WEBVTT - Chipotle CEO on Earnings, Inflation and Crypto 0:00:01.840 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.320 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.880 --> 0:00:13.640 plus technology, politics, economics, all furnessing the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.040 analysts in more than one twenty countries. You can download 0:00:20.040 --> 0:00:23.239 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.440 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.880 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:32.559 YouTube search Bloomberg Global News. Well, well, mena maybe having 0:00:32.600 --> 0:00:36.440 a tough time in the aftermarket. Chipotle Mexican Mexican Grill. 0:00:36.520 --> 0:00:39.320 Let's try it again. Chipotle Mexican Grill in the aftermarket 0:00:39.400 --> 0:00:43.000 yesterday was soaring, and it's soared in today's session, up 0:00:43.040 --> 0:00:45.920 more than six at its highs. And this is after 0:00:45.960 --> 0:00:49.200 the company reported second quarter earnings at top analyst projections. 0:00:49.479 --> 0:00:52.599 The chain adding new locations consumers show that they were 0:00:52.640 --> 0:00:55.040 willing to show up and pay more. The company also 0:00:55.080 --> 0:00:57.720 provided an upbeat sales outlook. So great to have back 0:00:57.720 --> 0:01:00.960 with us. We got with us and Nicol. He is 0:01:01.000 --> 0:01:03.440 the CEO of chip Pole. It's good to have you 0:01:03.480 --> 0:01:07.120 with us, Brian. How are you. I'm great, Yeah, thanks 0:01:07.120 --> 0:01:08.839 for having me guys. Yeah, thanks so much for joining 0:01:08.920 --> 0:01:10.640 us on this. Hey, Carol went through some of these. 0:01:10.680 --> 0:01:12.520 We also want to mention the same store sales growing 0:01:12.520 --> 0:01:14.720 in the mid to high single digits in the third quarter. 0:01:14.800 --> 0:01:17.480 That's the outlook that you gave. Um. What worked so 0:01:17.520 --> 0:01:19.240 well this past quarter, as we're sort of getting a 0:01:19.240 --> 0:01:21.120 tail of two different earnings reports at this point, what 0:01:21.240 --> 0:01:26.400 worked was so well for you guys? Well, unfortunately for us. Uh. 0:01:26.440 --> 0:01:31.280 You know, our customer mix definitely over indexes with higher 0:01:31.319 --> 0:01:36.440 income and we saw that group actually increase their purchase 0:01:36.520 --> 0:01:39.800 frequency with us, and uh, their spend was also a 0:01:39.840 --> 0:01:42.920 little bit of So what we concluded is we we've 0:01:42.959 --> 0:01:46.640 seen some trade down and you know, people are switching 0:01:46.680 --> 0:01:50.559 some occasions in digitotle, so we feel like we're gaining 0:01:50.600 --> 0:01:54.760 market share um for our company. Uh. And then at 0:01:54.760 --> 0:01:57.240 the same token, we did see a slight slow down 0:01:57.240 --> 0:01:59.960 with the lower income consumer from a purchase frequency standpoint, 0:02:00.400 --> 0:02:03.200 but not in their absolute spend. And you know, the 0:02:03.240 --> 0:02:05.360 thing that was really powerful for us throughout the quarter 0:02:05.520 --> 0:02:09.240 is our restaurants were staffed, um, you know, and our 0:02:09.280 --> 0:02:11.840 team members did a great job of servicing both our 0:02:11.840 --> 0:02:15.959 digital business, which is rough, and our frontline business, which 0:02:16.000 --> 0:02:20.120 is really accelerating as people kind of come back to 0:02:20.160 --> 0:02:23.240 normal routines. And uh, that was really the thing that 0:02:23.280 --> 0:02:26.280 I think carried us to order. And then obviously our 0:02:26.320 --> 0:02:28.960 brain has tremendous value. Uh, and as a result, we 0:02:28.960 --> 0:02:30.919 were able to pass through some pricing to offset a 0:02:30.960 --> 0:02:33.959 lot of the inflationary pressures we've been dealing with. Brod, 0:02:34.000 --> 0:02:36.400 I gotta ask you, I mean, when you saw these 0:02:36.480 --> 0:02:39.919 results coming in are leading up to this earnings report, Um, 0:02:40.040 --> 0:02:41.840 were you