Chipotle’s recipe for digital transformation: Cloud plus AI

When Curt Garner became Chipotle’s first CIO in 2015, the only technology used for restaurant ordering online, “believe it or not,” was a fax machine, he says.

Seven years later, the Newport Beach, California-based company is testing a robotic arm system called “Chippy,” which prepares the fast-casual chain’s famous fried salt-and-lime chips every day without human labor, with the goal of tuning output to the daily needs of any restaurant.

“We’re using robotic technology to do all the manipulations that a human would do in that process,” Garner says, noting that “Chippy” is currently used in only one of Chipotle Mexican Grill’s 3,000 stores, but usage will continue to grow. increase. “We spent several months in our lab refining the recipes and processes to make this possible.”

The former Starbucks CIO wasted no time kicking off the restaurant chain’s digital transformation in 2016, applying and developing his “lessons learned” from Starbucks to test a digital ordering system that allows Chipotle customers to pre-order online. can order and pick up their food from a drive-through window — without the use of speaker boxes or menu boards typical of drive-through fast food restaurants.

Removing the physical speaker box on site was a simple concept, but a key part of a larger digital transformation Chipotle began in 2018, sparking an explosion in business, largely because the digital ordering system required less human labor during the pandemic. Chipotle’s digital business was $3.5 billion in 2022 — a size greater than the $100 million to $200 million annual average before digital ordering processes were implemented in the company.

Chipotle IT’s Secret Sauce

Garner credits Chipotle’s entire business model for having enabled him to deploy advanced technologies such as the cloud, analytics, data lake and AI uniformly across all restaurants, as they are all based on the same digital backbone. Many restaurant chains, on the other hand, are individually owned and operated as franchisees.

“We are not 3,100 different companies, but one restaurant 3,100 times, while each of those locations is affected differently by their trade area, commute and weather patterns,” said Garner, who was promoted to CTO after proving his mettle. “Part of the strategy and policy we put in place around the cloud in early 2016 was that the closer we got to the consumer experience, the more we could abstract from that consumer experience and leverage cloud and commodity services.”

And the cloud is central to this. Chipotle’s digital commerce platform is Microsoft Azure and its internal business processes, such as ERP, have been migrated from on-premises Oracle to Oracle Cloud. Because the company got an early start, 98% of Chipotle’s workloads now run in the cloud, Garner says, allowing the chain to retire its Denver-based data center and deploy a suite of next-generation cloud-native applications to run its business. to grow in the US and Europe.

That foundation has set up Chipotle well to not only survive but thrive during the pandemic, said Sandeep Unni, senior director analyst at Gartner.

“In an industry that has historically been resistant to change and operates with wafer-thin margins, the importance of investing in digital technology, data and customer experience cannot be overemphasized,” said Unni. “I consider Chipotle a great example where strategic bets in digital transformation made long before the pandemic are paying off.”

Currently, Chipotle operates several cloud services that are part of the Microsoft Azure platform, such as the AI ​​and ML modeling services. The restaurant’s Microsoft consumer data platform for ordering customers online uses built-in AI that performs tasks without human intervention, but Garner also makes heavy use of another AI application known as H20, which Chipotle has been using for two years. used.

“We really like their cloud-based AI program,” Garner says. “It enables us to build models and applications very quickly and transparently. They have a management level on top of that, which allows us to dynamically change and monitor the performance across the entire platform and the powerful set of tools.”

Building on the foundation

Garner also recently implemented RFID in 100 restaurants to track food supplies from local farms to distribution centers to each restaurant. The system connects to Chipotle’s Oracle system and provides traceability, points of origin, and real-time visibility into the delivery location, especially if suppliers have issues. But Garner sees even more possibilities for the system.

“I see a future where we combine technology called ‘real food print’ that we’ve implemented that allows the customer to understand the environmental impact of that order, such as the local farm their food comes from,” said Garner, noting that the company buys more than £30million worth of locally sourced products a year, something that is becoming increasingly important for customers, especially students.

Garner’s flexible cloud infrastructure, including a data lake built on Snowflake, has also facilitated the chain’s implementation of PreciTaste, a SaaS and AI system that allows any store to accurately predict its sourcing needs. The system provides “demand-based forecasting for cooking and ingredient preparation to optimize throughput and freshness while minimizing food waste,” the company said. “Using AI and machine learning, the system monitors ingredient levels in real-time and informs crews how much to prepare, cook and when to start cooking, while automatically filling the real-time production schedule for each restaurant,” it announced. the company recently.

Despite Chipotle’s heavy reliance on technology, Garner argues that fully automating the stores with robots would hurt the business, as customers still want to interact with and understand human servers.

While this longtime CIO and his team like to use the most modern tools in the business to serve the freshest food, Garner also makes it clear that he is not married to a single cloud or technology infrastructure.

“Technology is constantly changing, and one of the things I appreciate about the cloud as a growth company is not only the flexibility we have to quickly scale up or down and deliver more, but we have the ability to evolve over time. time to transition to other platforms without the legacy costs typical of on-premise solutions,” said the CTO.

“I never think about our static architecture,” Garner adds. “I think flexibility and agility will continue to be a competitive advantage for us for a while.”

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