1 00:00:05,920 --> 00:00:08,760 Speaker 1: All right, let's turn our attention right now to food 2 00:00:08,880 --> 00:00:11,959 Speaker 1: and the health of the restaurant sector. Chipotle, Mexican Grill 3 00:00:12,000 --> 00:00:15,000 Speaker 1: among the biggest outperformers in the S and P Restaurants Index, 4 00:00:15,080 --> 00:00:17,759 Speaker 1: shares up more than fifty percent year to date, and 5 00:00:17,800 --> 00:00:19,800 Speaker 1: a big question going forward right now is to how 6 00:00:19,840 --> 00:00:22,400 Speaker 1: much further that rally can go and what actually drives it. 7 00:00:22,600 --> 00:00:24,680 Speaker 1: Who better to talk to than the CEO and chairman 8 00:00:24,760 --> 00:00:27,440 Speaker 1: of Chipotle, A Brian Nicol, joining us right now here 9 00:00:27,480 --> 00:00:30,040 Speaker 1: on the big program. Brian, great to have you back here, 10 00:00:30,080 --> 00:00:32,880 Speaker 1: and let's get right to it. We talk about dining trends, 11 00:00:32,880 --> 00:00:35,120 Speaker 1: and we know they shift kind of from month to 12 00:00:35,159 --> 00:00:38,280 Speaker 1: month and year to year, obviously depending on economic conditions. 13 00:00:38,440 --> 00:00:40,840 Speaker 1: When you take a look at economic conditions right now, 14 00:00:41,040 --> 00:00:44,040 Speaker 1: do you see any material impact in what's going to 15 00:00:44,080 --> 00:00:45,240 Speaker 1: happen inside your source? 16 00:00:45,520 --> 00:00:48,400 Speaker 2: Yeah, you know, we continue to see a really healthy 17 00:00:48,520 --> 00:00:52,720 Speaker 2: consumer that continues to come to Chipotle, and I'm happy 18 00:00:52,760 --> 00:00:56,480 Speaker 2: to say that I think our restaurants are better staff 19 00:00:56,640 --> 00:00:59,320 Speaker 2: better deployed, and you know, we've got our culinary right 20 00:00:59,360 --> 00:01:02,520 Speaker 2: on points, so as guests show up, you know we 21 00:01:02,600 --> 00:01:06,240 Speaker 2: believe we're giving them great customized meals. That they want, 22 00:01:06,440 --> 00:01:10,560 Speaker 2: and we continue to seeing strength really across all income cohorts. 23 00:01:11,280 --> 00:01:14,720 Speaker 1: I am curious about uppricing and really the value proposition 24 00:01:14,840 --> 00:01:17,959 Speaker 1: that fast casual and fast food restaurants have for a 25 00:01:18,000 --> 00:01:21,199 Speaker 1: lot of consumers out there. You've raised prices several times 26 00:01:21,240 --> 00:01:23,199 Speaker 1: over the last couple of years, at least four times 27 00:01:23,200 --> 00:01:26,200 Speaker 1: on your major items here, and I'm wondering, do you 28 00:01:26,280 --> 00:01:27,880 Speaker 1: feel like you're going to get to I guess sat 29 00:01:27,920 --> 00:01:30,160 Speaker 1: at that breaking point where you feel like that this 30 00:01:30,280 --> 00:01:32,399 Speaker 1: is just as much as the consumer is willing to 31 00:01:32,440 --> 00:01:34,520 Speaker 1: take or is there more room for you to maneuver? 32 00:01:34,840 --> 00:01:36,319 Speaker 2: Yeah, So you know, the way we look at that 33 00:01:36,440 --> 00:01:41,720 Speaker 2: rowane is we always are trying to evaluate our value proposition, specifically, 34 00:01:41,760 --> 00:01:44,319 Speaker 2: do consumers feel great about what they're paying for what 35 00:01:44,360 --> 00:01:47,240 Speaker 2: they're getting from Chipotle? And what we've seen over and 36 00:01:47,240 --> 00:01:50,320 Speaker 2: over again is the brand continues to be really strong 37 00:01:50,560 --> 00:01:55,640 Speaker 2: from a value proposition standpoint. So currently we've seen we've 38 00:01:55,680 --> 00:01:58,240 Speaker 2: got some of the best value ratings from our customers 39 00:01:58,320 --> 00:02:01,200 Speaker 2: that we've had, frankly in a long time. And then 40 00:02:01,280 --> 00:02:03,600 Speaker 2: when we look at where our pricing is relative to 41 00:02:03,640 --> 00:02:07,600 Speaker 2: the alternative to have the same quality culinary, we find 42 00:02:07,640 --> 00:02:11,200 Speaker 2: ourselves to be at a significant discount relative to those alternatives. 