just kind of blown away? I mean, even 0:02:42.400 --> 0:02:46.600 restaurant margin, which we all watch so closely because it's 0:02:46.680 --> 0:02:51.200 key in terms of measuring profitability in the quarter, compared 0:02:51.240 --> 0:02:54.079 with an estimate of I mean, as the numbers were 0:02:54.120 --> 0:02:57.440 coming in, and you know, were you just kind of 0:02:57.480 --> 0:03:00.799 blown away by the performance considering the declines we've seen 0:03:00.800 --> 0:03:05.679 in consumer sentiment and so much recessionary talk. Yeah, Look, 0:03:05.680 --> 0:03:09.079 I really think it goes back to the strength of 0:03:09.080 --> 0:03:12.919 both our teams that are executing in our restaurants, because 0:03:12.960 --> 0:03:15.880 you know, they're the ones that turn the top line 0:03:15.919 --> 0:03:18.079 into the bottom line based on how they perform in 0:03:18.120 --> 0:03:21.000 the restaurant. And then I think the I would say 0:03:21.040 --> 0:03:24.079 the strength of brand, which is, you know, it's really 0:03:24.080 --> 0:03:28.800 based on great culinary, great ingredients, you know, customization and convenience, 0:03:28.919 --> 0:03:31.400 and I think we did a great job of executing 0:03:31.400 --> 0:03:34.920 against all those markers and as a result, um, you know, 0:03:34.960 --> 0:03:37.560 we were rewarded with people's business that then our teams 0:03:37.560 --> 0:03:40.080 did a great job of executing so that it flowed 0:03:40.120 --> 0:03:42.640 to the bottom line. But yeah, I'm really proud of 0:03:43.720 --> 0:03:47.160 the results. You know, to achieve a ten percent pump 0:03:47.880 --> 0:03:52.360 and also be able to you know, deliver the margins 0:03:52.400 --> 0:03:55.720 at the restaurant in this environment, I think it speaks 0:03:55.720 --> 0:03:59.000 of testament to just the value proposition, the strength of 0:03:59.040 --> 0:04:01.320 the brand in the strength of the people working in 0:04:01.360 --> 0:04:04.680 our restaurants. And while analysts in the investment community were 0:04:04.680 --> 0:04:06.600 pretty happy about what they had heard, you know, in 0:04:06.640 --> 0:04:08.240 terms of your comp sales, I just want to mention 0:04:08.320 --> 0:04:11.720 another headline crossing about another company, best Buy, talking about 0:04:11.760 --> 0:04:14.040 their second quarter comp sales, and they're talking about them 0:04:14.040 --> 0:04:18.560 declining about so a different company, but this stock is 0:04:18.560 --> 0:04:20.919 now down about five percent and the after hours. Hey, Brian, 0:04:21.000 --> 0:04:24.680 back to Chipotle. Let's talk about wages because I know 0:04:24.800 --> 0:04:27.240 that we heard from you guys last night that labor 0:04:27.279 --> 0:04:30.600 cross for the quarter were increased about thirty basis points 0:04:30.640 --> 0:04:34.160 from last year twenty four eight percent. You did that, 0:04:34.560 --> 0:04:37.880 you know wage rays last year. That's sort of widespread 0:04:38.160 --> 0:04:40.000 wage increase. Are you gonna have to do that again? 0:04:41.320 --> 0:04:45.480 You know, we are continuing to see pockets of you know, 0:04:45.960 --> 0:04:51.039 needs to do still movement on our wages. The good 0:04:51.040 --> 0:04:53.239 news for us is we took a really big move 0:04:53.680 --> 0:04:56.360 about a year ago, which you manage, and then really 0:04:56.400 --> 0:04:58.440 what we've been doing is just monitoring kind of at 0:04:58.480 --> 0:05:02.960 the local level what's happening with wages and opportunity at 0:05:02.960 --> 0:05:06.120 our company, so that we need to attract retain the 0:05:06.200 --> 0:05:08.840 right people. And we still are dealing with I like 0:05:08.880 --> 0:05:11.760 to say, pockets of challenges on that front. Where are 0:05:11.760 --> 0:05:16.120 those geographical pockets? Yeah, and it's almost look it's like 0:05:16.200 --> 0:05:20.159 store by store, Um, you know, it's not contained one 0:05:20.200 --> 0:05:24.200 region over another region. It really depends on what I 0:05:24.200 --> 0:05:26.719 would call kind