- Chipotle has created a new venture fund, Cultivate Next, which will provide early-stage investments to companies that align with Chipotle's mission, the company announced Tuesday. The initial size of the fund will be $50 million and will be solely financed by the chain.
- The fund will support Series B stage companies that can help accelerate Chipotle's strategic priorities, which include improving operations, amplifying technology, advancing its Food With Integrity mission and increasing convenience for consumers.
- Chipotle has been exploring various technologies of late, partnering with Miso Robotics in March to test Chippy, a robot that can cook tortilla chips, and piloting a radio-frequency identification system to trace and track ingredients. The chain also uses a scheduling tool that leverages artificial intelligence to create more effective schedules. Last year, it invested in autonomous delivery company Nuro.
Chipotle has long been interested in using technology to improve operations and make employees' jobs easier. Now, that could mean looking at robotics or automation to perform tasks such as cleaning dishes or cutting and coring avocados, Chipotle CEO Brian Niccol said in February during the company's earnings call.
Investing in early-stage companies could give Chipotle a leg up over rivals when it comes to accessing emerging technologies. Competition is already heating up — chains like White Castle, Buffalo Wild Wings, Jamba, Chili's and Panera have been testing robotics and automation to improve operations, while Checkers & Rally's is adding conversational artificial intelligence at the drive-thru.
"We are exploring investments in emerging innovation that will enhance our employee and guest experience, and quite possibly revolutionize the restaurant industry," Curt Garner, Chipotle's chief technology officer, said in the press release. "Investing in forward-thinking ventures that are looking to drive meaningful change at scale will help accelerate Chipotle's aggressive growth plans."
Before the pandemic, the company added a digital make line, which helped improve the flow of operations in-restaurants. It was also one of the first to create digital pickup windows, which are now a major driver of new development. The company opened its first Chipotlane-centric restaurant without a dining room late last year.
Chipotle's loyalty program, which launched in 2019, has also grown significantly, reaching 26.5 million members at the end of 2021, Niccol said during the February investor call. Comparatively, Starbucks Rewards, which has been around for well over a decade, reached 26.4 million during its fiscal Q1 2022 ending Jan. 2, 2022.
All of these innovations have led to significant growth in digital sales, which reached $3.4 billion in 2021, 3.5 times the pre-pandemic level of digital sales, according to Niccol.
"Digital has proven to be sticky as it's a frictionless and convenient experience that has been aided by continuous investments, and you will likely see us increasing technology enablement for our restaurants and support centers to amplify innovation, enhance the customer experience and optimize efficiencies to improve operational execution," Niccol said on the call.