Chipotle founder Steve Ells eyes fast-food comeback with startup Kernel

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Chipotle founder and ex-CEO Steve Ells is plotting a return to the fast-food scene — with a plant-based, robot-powered chain whose restaurants could operate with as few as three employees, The Post has learned.

Ells, 56, has been pitching investors since at least last year on a startup that “fundamentally rethinks of labor, technology, real estate and menu” and uses “automation with a human touch,” according to draft investor materials obtained by The Post.

“We proved a 3-person labor model can work,” the company said in the materials, which The Post did not publish in order to protect the anonymity of a source.

The pitch deck includes mock-ups and photos of Kernel’s compact kitchens — with three employee workstations surrounded by computer screens, robotic arms and an array of slots and chutes for moving food through an assembly line.

When reached by The Post, Kernel representative Sarah Rosenberg confirmed that Ells is leading the new startup and described it as a “tech-enabled fast-food concept that leverages software and robotics,” but declined further comment about its technology.

“Yes, a fundamentally lighter labor model is core to the operation,” Rosenberg said.

“Kernel’s operational model requires materially fewer employees to the status quo business model.”


Kernel already has a talented roster of corporate employees.
AP

The startup will be based in New York and its executives and initial production hub are located on 14th Street in Manhattan, Rosenberg said.

Kernel’s first store launch is expected to take place in late 2023, and it’s in talks about various potential locations in lower Manhattan for the initial store, a source told The Post.

Ells is self-funding the startup ahead of a planned fundraising round, and investor interest in Kernel is already said to be significant.

The initial round could approach $30 million to $50 million, one source with knowledge of the situation told The Post.

Rosenberg declined to comment on the round’s status or potential size.

In addition to work shifts requiring just three employees, Kernel asserts that its automated kitchens will limit the size of its stores to roughly 800 square feet each, or roughly a third the size of locations operated by Sweetgreen and Shake Shack.

“Kernel intends to open doors with a material smaller footprint than fast food and fast casual incumbents,” Rosenberg said.


Chipotle
Steve Ells left Chipotle in 2020.
REUTERS

Kernel appears likely to operate in a manner similar to rivals such as Dig and Little Beet, where the majority of food is prepared at an offsite location and then delivered to stores for final assembly and sale to customers, according to Arlene Spiegel, a New York-based restaurant, retail and food-service consultant and president of Arlene Spiegel & Associates.

Spiegel likened Kernel’s proposed automation-heavy model to “a makeshift factory, almost like the Willy Wonka of takeout foods.”

“At the storefront, it’s completely portion-controlled, automated and logistically connected to all of the ordering platforms for a consistent fast pick-up and delivery,” Spiegel told The Post.

Store locations will include a novelty aspect for customers, who will be able to see the automated kitchen at work preparing their food, Rosenberg confirmed.

Kernel’s proposed offerings would consist a wide array of cuisines, ranging from acai bowls, wraps and salads to pizza, pasta and hamburgers.

It also cites a number of different food influences, including Greek, Chinese, Indian, Mediterranean and Thai, that will inspire the menu choices.

The startup sees Shake Shack, Sweetgreen, Dig, Cava and Ells’ former company Chipotle as its competitors, according to the materials.

Other potential rivals include plant-based meat brands, automated kitchen companies and so-called “ghost kitchens.”


Steve Ells
Ells started Chipotle with a single restaurant in Denver.
AP

Aside from operating storefronts, Kernel is exploring plans to license its operating system to other businesses.

The startup’s roster, according to the old investor materials, included Chef Andrew Black, a veteran of ritzy Eleven Madison Park, as head of its culinary and restaurant ops.

Eric Wilson, a veteran of Apple and Chipotle, is listed as head of operations and digital product.

Kernel declined to comment on the size of its founding team and who else, besides Ells, is currently involved in its operations.

“Kernel’s team has veterans from companies such as Goldman Sachs, Apple, Eleven Madison Park, GoPuff, Mirror, Amazon and more,” Rosenberg said.

The investor materials included testimonials from people who were invited to sample Kernel’s food offerings.

“I love comfort food and this gave me all of the things I love about comfort food without the guilt of being unhealthy,” one customer said.

Kernel’s tech-heavy approach to food service could gain a following if the startup is able to innovate and present a unique experience to customers, according to Mike Plutino, a hospitality industry consultant and CEO of Food Service Matters.

“In the right market, we think it is only a matter of time for a visionary restaurateur to push the boundaries and would be successful if they can deliver a good-tasting product, produced with speed, with minimal staff and with a bit of novelty in guests watching an automated process,” Plutino said.


Steve Ells
Kernel is using a tech-heavy approach for its chain.
REUTERS

Ells founded Chipotle with a single Denver store in 1993 and built the chain into a powerhouse over the next two decades, with more than 2,600 restaurants under his watch.

The company cultivated a massive following through popular menu items such as burrito bowls and an emphasis on fresh, sustainable ingredients.

But the company began to struggle in the late 2010s following a series of foodborne illness outbreaks at its restaurants.

Ells stepped down as Chipotle’s CEO in 2017 and gave up his role as chairman of the board in 2020.

Chipotle has since rebounded under current CEO Brian Niccol.

The company’s stock has risen 365% over the last five years.



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