43 00:02:11,200 --> 00:02:13,520 Speaker 2: So you know, we see time and time again people 44 00:02:13,560 --> 00:02:16,800 Speaker 2: are saying, hey, look to get this great chicken burrito 45 00:02:16,960 --> 00:02:21,359 Speaker 2: or chicken bowl or barbacoat Quesadilla. They feel like, hey, 46 00:02:21,560 --> 00:02:24,400 Speaker 2: the ten fifteen dollars, you know, if you've got guawk 47 00:02:24,480 --> 00:02:28,120 Speaker 2: and chips as part of your meal, they feel like 48 00:02:28,360 --> 00:02:31,359 Speaker 2: it's a tremendous value because of the customization, the speed, 49 00:02:31,919 --> 00:02:33,160 Speaker 2: the caliber of the culinary. 50 00:02:33,880 --> 00:02:35,840 Speaker 3: They feel really good about what they're getting from Chipotle. 51 00:02:36,280 --> 00:02:38,919 Speaker 4: Well, thank you for framing how you're thinking about it. 52 00:02:39,080 --> 00:02:41,560 Speaker 4: Have you decided how much you'll raise prices by next year? 53 00:02:42,919 --> 00:02:45,919 Speaker 3: You know, we have not made a decision on that yet. 54 00:02:46,560 --> 00:02:48,520 Speaker 2: You know, we've got an estimate of where we think 55 00:02:49,760 --> 00:02:51,919 Speaker 2: kind of food costs will be next year and where 56 00:02:51,919 --> 00:02:54,800 Speaker 2: we think our labor inflation will be, and right now 57 00:02:54,840 --> 00:02:57,280 Speaker 2: we're estimating that's kind of like in the mid single digits. 58 00:02:57,919 --> 00:02:59,840 Speaker 2: We always kind of like to see how the year 59 00:03:00,160 --> 00:03:03,840 Speaker 2: folds and then we make a decision on our pricing. Historically, 60 00:03:04,240 --> 00:03:07,520 Speaker 2: you know, in normal environments, you know, we usually take 61 00:03:07,560 --> 00:03:10,200 Speaker 2: about one to three percent pricing a year. 62 00:03:11,160 --> 00:03:13,240 Speaker 3: But we've not made any decision jet for next year. 63 00:03:13,400 --> 00:03:16,040 Speaker 4: Okay, and sure we noted that Chipotle is headquartered in 64 00:03:16,120 --> 00:03:19,880 Speaker 4: Newport Beach, California. I'm curious, given that state it's new 65 00:03:19,919 --> 00:03:22,600 Speaker 4: minimum wage law, how much more prices would need to 66 00:03:22,639 --> 00:03:24,160 Speaker 4: increase in California because of that. 67 00:03:25,760 --> 00:03:28,680 Speaker 2: Yeah, look, that's that's one that we'll obviously have to address. 68 00:03:29,320 --> 00:03:32,440 Speaker 2: You know, currently we're in like the seventeen eighteen dollars 69 00:03:33,000 --> 00:03:36,240 Speaker 2: wage range. So obviously with this moving to twenty dollars 70 00:03:36,280 --> 00:03:38,920 Speaker 2: and put some additional inflation in the state of California, 71 00:03:39,360 --> 00:03:41,640 Speaker 2: We've got about ten to fifteen percent of our restaurants here. 72 00:03:42,480 --> 00:03:45,600 Speaker 2: We haven't made any decision jet, but I'm assuming pricing 73 00:03:45,640 --> 00:03:47,280 Speaker 2: will probably have to be part of the puzzle in 74 00:03:47,360 --> 00:03:50,520 Speaker 2: order to handle some of that inflation. But obviously we 75 00:03:50,600 --> 00:03:53,240 Speaker 2: first look to what another place where you get more efficiency? 