or 7.8 percent, from February 2020.
For Chipotle, the topic pulsed this week when an Augusta, Maine, location permanently closed Tuesday due to understaffing, the company said. It was also the first store in Chipotle’s 3,000-unit-plus fleet to file for a union.
The brand’s hourly (crew, kitchen manager, service manager) turnover rate hit 194 percent in 2019, up from 141 percent the prior year. Chipotle has raised average hourly wages to $15, added referral bonuses, and spent time refining pathways for advancement in response. Additionally, crew members can now become “restaurateurs,” which is what Chipotle calls its highest GM role, in as little as three and half years. If they get there, earning potential hikes to $100,000.
This past year, 90 percent of restaurant management roles at Chipotle came from internal promotions. On average, six employees were promoted per restaurant for a total of nearly 19,000. Its internal promotion rate was 77 percent for apprentice and GM roles in 2021.
In April, CEO Brian Niccol hinted more automation could be on deck. “Obviously, Chippy is our first attempt,” Niccol said. “And we’ve worked with a lot of our employees to identify what are the tasks that they would love to see us bring automation to or AI, so that hopefully the role can become less complicated. And then I think there are just other places in the back of the restaurant where we have the ability to automate, whether it’s on the digital make-line or other tasks.”
Labor costs last quarter came in at 26.3 percent, roughly 140 basis points higher, year-over-year, mainly due to the brand’s wage hike.
Staffing will remain atop Chipotle’s operational tasks as it tracks toward 7,000 stores, the company said. The figure should sit between 235–250 units this calendar alone.
Niccol in April said Chipotle was currently in the 85–90 percent range of restaurants staffed to model. Pre-COVID, it was closer to 80 percent.
With Meati Foods, which is based in Boulder, Colorado, the mushroom roots are grown indoors year-round in “an ultra-clean, pure environment that is unexposed to pollutants, pesticides, antibiotics, or growth hormones,” Chipotle said. “Meati’s products are created in a way that protects and preserves our planet’s water, land, and air.”
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“We are excited to support new ways to bring vegetables to the center of the plate though plant-based alternative protein options that mirror Chipotle’s Food With Integrity standards,” Garner added. “Meati is producing responsibly grown plant-based protein that tastes delicious.”
Chipotle is no stranger to plant-based launches. The company introduced Cilantro-Lime Cauliflower Rice in January 2021, which the brand said lifted sales and attracted new guests. It recently began testing Mexican Cauliflower Rice at 60 stores in Arizona, Southern California, and Wisconsin. It’s seasoned with a signature blend of spices including garlic, cumin, salt, and paprika.
Chipotle offered Plant-Based Chorizo nationwide for a limited run earlier in the year and offers Plant-Based Sofritas as a mainstay.
“With their industry-leading commitments to sustainability and responsibly-raised ingredients, Chipotle is a like-minded leader in the movement to create sustainable food systems,” Tyler Huggins, co-founder and CEO of Meati Foods, said in a statement. “Breaking ground on the Cultivate Next venture fund is an important signal of Meati’s industry leadership potential, and new investments like this will help us scale operations and our mission-driven team.”
Chipotle said it will continue providing updates on Cultivate Next headed into 2023. It didn’t divulge how much either investment was, but said companies interested in collaborating through the venture fund could apply by emailing cultivatenext@chipotle.com.