of the market area. And you know 0:05:26.720 --> 0:05:28.560 there's a lot of dynamics that go into it. You know, 0:05:29.120 --> 0:05:32.120 is there big box retail nearby? What are the other 0:05:32.240 --> 0:05:37.200 alternatives for um kind of the the employee pool that 0:05:37.240 --> 0:05:41.200 we compete with. So while you raised wages pretty much 0:05:41.200 --> 0:05:43.720 across the board last year, by not necessarily you will 0:05:43.760 --> 0:05:45.560 have to do the same thing this year or your 0:05:45.920 --> 0:05:48.599 you might might have to. We're look, we're still moving 0:05:48.600 --> 0:05:51.040 forward with MERITA increases, and we did a little bit 0:05:51.040 --> 0:05:54.280 bigger merit increase than usual given the inflationary environment, because 0:05:54.320 --> 0:05:57.200 we don't want to fall behind on wages either, given 0:05:57.600 --> 0:06:00.760 you know, the environment we're dealing with, So that's really 0:06:00.760 --> 0:06:04.920 important to us. So I should probably caveat. We're trying 0:06:04.920 --> 0:06:07.960 to run our wage program on more of a you 0:06:08.000 --> 0:06:11.240 know system basis, where it happens every six months we 0:06:11.279 --> 0:06:15.000 re evaluate wages, you know, we pass along merit increases, 0:06:15.520 --> 0:06:19.000 and also we provide promotions for folks. And you know, 0:06:19.160 --> 0:06:21.799 before we were having to come in between those because 0:06:22.200 --> 0:06:25.359 you know, you just the competition to get labor to 0:06:25.480 --> 0:06:30.760 work had really increased dramatically because there were fewer people applying. Luckily, 0:06:30.880 --> 0:06:33.760 that seems to have gone um to more of a 0:06:33.800 --> 0:06:37.719 normal pace where applicant flow as well as our ability 0:06:37.760 --> 0:06:41.200 to then retain people as as starting to get more 0:06:41.440 --> 0:06:44.000 I would say, to a normal approach for us UM 0:06:44.120 --> 0:06:46.880 or normal run rate. I gotta ask you only because 0:06:46.880 --> 0:06:48.800 it's been another story that we've been following for the 0:06:48.839 --> 0:06:52.599 last few months about unionization that we're seeing certainly among 0:06:52.839 --> 0:06:55.480 you know, restaurants. Are you how do you guys feel 0:06:55.480 --> 0:06:57.680 about that or is that part of your move to 0:06:57.720 --> 0:06:59.320 make sure you stay ahead of when it comes to 0:06:59.400 --> 0:07:03.320 higher wage is because would you prefer that your restaurants 0:07:03.320 --> 0:07:06.960 don't become unionized or are you okay about it? Yeah? Look, 0:07:06.960 --> 0:07:10.679 I really don't see the need for union at chipotlech Um. 0:07:10.720 --> 0:07:13.760 You know, I believe our jobs and the culture and 0:07:13.760 --> 0:07:18.559 the opportunities are best done within our restaurants and within 0:07:18.560 --> 0:07:20.400 our company. We don't need a third party to be 0:07:20.440 --> 0:07:22.520 a part of that conversation. And the reason why I 0:07:22.560 --> 0:07:26.440 say that is we've got great wages. Um, okay, they're 0:07:26.480 --> 0:07:29.840 great jobs. Were a growth company. You have the ability 0:07:29.880 --> 0:07:32.440 to join our company with you know, a high school 0:07:32.480 --> 0:07:35.720 degree or some equivalent. Um. And also if you talk 0:07:35.760 --> 0:07:38.520 to any like new immigrants or refugees, I mean this, 0:07:39.120 --> 0:07:42.840 this company delivers jobs and deliver the American dream. And 0:07:42.920 --> 0:07:45.560 I can share many stories where you know, I was 0:07:45.640 --> 0:07:47.440 just with somebody that was a refugee from the Congo. 