Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Chipotle Mexican Grill is taking a significant step towards automation in its restaurants, introducing robots to assist with food preparation as it grapples with rising labor costs. The fast-casual chain has deployed an avocado-processing robot called ‘Autocado’ at its Huntington Beach, California location, while also testing an automated bowl-and-salad maker at another California store. This move comes as the company adapts to California’s new $20 per hour minimum wage for fast food workers, which took effect on April 1, 2024.
Automating the Guacamole Process
The ‘Autocado’ robot, developed by Los Angeles-based startup Vebu, can process an avocado in just 26 seconds, cutting, coring, and peeling the fruit before an employee mashes it into guacamole. This innovation could significantly streamline operations for Chipotle, which goes through more than 5 million cases of avocados annually. In addition to the ‘Autocado’, Chipotle is testing an “augmented makeline” at its Corona Del Mar store. This automated system dispenses ingredients like rice, corn, and lettuce into bowls, further reducing the manual labor required in food preparation.
Chipotle’s foray into automation is backed by a substantial financial commitment. The company has invested in these technologies through a $100 million venture fund, which received an additional $50 million boost in February 2024. This fund includes a stake in Hyphen, the startup behind the automated bowl-and-salad maker. The market has responded positively to Chipotle’s automation efforts, with analysts suggesting that this technology could give the chain a competitive edge. As of 12:59 PM EDT on the day of reporting, Chipotle’s stock (NYSE: CMG) was trading at $2,157.58, up 2.61% or $57.47.
Join our Telegram group and never miss a breaking story.
Financial Performance and Outlook
Despite the challenges posed by rising labor costs, Chipotle’s financial performance remains strong. The company boasts a market capitalization of $78.862 billion and a trailing twelve-month (TTM) revenue of $10.66 billion. Its profit margin stands at 13.23%, with a return on equity (TTM) of 43.54%. The stock’s forward price-to-earnings ratio of 41.84 and PEG ratio of 2.70 suggest that investors have high growth expectations for the company. However, Chipotle faces the challenge of balancing efficiency gains from automation with maintaining food quality and customer service, a crucial factor in the competitive fast-casual dining sector.
As the debate over the impact of automation on jobs in the food service industry continues, Chipotle’s moves highlight the broader trend of increasing automation in response to rising labor costs.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
The post Chipotle Stock Gains as Firm Deploys Avacado-Processing Robot appeared first on Tokenist.