In today's fast-paced business world, companies are constantly seeking ways to innovate and stay ahead. Chipotle Mexican Grill is no exception. Under the leadership of new CEO Scott Boatwright, the burrito chain is embarking on a journey of modernization. Let's delve into the various initiatives and their potential impact.

CEO's Early Morning Routine and Kitchen Focus

In his spare time, Scott Boatwright, the new CEO of Chipotle (CMG), engages in activities that showcase his dedication and passion. He is often found hitting the gym at 5 a.m. with former CEO Brian Niccol (now leading Starbucks (SBUX)) or cooking up delicious meals on the smoker or grill for his family. This attention to detail and hands-on approach extends to his work at Chipotle, where he is focused on modernizing the kitchen.Boatwright believes that the kitchen needs to be modernized to meet the demands of the current market. "It is my endeavor to really modernize the kitchen," he told Yahoo Finance's Opening Bid podcast. "It's been exactly the same for 30 years." This commitment to change is crucial as Chipotle aims to expand and reach 7,000 total locations from its current 3,600 stores.

Automating the Kitchen for Expansion

Automating the kitchen is a key strategy for Chipotle's growth. By automating processes, the company can increase efficiency and free up employees to focus on other tasks. Boatwright reported to Niccol as chief operations officer since 2017 and is now implementing these changes."The [third] phase of growth for Chipotle [is to] continue to drive incredible North American results in same-store restaurant sales and new unit growth," Boatwright said. "Then, think about how do we show up internationally on the international stage, whether that's growth in Western Europe or international partnerships?"In July, Chipotle signed an agreement to open restaurants in the Middle East with franchise operator Alshaya Group. This international expansion is part of the company's growth strategy and will require efficient kitchen operations.

Digital Makeline and Hyphen Collaboration

In October 2023, Chipotle and Hyphen introduced a digital makeline. This innovative system allows a burrito bowl or salad to travel along a conveyor belt while the system automatically dispenses each ingredient into the bowl. The process is currently in the testing phase in Southern California restaurants.Boatwright said the company "fully [intends] to leverage that automation" to fulfill online orders, which make up 65% of bowl and salad orders. It only takes the makeline 30 to 60 seconds to complete a bowl, freeing up employees to work on burritos or in-store orders.In September 2024, Chipotle added Autocado, a robot that peels and cores avocados for guacamole, to local testing. Additionally, produce slicers are being rolled out to help with prep and ensure "consistent cut sizes."Morningstar analyst Sean Dunlop believes that the digital makeline could "be a material unlock." Comparing it to Sweetgreen's (SG) Infinite Kitchen stores, he sees the potential for a faster and higher quality food experience. Sweetgreen's restaurant-level margin for the third quarter was 20.2%, and Dunlop suggests that similar automation could have a significant impact on Chipotle's margins.Chipotle posted a restaurant-level operating margin of 25.5% last quarter, down from 26.3% a year ago. The digital makeline and other automation initiatives could help improve these margins and drive financial growth.

Third Quarter Financial Results

Overall, Chipotle posted a mixed third quarter print after a string of winning quarters. Revenue grew 13% to $2.78 billion, under the expected $2.82 billion. Adjusted earnings per share of $0.27 represented a 17.4% jump from a year ago and beat estimates of $0.25.Same-store sales grew 6%, slightly missing estimates of 6.38%. CFO Adam Rymer told Yahoo Finance that the quarter started a "little bit soft" due to seasonality, but growth is coming from "all income cohorts."The average chicken burrito is still under $10, even with a recent 2% price increase. Boatwright emphasized Chipotle's unique approach to value. "We think about value very differently [than competitors] at Chipotle," he said. "I think about it as an equation, as benefit over price. As price moves up, benefit has to improve at the same pace to keep value the same for the consumer."Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.