0:07:47.560 --> 0:07:50.440 He's now one of our highest level general managers, making 0:07:50.480 --> 0:07:53.480 six figures, leading a multimillion dollar restaurant, a team of 0:07:53.520 --> 0:07:56.440 thirty plus people. And the guy is electric and you 0:07:56.480 --> 0:07:58.960 know what he's gonna be able to continue to grow with. Yeah, 0:07:59.080 --> 0:08:02.160 there's a young woman should be immigrated from Chihuahua, Mexico, 0:08:02.520 --> 0:08:06.560 single female, didn't know English, learns English. You know, nine 0:08:06.640 --> 0:08:09.400 years later, she's our top restaurant general manager in the 0:08:09.520 --> 0:08:14.200 entire coping. So yeah, there's just tremendous opportunity for people 0:08:14.600 --> 0:08:18.080 to go from a crew position, work their way up 0:08:18.120 --> 0:08:20.720 to being a general manager, becoming what we call a 0:08:20.800 --> 0:08:23.600 restaurant tour which is our top general managers, becoming a 0:08:23.680 --> 0:08:27.600 multi unit leader. And when you're when you're building restaurants 0:08:27.640 --> 0:08:29.880 a year, there is so much suction for people to 0:08:29.880 --> 0:08:32.079 get promotered and moved up. I I think last year 0:08:32.120 --> 0:08:36.160 we promoted you know, like nineteen people. Um, so, just 0:08:36.240 --> 0:08:39.160 tremendous opportunity. And you know, I'm very proud of our 0:08:39.200 --> 0:08:40.840 company and I'm very proud of the jobs that we 0:08:40.880 --> 0:08:42.959 provide to our people. Hey, Brian, a lot those still 0:08:42.960 --> 0:08:45.440 out of your control, especially when it comes to costs. 0:08:45.440 --> 0:08:47.640 And this is something that we heard fed J. J. 0:08:47.760 --> 0:08:50.319 Powell talking about the rising costs across the board, especially 0:08:50.320 --> 0:08:52.640 for food. We did learn last night in your earnings 0:08:52.679 --> 0:08:57.600 report that you mentioned avocados, dairy tortillas, some packaging. Um, 0:08:57.640 --> 0:09:00.440 those prices are still going up. You did those say 0:09:00.480 --> 0:09:04.160 that other parts of the business you've seen prices plateau. 0:09:04.600 --> 0:09:07.240 What is that? Where? Where has where has inflation been 0:09:07.240 --> 0:09:10.800 transitory in your business? Well? Yeah, don't mistake that for 0:09:10.800 --> 0:09:13.880 transitory because it hasn't gone back right, So you're not 0:09:13.920 --> 0:09:17.760 ready to call peak inflation. Not ready to call peak 0:09:17.800 --> 0:09:20.640 inflation yet. I wish, I wish I could, and I'm 0:09:20.679 --> 0:09:23.480 not ready to say that because we haven't seen anything 0:09:23.480 --> 0:09:27.040 really go backwards yet. Um. The good because is we 0:09:27.120 --> 0:09:28.360 finally had like I don't know if you can call 0:09:28.400 --> 0:09:29.839 this a trend, but we have like a month or 0:09:29.880 --> 0:09:32.480 two where we didn't see everything going up. Um. But 0:09:32.720 --> 0:09:35.480 as you mentioned, we had some major inputs going up 0:09:35.520 --> 0:09:39.199 still uh and in a meaningful way. And that's why 0:09:39.480 --> 0:09:41.880 you know, Unfortunately we've got to take another price increase 0:09:41.920 --> 0:09:44.480 in August. Um, as much as I hate to do it, 0:09:44.960 --> 0:09:47.160 we're fortunate that our brand has the pricing power to 0:09:47.280 --> 0:09:50.280 do it. Uh, and we can maintain the integrity of 0:09:50.280 --> 0:09:53.000 our value. Was it what ingredients? What ingredients are you 0:09:53.000 --> 0:09:54.880 referring to? Was a chicken was at steak? What was it? 0:09:56.000 --> 0:10:00.280 That plateau? Or continue? Yeah? That that that plateau? It 0:10:00.320 --> 0:10:02.440 was it was more in the proteins, so like pork, 0:10:02.960 --> 0:10:11.079 beef in some produce items. Unfortunately packaging aluminum, Uh, dairy tortillas, avocados, 0:10:11.559 --> 0:10:15.160 chicken um continue to have a lot of pressure. One 0:10:15.200 --> 0:10:16.640 thing I want to ask you about, Brian. I mean, 0:10:16.679 --> 0:10:19.160 you're continue to grow in terms of the number of 0:10:19.240 --> 0:10:22.080 restaurants and especially the pickup windows. You know, where is 0:10:22.160 --> 0:10:24.680 the real growth and momentum that you guys continue to see. 0:10:24.760 --> 0:10:26.760 I've been out to visit It's really pretty cool to 0:10:26.800 --> 0:10:28.600 see the different lines that you guys are able to 0:10:28.640 --> 0:10:31.600 tap into, and certainly the digital world of people just 