Inside the pizza chain that's replacing chefs with robots

The future has arrived in Mountain View, California.

Zume Pizza is replacing human chefs with robots, slashing labor costs in half, and reinvesting those savings into higher-quality ingredients to carve out a portion of the $40 billion annual U.S. pizza business.

"What we are doing is leveraging the power of this evolution of automation, these intelligent robots, to put better food on people's tables," said Julia Collins, the company's co-founder and co-CEO.

Zume, which is delivery-only, employs far fewer workers than the average pizza chain, but the employees it does hire — which include sous chefs and software engineers — get full benefits, education subsidies and shares in the business. The company — which made its first hire on Sept. 8, 2015 — has never had an employee quit, which is unusual in the restaurant business, said Collins.

"We're a co-bot situation," said Collins. "There are humans and robots collaborating to make better food, to make more fulfilling jobs and to make a more stable working environment for the folks that are working with us."

Zume's co-bot workforce provides a model for what the future of many industries might look like: Within five years robots and so-called intelligent agents will eliminate many positions in customer service, trucking and taxi services, amounting to 6 percent of U.S. jobs, according to a recent Forrester report.

For Americans who are afraid of that future, Collins has this message: "Since the industrial revolution the American workforce has learned to adapt with the advent of new technology, so as a country, as a people, we know how to do this."

Within Zume's kitchen, it is the highly repetitive tasks that have been automated first. For example, there are three bots for squirting and spreading tomato sauce on pies, and a bot similar to ones used on a car assembly line to place those pies in an 800-degree oven hundreds of times a day.

"That's a highly repetitive task and one that can be dangerous for human beings, so integrating robots into that makes a lot of sense," said Collins.

The company will always need humans for food preparation, recipe development, taste tests and to improve their pizzas based on customer feedback, said Collins. The company employs 50 people — 32 are low-skilled employees working in either the kitchen or as delivery drivers. The other employees are in executive, management or engineering roles.

Zume's robots are manufactured by global manufacturing company ABB (Swiss Exchange: ABBN-CH) — whose robots are typically used in large manufacturing settings — and integrated with the help of Silicon Valley software company L2F.

"We have co-developed the entire pizza production process that is robot-enabled," said Collins. "The individual pieces of equipment come from these large global manufacturers, but the integration of those robots within our ecosystem is something that we have designed and that we actually have the intellectual property on."

The bots cost between $25,000 and $35,000 each, but the investment will quickly pay off, said Collins.

"That cost is a lot lower, as you can imagine, than the salary of a human being with benefits," she said.

Yum Brands (NYSE: YUM)' Pizza Hut and Domino's (NYSE: DPZ) which, along with Papa Johns and Little Caesars dominate the U.S. pizza industry, have also been experimenting with robots. Pizza Hut has deployed robots in selected restaurants in Asia and Domino's has introduced pizza delivery droids in New Zealand.

Global investments in robotics start-ups have risen sharply over the past 18 months, according to data from CB Insights. There were more than 120 deals in the robotics sector in 2015, up from less than 50 in 2013. There have been more than 100 robotics start-up deals so far this year, CB Insights found.

Today, Zume is rolling out its new "Baked in the Back" pizza delivery van equipped with 56 ovens to cook pizzas en route to customers — the latest patented innovation the company hopes will help differentiate its pies. By crunching all the data about customer orders, Zume knows which pizza you will order while watching Monday night football before you do, and loads up the pies before the orders are even placed.

The company — which sold its first pizza on April 1, 2016, and delivered its 10,000th pizza on Saturday — is in the process of raising a Series A round of funding to complete a planned Bay Area expansion.

Collins would not disclose any details about the financials of the business, but said revenue is increasing every week. Zume's other co-founder is Alex Garden, who is former head of Zynga Studios and was a general manager of Microsoft's Xbox Live.

Collins predicts other restaurants and food delivery services are ripe for robot disruption.

"I think you would be hard-pressed to find any food type that wouldn't benefit form this kind of intelligent automation that we're using," she said.

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