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Chipotle tests robotic assembly line for burrito bowls

Mexican chain restaurant Chipotle (CMG) is experimenting with a new automated assembly line that will hasten the production of burrito bowl orders. Yahoo Finance Reporter Brooke DiPalma explains Chipotle's partnership with kitchen robotics company Hyphen as the fast-casual chain invests long-term into automation alongside growing digital sales.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Robots are coming to Chipotle. And one could even assemble your burrito Bowl in the future. Yahoo Finance's Brooke DiPalma has the details for us. Brooke, of course, first, it was Chippy, the chip-making robot. Now, we got bowl-making robots? Tell us what's going on.

BROOKE DIPALMA: That's right, Julie. I mean, Chipotle continues to invest in automation. And we continue to be wowed by just the automation and the innovation that's really coming from this burrito chain turned-automation center. I mean, this is just the latest investment that Chipotle has made in order to increase its throughput during rush hour to fulfill digital orders. This is in partnership with the food service platform, Hyphen, that Chipotle invested in last year as part of its $50 million venture fund cultivate next.

So here's how the digital assembly line works. On the top line, you could see there an employee fulfills part of the digital order. So think things like burritos, tacos, quesadillas. And then underneath, the digital make line will assemble salads and burrito bowls by positioning the Bowl under each ingredient and then fulfilling the exact amount that the customer ordered.

Now, one of the biggest challenges, one of the biggest hurdles that Chipotle had to go over while creating this digital make line was making sure that each ingredient was portioned correctly in order to ensure that if a customer ordered three different types of salsas, well, it wasn't too saucy. Now, we know, as you mentioned earlier, that this is just one of the many investments in automation that Chipotle has made. As you mentioned, they have Autocado, they have Chippy.

But now, the question is, how many of these digital technologies, these automations, are going to be in one restaurant at a time, whether or not there'll be a separate restaurants? But their chief technology officer did mention that this particular assembly line is still months away from actually being introduced into a restaurant. And he said that no matter how many automation parts are being introduced, the employee is still at the core of Chipotle's business saying, quote, "The best solutions for restaurants and guests are those that have a co-pilot or are co-biotic in nature."

And so consumers as well don't expect to see a fully automatic Chipotle or automation-devised Chipotle in the near future. They plan to keep labor at the forefront of the stores as well.

JOSH LIPTON: And Brooke, how does this play into Chipotle's long-term strategy? And what's the-- what's the Street saying?

BROOKE DIPALMA: Yeah. Well, Josh, I guess, you could say that the digital wave and automation is certainly at the forefront for fast-food and fast-casual restaurants. And we know that digital sales continue to be a core part of food and beverage revenue for Chipotle. Last quarter, it was roughly 38% of digital sales that made up that total food and beverage revenue. And that continues to hold steady post-pandemic.

And you know, really, when you think about how exactly Chipotle wants to deploy its labor, in both the frontline, you know, where people are fulfilling orders for those people that come into store for those customers, and then also make sure that they're keeping up with that inflow of digital orders, they're getting more smart. They're building this technology in order to meet that demand.

But, you know, this comes at a cost. And so when I spoke to one analyst on the Street, Morningstar analyst, Sean Dunlop, he said, quote, "There's certainly a lot of potential for automation in the restaurant space, but the issue that you run into is a lot of this equipment is really expensive." And so it'll be interesting to see while all this investment in automation is certainly exciting for consumers and getting a lot of attention and a lot of buzz, it's important to-- to whether or not to see this fully deploy out to every single restaurant or how they'll pick and choose where this goes.

And, you know, we're seeing other fast casual restaurants certainly weigh into this. Recently, we saw Sweetgreen invested in an automated production line. And they're seeing big returns there as well. And so I'm sure Chipotle is looking out to see what the competition is doing as well.

JULIE HYMAN: I'm sure they are. Brooke DiPalma, thank you.