0:10:31.760 --> 0:10:34.160 either ordering online and just zipping by and picking up. 0:10:34.440 --> 0:10:38.240 So where is it that you really continue to see 0:10:38.360 --> 0:10:40.600 growth in terms of the types of restaurants you want 0:10:40.600 --> 0:10:44.400 to be opening up? Yeah, look the restaurant the Chipotle 0:10:44.480 --> 0:10:47.920 lane format um is you know, a traditional Chipole with 0:10:47.960 --> 0:10:49.440 a pickup window where you don't have to get out 0:10:49.440 --> 0:10:52.599 of your car and those restaurants and we now have 0:10:52.679 --> 0:10:54.679 four hundred and thirty of them, and I think the 0:10:54.760 --> 0:10:56.680 last time we spoke or maybe the first time we 0:10:56.679 --> 0:10:58.760 spoke about this, I think when we were talking about it, 0:10:58.880 --> 0:11:00.960 we had like Tan in the back in like two 0:11:01.000 --> 0:11:05.400 thousand nineteen. So it just shows the power of our development. Uh, 0:11:05.840 --> 0:11:08.200 but they continue to really perform. You know, our digital 0:11:08.240 --> 0:11:12.960 business is about big uh in in that execution, and 0:11:13.000 --> 0:11:16.240 then the total business is also opens at a higher 0:11:16.320 --> 0:11:21.000 volume as well. So uh, that's what we're building. Um. 0:11:21.160 --> 0:11:24.079 We just opened our first one up in Canada to 0:11:24.200 --> 0:11:27.040 a really successful opening, and then just recently we opened 0:11:27.040 --> 0:11:29.080 one and kind of a smaller town outside California. It's 0:11:29.080 --> 0:11:31.520 like a new record opening for us. So it's got 0:11:31.559 --> 0:11:34.160 a lot of momentum. Will continue to build the inline 0:11:34.920 --> 0:11:37.800 um Chipotle's as well where we can't get the chipotlenk. 0:11:37.880 --> 0:11:41.680 But it's clear consumers like the additional access point of 0:11:41.720 --> 0:11:44.079 not having to get another car, and it really it's 0:11:44.120 --> 0:11:46.199 the fastest drive the experience you can have because you 0:11:46.320 --> 0:11:48.520 ordered ahead, you've already paid for it. If you order 0:11:48.520 --> 0:11:50.240 a fountain drink, that's the thing that you gotta wait 0:11:50.280 --> 0:11:52.840 on otherwise you pull up, say your name, and you 0:11:52.880 --> 0:11:55.760 know you got a burrito and you're ready to go. Hey, Brian, 0:11:55.800 --> 0:11:57.640 about a year ago we were interviewing you and I 0:11:57.640 --> 0:12:01.000 asked you about Chipotle accepting crypto, and I gotta be honest, 0:12:01.040 --> 0:12:03.280 you kind of laughed it off, and and here we 0:12:03.320 --> 0:12:05.920 are a year later, and you know, June of this 0:12:06.000 --> 0:12:09.040 year you announced that you now accept crypto at US 0:12:09.120 --> 0:12:12.560 locations his partnership with Flexa. So essentially, people load up 0:12:12.840 --> 0:12:15.199 this app with with their crypto and then you accept 0:12:15.200 --> 0:12:18.040 that app at the restaurants. What how's that going right now? 0:12:18.040 --> 0:12:20.880 What percentage of sales is in crypto at this point? 0:12:22.440 --> 0:12:25.320 It's uh, you know, look, it's a really neat tool 0:12:25.440 --> 0:12:29.640 that Flexa provides so that people can monetize their crypto. Um, 0:12:29.679 --> 0:12:33.080 but you know they carry all the risk and uh, 0:12:33.080 --> 0:12:36.960 it's a very very small percentage of sales. Um. Arguably 0:12:36.960 --> 0:12:40.439 it's almost negligible. But um, you know, for those that 0:12:40.600 --> 0:12:42.920 have it and want to monetize it, we found I 0:12:42.960 --> 0:12:45.480 think a pretty clever solution. All right, but you are 0:12:45.559 --> 0:12:47.600 doing and then buy the dip game, right and if 0:12:47.640 --> 0:12:51.199 you win, you can get it, but you could get 0:12:51.280 --> 0:12:53.280 you gotta could get about crypt We got a lot 0:12:53.320 --> 0:12:55.560 of creative people in our own marketing department. I'll tell 0:12:55.559 --> 0:12:58.560 you that much. Well, but why do promotion in time? 0:12:58.760 --> 0:13:01.280 Even dose coin is