76 00:03:53,760 --> 00:03:55,560 Speaker 3: Are there ways for us to grow around it? 77 00:03:56,000 --> 00:03:58,920 Speaker 2: But you know, with that type of move in such 78 00:03:58,920 --> 00:04:01,560 Speaker 2: a short order, I'm assuming probably pricing will love to 79 00:04:01,560 --> 00:04:02,400 Speaker 2: be part of the equation. 80 00:04:03,040 --> 00:04:06,160 Speaker 1: I am curious about some of the menu offerings and 81 00:04:06,240 --> 00:04:10,800 Speaker 1: whether we can expect something new. I mean, obviously, I'm 82 00:04:10,800 --> 00:04:13,440 Speaker 1: sure you've known there's been so much talk about watchabullet 83 00:04:13,520 --> 00:04:16,000 Speaker 1: doesn't do breakfast in the way that the other fast 84 00:04:16,080 --> 00:04:18,080 Speaker 1: casual restaurants to. I'm sure you're tired of hearing that, 85 00:04:18,440 --> 00:04:20,960 Speaker 1: but there is a growth story that investors want to see, 86 00:04:21,279 --> 00:04:23,160 Speaker 1: and they want to see that. Okay, something new is 87 00:04:23,160 --> 00:04:25,440 Speaker 1: maybe going to come down the pipeline that they can 88 00:04:25,640 --> 00:04:28,000 Speaker 1: maybe think will be aid and profitability. 89 00:04:29,360 --> 00:04:32,440 Speaker 2: Yeah, look, you know, I will tell you I've had 90 00:04:32,600 --> 00:04:36,480 Speaker 2: archerizo with eggs and it does make a fabulous breakfast brito. 91 00:04:36,960 --> 00:04:39,560 Speaker 3: We have no plans right now, though, to do breakfast. 92 00:04:39,680 --> 00:04:43,400 Speaker 2: There's so much opportunities to grow in our lunch, afternoon, 93 00:04:43,480 --> 00:04:46,200 Speaker 2: and dinner day parts. Right now, we're closing in about 94 00:04:46,240 --> 00:04:49,520 Speaker 2: three million dollars average unit volumes. We see no reason 95 00:04:49,560 --> 00:04:52,520 Speaker 2: why we can't get to four million just winning in 96 00:04:52,600 --> 00:04:55,919 Speaker 2: those day parts. So significant growth from where we are today, 97 00:04:56,400 --> 00:04:59,839 Speaker 2: just by executing what I say is great throughput operation. 98 00:05:00,600 --> 00:05:01,960 Speaker 3: And why is that so important? 99 00:05:01,960 --> 00:05:04,280 Speaker 2: Because one of the things that's unique about Chipoli is 100 00:05:04,360 --> 00:05:08,080 Speaker 2: just how fast we can get you a customized, high caliber, 101 00:05:08,240 --> 00:05:12,080 Speaker 2: culinary created meal. And we see time and time again 102 00:05:12,440 --> 00:05:17,039 Speaker 2: that when we execute the fundamentals of great culinary, great throughput. 103 00:05:17,000 --> 00:05:19,200 Speaker 3: We are rewarded with more business. 104 00:05:19,320 --> 00:05:21,840 Speaker 2: And we're seeing that play out in our most recent quarter, 105 00:05:22,160 --> 00:05:24,320 Speaker 2: and we continue to believe that that's the right focus 106 00:05:24,400 --> 00:05:24,880 Speaker 2: going forward. 107 00:05:24,920 --> 00:05:26,680 Speaker 3: So you'll see us through things like right now we're 108 00:05:26,680 --> 00:05:27,560 Speaker 3: doing carne asada. 109 00:05:27,640 --> 00:05:30,039 Speaker 2: Yeah, we'll probably bring back a Chicken out pass store, 110 00:05:30,720 --> 00:05:33,600 Speaker 2: have some nice menu innovation. But look, the name of 111 00:05:33,640 --> 00:05:36,159 Speaker 2: the game for us is build more restaurants and grow 112 00:05:36,240 --> 00:05:39,039 Speaker 2: the lunch, afternoon, and dinner day parks through great throughput. 