Chipotle (CMG) Is Piloting Palantir (PLTR) for Food Safety. Does It Matter for Investors?

Chipotle Mexican Grill Inc (NYSE: CMG ) spent this summer doing damage control, including removing affected jalapeños from restaurants after they were linked to a salmonella outbreak, while the broader restaurant industry faced a cyclospora outbreak linked to iceberg lettuce, and navigating a landscape that's seen over 12,800 illnesses caused by foodborne outbreaks in the US. Now the company is turning to an unlikely partner to help it stay ahead of the next crisis: Palantir Technologies Inc. (NASDAQ: PLTR ).

According to WIRED, Chipotle has revealed that it is piloting a Food Safety Risk Management Platform based on Palantir's Foundry software. The approach leverages a variety of restaurant-level data sources, including health department inspection scores, pest incidences, and employee illness reports, to assign a food safety risk score to each location. Laurie Schalow, Chief Corporate Affairs and Food Safety Officer, explained that it is intended to provide "a more consistent and centralized view of food safety risk across our restaurants."

A Rough Stretch That Explains the Timing

The new platform also bears the weight of Chipotle's own past. In 2020, the company agreed to pay a $25 million criminal fine to resolve charges related to foodborne illness outbreaks that sickened more than 1,100 people between 2015 and 2018. Prosecutors discovered that some of the previous outbreaks were caused by employees failing to follow the company's own sick-leave and food-safety regulations, which is why employee illness reports are now one of the variables incorporated into the new Palantir-built risk scores.

Palantir's partnership with Chipotle adds a highly recognizable consumer brand to a commercial food and beverage customer base it has been building for years, which already includes work with Tyson Foods, General Mills, and the purchasing cooperative that serves Wendy's restaurants. It supports the company's overall push away from its defense, intelligence, and government roots, which still include contracts with the FDA, DHS, and ICE, and toward more diversified US commercial revenue, which reached $764 million last quarter.

Institutional positioning declined for both companies. Chipotle Mexican Grill Inc (NYSE:CMG) witnessed hedge fund ownership decline from 68 in the first quarter to 63 in the second. Palantir Technologies Inc. (NASDAQ:PLTR) experienced a steeper drop, from 96 funds to 86 over the same period, a reduction that predates this specific partnership.