in there like so no, no, no, 0:13:01.400 --> 0:13:03.600 but but it is interesting. Is it just kind of 0:13:03.600 --> 0:13:06.320 its appeals to your audience and you know what is it? 0:13:06.640 --> 0:13:09.480 You know, Look, we have a commitment to stay relevant 0:13:10.040 --> 0:13:14.040 both in culture, food, culture, you know, music. You know, 0:13:14.120 --> 0:13:16.760 I guess tech falls all the way to this idea 0:13:16.760 --> 0:13:19.080 of crypto and uh, I think the team does a 0:13:19.120 --> 0:13:21.959 fabulous job of staying on the front end of where 0:13:22.440 --> 0:13:25.720 young people want to be, uh, and then also being 0:13:25.840 --> 0:13:28.000 very relevant. You know, I never want our brand to 0:13:28.040 --> 0:13:32.200 be out of sync with the conversation and uh. You know, look, 0:13:32.400 --> 0:13:35.000 the reality is the things that drive culture, right, It's food, 0:13:35.080 --> 0:13:38.080 it's fashion, its sports, it's music. I think it's tech. 0:13:38.720 --> 0:13:40.439 So we want to be president in those things. Well. 0:13:40.440 --> 0:13:41.760 I love that you said tech because we had a 0:13:41.760 --> 0:13:44.840 great conversation with your chief technology officer last week, Kirk Corner, 0:13:44.880 --> 0:13:47.920 and we talked about the Cultivate Next venture fund. You 0:13:47.960 --> 0:13:51.280 guys are investing in companies like hyphen and we were 0:13:51.280 --> 0:13:53.400 actually kind of blown away. We were online Tim and 0:13:53.400 --> 0:13:56.720 I looking at at this make line of where you've 0:13:56.720 --> 0:14:00.400 got teams in the restaurants servicing customer is and then 0:14:00.480 --> 0:14:03.600 yet below all the digital orders are being filled. I mean, 0:14:03.880 --> 0:14:05.640 when you think about the investments you want to be 0:14:05.720 --> 0:14:08.200 making in other companies, how do you think about it? 0:14:08.320 --> 0:14:11.800 What's the strategy there? Well? Yeah, look, I am I'm 0:14:11.840 --> 0:14:16.120 super excited about this hyphen possibility for exactly what you 0:14:16.200 --> 0:14:18.880 just described. Right, We've got think of it this way, right, 0:14:19.960 --> 0:14:22.920 our business is on that digital makeline. If we could 0:14:23.360 --> 0:14:27.800 automate that aspect of our business where you know, you 0:14:27.880 --> 0:14:30.600 only need a person or two to manage it, uh, 0:14:30.640 --> 0:14:33.040 it makes the job a lot easier in way for 0:14:33.040 --> 0:14:35.880 our employees because now you're not having really balanced deployment 0:14:36.320 --> 0:14:40.120 between digital orders and frontline orders. And uh, at the 0:14:40.160 --> 0:14:42.680 same token, you know, in the event it goes down, 0:14:42.720 --> 0:14:45.240 you still can serve off the top of the line. 0:14:45.280 --> 0:14:51.000 So that hyphen technology, automation, robotics, whatever term you want 0:14:51.000 --> 0:14:55.040 to give it, is I think a big, big opportunity 0:14:55.040 --> 0:14:58.160 for us. I'm super excited about our investment. I've met 0:14:58.200 --> 0:15:00.440 the guys that are working on it, or should save 0:15:00.480 --> 0:15:02.760 a team that's working on it up in San Jose, 0:15:03.440 --> 0:15:05.520 smart group of people. I never thought I could say 0:15:05.520 --> 0:15:08.280 I would have a bunch of rocket sciences. I got 0:15:08.280 --> 0:15:10.880 a bunch of rocket sciences working by which is pretty amazing. 0:15:10.920 --> 0:15:14.360 This technology and every walk of our life, that's for sure. Hey, 0:15:14.400 --> 0:15:16.880 Brian Fund to spend some time with you. Brian Nicol, 0:15:16.920 --> 0:15:19.640 of course, the chairman and CEO Chipotle, joining us via 0:15:19.720 --> 0:15:22.920 Zoom from the company's headquarters in Newport Beach, California. Brian, Bwell, 0:15:22.960 --> 0:15:27.160 thank you. You're listening to Bloomberg Business Week with Carol 0:15:27.200 --> 0:15:31.640 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:15:31.960 --> 0:15:34.240 So we know during the pandemic that a broader clientele 0:15:34.320 --> 0:15:37.520 was boarding private jets, especially as business travel came to 0:15:37.640 --> 0:15:39.600 a hall. And we've got a great guest to give 0:15:39.680 --> 0:15:42.800 us kind of an update is how the projjet industry 0:15:42.840 --> 0:15:45.800 continues to evolve as we increasingly come out of the pandemic. 