Like other restaurant chains, Sweetgreen Inc. is exploring automation, in its case with its Infinite Kitchens that use robotic technology to assemble salads and bowls. But Morgan Stanley analyst Brian Harbour isn’t sure the concept will translate easily to green for investors.
“Increasingly the story feels to us like a bet on the Infinite Kitchen rollout, and whether this falters, or drives a real step change in economics and the unit development opportunity, which is needed for the stock to work, in our view,” Harbour wrote as he downgraded Sweetgreen’s stock
SG,
-6.97%
to underweight from equal weight. “We’re more cautious for now.” Sweetgreen has two Infinite Kitchens up and running, according to Harbour, and plans to open more this year. Though food chains are betting that automation will help them improve margins by allowing them to rely less on human labor, Harbour isn’t sold yet on the benefits to the bottom line. See also: Burger King to buy franchisee Carrols so it can ‘rapidly remodel’ restaurants “Does this actually save cost or is maintenance and upkeep offsetting?” Harbour asked. “Some industries have found there are real limits to automation in this regard. How capital intensive is automation on an upfront and ongoing basis?” There are also questions about how customers will react. Will they see robotic salad makers as an attractive element that distinguishes Sweetgreen’s brand, or will they expect that machine-assembled salads should cost less? Chief Executive Jonathan Neman, for his part, is upbeat about the initiative. “Our Infinite Kitchen pilot continues to deliver many benefits to our operating model, such as increased throughput, near perfect order accuracy, portioning consistency, a better team- …
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“Increasingly the story feels to us like a bet on the Infinite Kitchen rollout, and whether this falters, or drives a real step change in economics and the unit development opportunity, which is needed for the stock to work, in our view,” Harbour wrote as he downgraded Sweetgreen’s stock
SG,
-6.97%
to underweight from equal weight. “We’re more cautious for now.” Sweetgreen has two Infinite Kitchens up and running, according to Harbour, and plans to open more this year. Though food chains are betting that automation will help them improve margins by allowing them to rely less on human labor, Harbour isn’t sold yet on the benefits to the bottom line. See also: Burger King to buy franchisee Carrols so it can ‘rapidly remodel’ restaurants “Does this actually save cost or is maintenance and upkeep offsetting?” Harbour asked. “Some industries have found there are real limits to automation in this regard. How capital intensive is automation on an upfront and ongoing basis?” There are also questions about how customers will react. Will they see robotic salad makers as an attractive element that distinguishes Sweetgreen’s brand, or will they expect that machine-assembled salads should cost less? Chief Executive Jonathan Neman, for his part, is upbeat about the initiative. “Our Infinite Kitchen pilot continues to deliver many benefits to our operating model, such as increased throughput, near perfect order accuracy, portioning consistency, a better team- …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]