113 00:05:39,360 --> 00:05:42,560 Speaker 1: Hey, gotcha talk about expansion here. I mean just yesterday 114 00:05:42,640 --> 00:05:45,160 Speaker 1: we were talking about I guess one of your quasi competitors, 115 00:05:45,200 --> 00:05:47,719 Speaker 1: if you will, with McDonald's announcing some pretty big expansion 116 00:05:47,760 --> 00:05:50,839 Speaker 1: plans as well as some big changes to the insides 117 00:05:50,839 --> 00:05:52,920 Speaker 1: of their stores as well. I am curious. I mean, 118 00:05:52,960 --> 00:05:55,599 Speaker 1: you guys have had a pretty aggressive expansion, at least 119 00:05:55,800 --> 00:05:58,400 Speaker 1: aggressive by what Wall Street I think had expected here. 120 00:05:58,760 --> 00:05:59,760 Speaker 1: Is that going to continue? 121 00:06:00,880 --> 00:06:03,520 Speaker 3: Yeah? Absolutely. You know, we only have thirty three hundred, 122 00:06:03,600 --> 00:06:05,080 Speaker 3: thirty four hundred restaurants. 123 00:06:04,720 --> 00:06:07,080 Speaker 2: Right now in the United States, and there's no reason 124 00:06:07,120 --> 00:06:08,880 Speaker 2: why we can't have seven thousand plus. 125 00:06:09,400 --> 00:06:12,480 Speaker 3: So we're going to go talk but in what time frame? Brand? 126 00:06:13,480 --> 00:06:15,320 Speaker 2: You know, Look, I think one of the things we've 127 00:06:15,400 --> 00:06:17,360 Speaker 2: really focused on is making sure that we open the 128 00:06:17,440 --> 00:06:20,720 Speaker 2: number of restaurants that support our people capability. So we've 129 00:06:20,800 --> 00:06:23,000 Speaker 2: given guidance for next year that we'll do you know, 130 00:06:23,480 --> 00:06:26,080 Speaker 2: two eighty five to three hundred and fifteen new restaurants, 131 00:06:26,360 --> 00:06:28,200 Speaker 2: and we've also shared we want to grow about eight 132 00:06:28,279 --> 00:06:30,400 Speaker 2: to ten percent a year, so you know, when you 133 00:06:30,480 --> 00:06:32,600 Speaker 2: start adding that up, you can see we're going to 134 00:06:32,640 --> 00:06:34,240 Speaker 2: have nice growth every year. 135 00:06:34,640 --> 00:06:36,600 Speaker 3: We're going to make sure we've got the people capability 136 00:06:36,640 --> 00:06:37,279 Speaker 3: to open those. 137 00:06:37,160 --> 00:06:41,240 Speaker 2: Restaurants, successfully, get great unit economics, and then grow our 138 00:06:41,320 --> 00:06:43,600 Speaker 2: way to you know, seven thousand plus restaurants just the 139 00:06:43,760 --> 00:06:46,839 Speaker 2: United States, and we're just getting started outside the United States. 140 00:06:46,920 --> 00:06:49,760 Speaker 2: So you know, that number doesn't even take into account 141 00:06:49,920 --> 00:06:51,400 Speaker 2: what I think we are going to be capable to 142 00:06:51,480 --> 00:06:53,680 Speaker 2: do outside the United States down the road. 143 00:06:54,000 --> 00:06:57,120 Speaker 4: So as you expand, I'm curious how you're incorporating one 144 00:06:57,160 --> 00:06:59,760 Speaker 4: of the buzziest themes out there, which is AI, into 145 00:06:59,800 --> 00:07:03,719 Speaker 4: your processes a McDonald's, for instance, just for an example 146 00:07:03,760 --> 00:07:06,480 Speaker 4: out there, they're using AI to train employees, give instructions 147 00:07:06,520 --> 00:07:09,040 Speaker 4: on how to use or repair equipment, or using AI 148 00:07:09,200 --> 00:07:12,480 Speaker 4: in drive through ordering, which actually has been less successful. 149 00:07:12,800 --> 00:07:14,640 Speaker 4: What have you found works for Chipotle? 150 00:07:16,120 --> 00:07:18,560 Speaker 2: Yeah, you know, look where we've used. This is more 151 00:07:18,640 --> 00:07:22,200 Speaker 2: in the space of forecasting correctly. And the reason why 152 00:07:22,240 --> 00:07:25,320 Speaker 2: that's so important is, you know, we do fresh prep 153 00:07:25,440 --> 00:07:28,200 Speaker 2: every day, and when we get the forecast right, our 154 00:07:28,280 --> 00:07:30,320 Speaker 2: teams then are set up with the right amount of 155 00:07:30,320 --> 00:07:32,120 Speaker 2: prep in the morning so that they have a