0:15:45.800 --> 0:15:47.920 But we're not done yet. We stare certainly not done. 0:15:47.920 --> 0:15:49.600 A good reminder that we are still in it right. 0:15:49.640 --> 0:15:52.720 The President just testing negative today. Andrew Collins is a 0:15:52.760 --> 0:15:55.680 president and CEO of Centian a Jet. He's with us 0:15:55.760 --> 0:15:58.520 right now in the Bloomberg interactive at Broker Studio. Andrew, 0:15:58.520 --> 0:15:59.840 it's been a while since we've seen you. It's good 0:15:59.840 --> 0:16:01.360 to have you back with us. How are you. I'm 0:16:01.360 --> 0:16:03.000 doing great and it's great to be back here in 0:16:03.040 --> 0:16:05.080 the student Thanks for having me. Hey, give us you know, 0:16:05.120 --> 0:16:06.760 I want to talk about sustainability and what you guys 0:16:06.800 --> 0:16:08.360 are doing there, because there's some really cool stuff. But 0:16:08.400 --> 0:16:10.480 first I want to get an idea of what you're 0:16:10.480 --> 0:16:12.480 seeing as you look across the landscape right now. And 0:16:12.520 --> 0:16:15.680 to Carroll's point, we saw private jet travel demand really 0:16:15.680 --> 0:16:19.080 shoot higher during the pandemic. Is people you know thought 0:16:19.160 --> 0:16:20.600 that this was a good way to keep them safe. 0:16:20.600 --> 0:16:23.600 Are you seeing that demand remains strong right now? We 0:16:23.680 --> 0:16:28.040 are so. Um. We we saw the addressable market expand 0:16:28.120 --> 0:16:31.040 per se right. A lot of hidden people, hidden customers 0:16:31.120 --> 0:16:33.880 that you know, really took a pandemic to bring them out. 0:16:33.960 --> 0:16:36.160 They might have been a little fiscally conservative, or they 0:16:36.200 --> 0:16:38.720 might have thought about the sustainability issue, but at the 0:16:38.800 --> 0:16:41.160 end of the day, they came out and products like ours. 0:16:41.200 --> 0:16:43.240 We invented the jet cards, so you pre buy twenty 0:16:43.240 --> 0:16:46.920 five hours at a time. When you utilize a service 0:16:47.000 --> 0:16:48.720 like that, you tend to get used to it. And 0:16:48.800 --> 0:16:52.200 so I don't think all the new entrants that came 0:16:52.240 --> 0:16:54.760 in and the expanded you know, amount of and the 0:16:54.840 --> 0:16:58.080 velocity by which you know, the volume came I don't 0:16:58.080 --> 0:17:01.280 know that that will remain exactly as it stands. But 0:17:01.400 --> 0:17:04.000 a good portion of it is we're very busy this summer. 0:17:04.600 --> 0:17:08.120 Despite you know, raising rates and fuel surcharges and everything else, 0:17:08.160 --> 0:17:11.360 there is a voracious appetite for flying and traveling. Right now, 0:17:11.400 --> 0:17:14.080 are you back to pre pandemic levels? We are well 0:17:14.119 --> 0:17:17.119 passed pre pandemic levels really, And is most of it 0:17:17.240 --> 0:17:21.000 leisure or is it a combination of leisure? A little tricky, 0:17:21.240 --> 0:17:23.719 A little tricky because it feels like leisure what they 0:17:23.760 --> 0:17:28.240 call it? Now? What is that? I think? I think 0:17:28.240 --> 0:17:29.600 it's a lot like that. Yeah. I go on a 0:17:29.640 --> 0:17:32.720 busits trip and I bring my Yeah, yeah, I think that. 0:17:33.119 --> 0:17:34.920 You know, it used to be I can tell you 0:17:35.040 --> 0:17:38.720 was sixty corporate, it was leisure, etcetera. Now it's very 0:17:38.800 --> 0:17:41.520 much hard to track because it's a lot of individuals, 0:17:41.560 --> 0:17:44.240 a lot of individual flying. Uh, they might be just 0:17:44.359 --> 0:17:46.880 expensing it. You have no idea. In some cases, you'd 0:17:46.880 --> 0:17:48.240 have to look at kind of time of day and 0:17:48.280 --> 0:17:50.879 what don't know. I mean, a corporate