On a never-ending quest to boost its digital experience, Chipotle has now invested in Nuro, an autonomous delivery company that uses robotics to transport everyday items.
The undisclosed expenditure is part of the brand’s Series C funding round. It marks Chipotle’s first major investment in a third-party technology company since Brian Niccol became CEO and chairman in 2018. The brand said it's now focused on “exploring disruptive opportunities outside of traditional third-party partnerships.”
"We are always seeking opportunities that provide innovative solutions for increasing access and convenience for our guests," said Curt Garner, chief technology officer, in a statement. “Nuro could change the traditional delivery model and we believe consumers are going to continue to seek options and additional access points for how and where they enjoy their food.”
Founded in 2016, Nuro’s objective from the beginning has been “harnessing the power of robotics and artificial intelligence to solve challenges at a global scale.” In December, Nuro became the first company to receive a permit from the California Department of Motor Vehicles to use autonomous cars on public streets. The permit lets the company operate vehicles commercially in two counties close to its Bay Area headquarters.
In February 2020, Nuro was the first to obtain a U.S. Department of Transportation exemption, and in April 2020, it became the second self-driving car company to receive a driverless testing permit in California. In October, Nuro started testing its vehicles in three different states.
"Nuro and Chipotle share the same commitment to improving everyday life through innovative products, whether it's through responsibly sourced food or autonomous delivery vehicles," Dave Ferguson, Nuro co-founder and president, said in a statement. "With financial and strategic support from world-class companies like Chipotle, we can continue to advance our industry-leading autonomous technology, grow our team and expand our delivery service.”
Chipotle’s digital business has exploded in the past year. The channel skyrocketed to $2.8 billion in 2020, or a 174 percent increase year-over-year. Roughly half of those sales came from delivery. In just Q4, digital lifted 177.2 percent, year-over-year, to 49 percent of mix.
The partnership with Nuro builds off of a string of recent digital investments.
Last year, Chipotle open its first digital-only restaurant near West Point in Highland Falls, New York. The Chipotle Digital Kitchen concept is focused on accelerating digital business in non-traditional venues. The company said the build is unique “because it does not include a dining room or front service line.” Guests must order in advance via the fast casual’s website, app, or through third-party delivery partners. Orders are picked up from a lobby designed to include all of the sounds, smells, and kitchen views of a traditional Chipotle, the company added.
The company has also expanded its Chipotlane units, which produce a digital gap (versus non-Chipotlane restaurants) around 10 percent, driven by higher-margin digital pickup orders. The stores open close to existing restaurant AUV immediately. Historically, Chipotle restaurants start in the high- to mid-80 percent range of sales before maturing. At 2020’s close, Chipotle had 170 Chipotlanes in the system, including five conversions.
Additionally, in late January, Chipotle announced it's testing carside pickup through its mobile app at 29 restaurants across California.