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A moneymaking idea during a labor shortage: invent a pizza robot with your friends

Sam Dean, Los Angeles Times on

Published in Business News

That demand was met by 75,117 pizza restaurants nationwide in 2021, with Domino's leading the industry in sales. With franchises and company-owned stores, it has 6,597 locations in the U.S. and more than 19,000 worldwide, according to its latest financial filings.

It takes an army of human workers to make all that dough. Hundreds of thousands of people work at Domino's locations, and difficulty hiring in the last year has cut into the chain's delivery business — on a corporate earnings call in April, Domino's announced that it would continue to offer customers $3 in store credit to pick up their own pizza instead of ordering delivery, a pandemic-era promotion.

This extra-large market facing labor constraints has inspired a few different robot approaches: pizza vending machines, standalone robotic pizza kitchens and robots that slot into existing restaurant kitchens.

None of the categories has a clear winner — yet — though a handful are currently in operation. In the vending market, L.A.'s Basil Street Cafe had deployed 12 vending machines that would cook frozen pizzas before shutting down in April. Wavemaker Labs, the Pasadena, California, parent company of the fry-kitchen Flippy robot, is building a pizza vending machine called Piestro, which cooks pizzas fresh, and has announced a co-branding deal with 800 Degrees Pizza.

A handful of other companies, such as Seattle's Picnic and the Bay Area's XRobotics, make machines designed to be installed in standard restaurant kitchens, or just placed on a countertop, that can automatically prep a pizza with sauce and toppings; a human can then pop the assembled pie in the oven.

The best-funded robot-pizza startup to date, Zume Pizza, imploded in early 2020 after absorbing $375 million in funding from Softbank Vision Fund, the same venture capital firm that plowed billions into WeWork before its collapse. But Albrecht argues that calling Zume's setup a pizza robot was always a stretch.

 

"Zume wasn't a robot company," Albrecht said, but rather a company that pitched a big-data approach to predicting pizza demand to efficiently place its trucks. The process was never fully automated, and used off-the-shelf robotic arms to spread sauce and insert pizzas into the oven while humans applied toppings and shaped the dough.

Stellar's machine is closer to a miniature factory than a kitchen with robot chefs on the line — and Tsai plans to take a bigger swing at the market than many competitors. Instead of trying to fill the convenience niche of a vending machine or target the restaurant industry with a plug-and-play pizzabot, he wants to turn Stellar into a name brand on par with Domino's, Papa John's or Pizza Hut, and win the day through the power of superior economics.

"Our vehicle build cost is on the same order of magnitude as building out a Domino's store," Tsai said. He declined to give specifics, but said that the cost was in the low six figures. Domino's franchise agreement estimates that, minus franchise fees, insurance, supplies and rent, opening a new location costs between $115,000 and $480,000 to build out.

With lower overhead compared with a store staffed by humans, Tsai says Stellar can drop prices but still maintain the fat profit margins enjoyed by pizza chains. Company-owned Domino's locations had profit margins of 21% in 2021, according to the company's annual report, even after 30% of revenue was eaten up by labor costs.

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