credit card goes through, right, 0:17:50.920 --> 0:17:54.080 doesn't it um Well, because when with our card, you 0:17:54.119 --> 0:17:56.560 actually deposit money and then we just dub it it down, 0:17:56.600 --> 0:17:59.040 so we'll never really know if you're using it for 0:17:59.080 --> 0:18:01.760 business or not unless you did set it up as 0:18:01.760 --> 0:18:05.720 a business account. Okay, but somebody pays, someone does pay 0:18:05.720 --> 0:18:07.480 for it, yeah, and it's a lot of times it's 0:18:07.480 --> 0:18:10.359 a primary customer and it's in their name. So at 0:18:10.359 --> 0:18:12.080 the end of the day, though, you can tell, like 0:18:12.160 --> 0:18:14.000 you can tell certain routes and you can see things 0:18:14.040 --> 0:18:16.800 come back. Titter Borrow's come back a lot, Westchester's come back, 0:18:17.119 --> 0:18:19.160 you know, Van Nye's come back. So there's a lot 0:18:19.200 --> 0:18:21.280 of business travel out there that's almost sneaky, but it's 0:18:21.280 --> 0:18:23.879 definitely happening. It's interesting we're seeing this reversion to the 0:18:23.880 --> 0:18:25.760 mean with a lot of these pandemic plays out there 0:18:25.760 --> 0:18:28.240 in the public markets, whether it's Shopify laying off ten 0:18:28.280 --> 0:18:31.600 percent a thousand people earlier this week, Peloton coming back 0:18:31.640 --> 0:18:34.800 from sky high valuations. Do you anticipate a reversion to 0:18:34.800 --> 0:18:37.000 the mean as we do ease out of the pandemic 0:18:37.000 --> 0:18:39.760 and we and you get back to pre pandemic levels 0:18:39.760 --> 0:18:42.560 which were significantly lower than they are now. People become 0:18:42.560 --> 0:18:47.080 more comfortable on commercial travel. Well, I think that commercial 0:18:47.080 --> 0:18:49.040 has got a long way to go, and that's you know, 0:18:49.240 --> 0:18:53.439 without disrespect to my commercial brethren, but we've had to 0:18:53.440 --> 0:18:58.239 do a bunch of disrespect. Yeah, it's been pretty it's 0:18:58.280 --> 0:19:01.640 been about it's tough, right they You know, the reaction 0:19:01.720 --> 0:19:04.000 up front was to shrink a lot of routes and 0:19:04.080 --> 0:19:05.800 shut a lot of things down. To bring that back 0:19:05.920 --> 0:19:07.680 is really tough. So they're in the process of trying 0:19:07.680 --> 0:19:09.400 to figure that out. But there's a lot of people 0:19:09.440 --> 0:19:11.440 that left the airline industry and they're not coming back, 0:19:11.560 --> 0:19:13.960 or pilots and crews retired, so there's a lot of 0:19:14.000 --> 0:19:16.880 challenges there. Over in Europe, it's even worse. So right 0:19:16.880 --> 0:19:21.280 now you're seeing private jetscent year over your growth, uh 0:19:21.440 --> 0:19:23.800 due to the fact that it's just very difficult to 0:19:23.840 --> 0:19:27.360 travel throughout Europe. And uh, now, I don't I don't 0:19:27.359 --> 0:19:30.919 know that I see a lot of return yet. It 0:19:31.040 --> 0:19:32.919 just doesn't feel like that. It feels like in the 0:19:32.960 --> 0:19:35.320 fallen in the winter, especially this peak period, we're gearing 0:19:35.400 --> 0:19:37.040 up for a very big peak period during the winter. 0:19:37.200 --> 0:19:38.919 Do you have all the workers that you need or 0:19:38.960 --> 0:19:41.800 that you want and or and or Yes, but you're 0:19:41.800 --> 0:19:43.520 gonna have to you're paying up for them big time. 0:19:44.000 --> 0:19:46.320 You have to be very aggressive. So we've done a 0:19:46.359 --> 0:19:48.440 lot of aggressive work. We've done a lot of recruiting. 0:19:48.480 --> 0:19:51.400 We've hired a lot of aggressive We're paying them more, 0:19:51.560 --> 0:19:53.919 and we're talking to a lot more people. You know, 0:19:54.000 --> 0:19:56.280 it takes a lot more to fill oncelot, so we're 0:19:56.320 --> 0:19:58.520 doing a lot. We're also doing that. Everybody can be 0:19:58.560 --> 0:20:00.800 a pilot, no, not every It can be a pilot, 0:20:00.960 --> 0:20:03.359 and so there's a lot of work that goes around 0:20:03.359 --> 0:20:06.120