great 156 00:07:32,200 --> 00:07:34,520 Speaker 2: lunch business and then we come back and do additional 157 00:07:34,600 --> 00:07:37,280 Speaker 2: prep for dinner. And one of the places that we've 158 00:07:37,280 --> 00:07:40,600 Speaker 2: seen this really benefit us is being sharper on our 159 00:07:40,640 --> 00:07:43,240 Speaker 2: ability to forecast what's going to happen that day so 160 00:07:43,360 --> 00:07:45,120 Speaker 2: that our teams are prepared and. 161 00:07:45,200 --> 00:07:47,400 Speaker 3: They create the fresh food correctly in the morning so 162 00:07:47,480 --> 00:07:49,600 Speaker 3: we're ready to go. So that's one place. 163 00:07:49,640 --> 00:07:52,080 Speaker 2: The other place that we've really invested is more probably 164 00:07:52,120 --> 00:07:54,960 Speaker 2: in robotics to make the job easier. You know, there's 165 00:07:55,040 --> 00:07:57,480 Speaker 2: a lot of work that goes into making our hand 166 00:07:57,560 --> 00:08:00,360 Speaker 2: mashed blackamoli every day. So we're working on a product 167 00:08:00,440 --> 00:08:03,400 Speaker 2: right now to cut core and scoop the fruit so 168 00:08:03,520 --> 00:08:05,320 Speaker 2: that then all our teams have to do is add 169 00:08:05,480 --> 00:08:07,679 Speaker 2: you know, the kalapanio, the cilantro of the lime juice, 170 00:08:08,040 --> 00:08:10,160 Speaker 2: mash it up a little red onion and now you've 171 00:08:10,160 --> 00:08:10,840 Speaker 2: got guacamole. 172 00:08:11,000 --> 00:08:15,600 Speaker 3: In saving time. That is a huge win. 173 00:08:15,680 --> 00:08:18,080 Speaker 2: And then also by the way the process of cutting 174 00:08:18,120 --> 00:08:20,920 Speaker 2: core scooping the avocado, that's a hard process. 175 00:08:21,560 --> 00:08:21,680 Speaker 3: You know. 176 00:08:21,720 --> 00:08:25,040 Speaker 2: If we can find solutions where it makes the job easier, 177 00:08:25,480 --> 00:08:27,480 Speaker 2: sets our teams up to be successful at lunch. 178 00:08:28,160 --> 00:08:29,840 Speaker 3: We want to invest in those things and bring those 179 00:08:29,880 --> 00:08:30,720 Speaker 3: things forward. Ran. 180 00:08:30,760 --> 00:08:32,079 Speaker 4: Before we let you go, I have to ask you 181 00:08:32,080 --> 00:08:34,440 Speaker 4: about ozepic and what kind of impact your it currently 182 00:08:34,559 --> 00:08:36,560 Speaker 4: seeing from the class of weight loss drugs. 183 00:08:38,000 --> 00:08:39,720 Speaker 3: Yeah, we're not seeing any impact. 184 00:08:39,800 --> 00:08:43,199 Speaker 2: And actually, as we've understood the way the drug works, 185 00:08:43,760 --> 00:08:48,199 Speaker 2: I think Chipotle's positioned really well for those folks that 186 00:08:48,320 --> 00:08:50,680 Speaker 2: end up on that drug. You know, our food is clean, 187 00:08:51,200 --> 00:08:55,280 Speaker 2: our food is customizable, so you can get exactly a 188 00:08:55,400 --> 00:08:57,760 Speaker 2: portioning that you want as well as the build that 189 00:08:57,880 --> 00:09:02,240 Speaker 2: you want. So I think we're well positioned for folks 190 00:09:02,280 --> 00:09:04,800 Speaker 2: that choose to use the drug. But too late today 191 00:09:04,960 --> 00:09:06,760 Speaker 2: we really haven't seen any meaningful impact. 192 00:09:06,920 --> 00:09:08,959 Speaker 4: All right, that is a headline right there, Brian, thank 193 00:09:09,000 --> 00:09:11,480 Speaker 4: you so much. Brian nicol Is Sherman and CEO of 194 00:09:11,559 --> 00:09:15,319 Speaker 4: Chipotle Mexican grill not seeing any impact from ozembic and 195 00:09:15,600 --> 00:09:18,480 Speaker 4: maybe they'll use AI and robotics to help mash and 196 00:09:18,760 --> 00:09:21,320 Speaker 4: create GUACAMOLEA, which does sound pretty good right now.