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Chipotle Mexican Grill generated $2.8 billion in digital sales in 2020 by doubling down on technologies that make mobile ordering and delivery fast and convenient.
Now it plans to take that effort to the next level by investing in autonomous delivery vehicles.
The fast-casual chain is investing in the robotics startup Nuro, whose fleet of self-driving vehicles can deliver prepared food, groceries, medicine, and retail products.
Domino’s and Walmart previously tested Nuro’s autonomous Priuses, while CVS and Kroger are using them for deliveries in Houston, Nuro told Insider.
Chipotle did not disclose the funding amount, which the chain called the “first significant investment in a third-party technology” company since CEO Brian Niccol was hired three years ago.
“What’s interesting about Nuro is they’re working to figure out how we can solve some of the problems we’re all facing related to delivery and what it might mean to have an access channel that doesn’t have a driver,” Curt Garner, Chipotle’s chief technology officer, told Insider.
So does Chipotle plan to use these autonomous rovers to reduce its dependence on third-party delivery companies like Uber Eats and DoorDash?
No, said Garner, who came to Chipotle in 2015 from Starbucks.
Garner, whose team built Chipotle’s industry-leading app and digitally enhanced food-prep lines geared toward off-premise orders, said delivery was an important part of the company’s business. It accounts for about half the chain’s digital sales, which grew more than 174% year over year in 2020.
While delivery is a crucial part of its business, the chain has said in recent earning reports that third-party delivery fees are hurting profit margins. As such, Chipotle increased delivery prices by about 13%, on average, to offset high commission fees.
The Nuro investment is about giving Chipotle a “competitive advantage” when it comes to providing customers access to nontraditional delivery methods, he said.
“It’s less about a focus on where we are today and more a focus on what the future could hold,” Garner said.
Does that mean Nuro vehicles could be delivering burrito bowls to Chipotle fans in the coming months?
“Eventually,” Garner said, declining to provide a specific timetable.
“I can’t tell you specifically when and where because we’re just at the very beginning with this announcement,” he added. “But yeah, certainly, we see the promise for this technology to be more widely available, and we would want to be one of the partners to pilot it and learn from it.”
That’s one key reason Chipotle invested in Nuro. Chipotle wants a seat at the table when it comes to battle-testing the technology for various types of delivery uses, Garner said.
“Certainly, our ability to partner with them more closely gives us an ability to make sure that those first iterations of product are as appropriate and fit for function as possible to what we’re looking to solve,” Garner said.
Shaping that technology means that Nuro’s autonomous fleet could be used beyond doorstep delivery, Garner added.
“I think over the long term, when you think about some of the future unlocks, you can see some of these vehicles helping us move goods between restaurants or distribution centers, or catering orders,” he said.
“Lots of different applications are possible in the future,” he added.
Last year, Nuro said it had raised $500 million to help it scale its vehicles commercially. About a month later, Nuro received a permit to deploy its autonomous vehicles on public streets in California.