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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. When we talk about

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Speaker 1: tariff risk, I mean, we've spoken so much about how

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Speaker 1: much it's going to cost US to import goods from

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Speaker 1: overseas because of potential retaliatory tariffs, but you kind of

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Speaker 1: forget we export a lot too. And I thought Bloomberg

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Speaker 1: had an interesting article today that talked about all of

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Speaker 1: these unfulfilled contracts for agriculture exports that could be in

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Speaker 1: jeopardy if Mexico wants to stick it to US. They

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Speaker 1: buy six billion dollars of corn from US, China buys

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Speaker 1: obviously a lot of soybean and a week from US,

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Speaker 1: and there are some concerns here that they might decide

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Speaker 1: to cancel or at least pair back some of those contracts.

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Speaker 2: Yeah, more than eleven million metric tons of grains have

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Speaker 2: been sold but not yet shipped to our top three

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Speaker 2: trading partners, China, Mexico, and Canada.

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Speaker 3: Let's see how it all shakes out.

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Speaker 2: Of course, President Trump has put on hold his plans

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Speaker 2: to tariff Mexican goods and services that are covered under

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Speaker 2: the USMC until April second, and then maybe new negotiations begin.

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Speaker 3: We're not sure how it's all going to play out,

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Speaker 3: just yell.

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Speaker 1: I just want to know, Scarlett, if I can get

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Speaker 1: my alvacada?

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Speaker 2: Are not?

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Speaker 3: Yeah? Well are you big avocado fans? I am all right?

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Speaker 3: So am I. So let's talk a little bit more

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Speaker 3: about avocado ocada.

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Speaker 2: Let's bring in right now someone who knows firsthand how

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Speaker 2: the price of avocados can change things up, and that

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Speaker 2: is Scott vote right.

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Speaker 3: He is CEO of Chipotle. Scott, welcome to the close.

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Speaker 3: Thank you so much for joining us today.

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Speaker 4: Thank you, Scarlet, Happy to be here with you this afternoon.

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Speaker 2: Let's start with tariffs, because we can't avoid the elephant

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Speaker 2: in the rooms here, the single biggest way that tariffs

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Speaker 2: are making your life actual pole more difficult.

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Speaker 5: Of course, tariff's impact everyone here in the US says

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Speaker 5: we think about. I know avocado supply is on the

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Speaker 5: top of mind for a lot of US consumers. It

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Speaker 5: is for us, as you can imagine, we've gone through

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Speaker 5: what we believe to be a very sound vendor diversification

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Speaker 5: program as it relates to buying avocados. We buy everything

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Speaker 5: that we can possibly pick up here in the US

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Speaker 5: as during the growing season that's.

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Speaker 4: Here in California.

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Speaker 5: But we've also moved out of Mexico, which was about

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Speaker 5: eighty percent of our supply, the other cuntry trees like Peru,

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Speaker 5: Dominican Republic and even Columbia, and reduce the reliance to

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Speaker 5: about fifty percent with further diversification efforts underway.

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Speaker 2: So the diversification effort and the sourcing inside the US,

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Speaker 2: how has that affected the cost? Has it increased costs

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Speaker 2: for you?

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Speaker 3: Now?

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Speaker 5: Actually, we've been able to maintain costs by bringing in

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Speaker 5: other countries of origin, which has helped support our margin.

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Speaker 5: Tariff impacts will be felt. As you can imagine, I

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Speaker 5: sit on our.

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Speaker 4: Last earnings call that if all tariffs go in into

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Speaker 4: place with.

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Speaker 5: Mexico, Canada, and China, it will impact our margin by

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Speaker 5: about sixty basis points in total.

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Speaker 4: Not immateial, but not the end of the world either.

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Speaker 1: You also said on that call, Scott, that you as

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Speaker 1: a company were willing to eat that, meaning not necessarily

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Speaker 1: pass that directly on to the consumer. You still stand

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Speaker 1: by that.

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Speaker 4: I do stand by that, Romaine.

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Speaker 5: And here's why the consumer today, we recognize fully is

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Speaker 5: under pressure. Specifically, the low income consumer is finding this

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Speaker 5: economy tough to navigate and we want to continue to

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Speaker 5: deliver extraordinary values value to our consumer, primarily because we

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Speaker 5: don't know which of vin tariffs will be transitory or

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Speaker 5: which will be permanent. That all remains to be seen,

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Speaker 5: So we're going to remain patient. We're going to continue

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Speaker 5: to deliver great value for the consumer and ensure that

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Speaker 5: the Chipotle customer feels that benefit when they come into

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Speaker 5: our business.

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Speaker 1: And of course a lot of your customers come to

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Speaker 1: Chipotle specifically for that, they also come to it, as

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Speaker 1: you know, Scott, for what's on the menu, and prior

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Speaker 1: to you taking over, there was some tinckering with the menu. Obviously,

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Speaker 1: now that you've permanently been installed in CEO since November,

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Speaker 1: you've had a chance to now guide this going forward.

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Speaker 1: When we talk about new product introduction to more importantly

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Speaker 1: not just what the uptake is going to be by

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Speaker 1: the consumer, but how you bring these products to the

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Speaker 1: market at a cost that's going to be favorable to

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Speaker 1: your own bottom line.

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Speaker 4: That's right Roumaine.

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Speaker 5: We continue to lean into product innovation and Black believe

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Speaker 5: to be the most meaningful, best in last version of

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Speaker 5: what we can put forward to our consumer.

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Speaker 4: We just launched a fully honey Chicken. It's in restaurants today.

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Speaker 5: You'll start to see that show up in national TV

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Speaker 5: ads later in the week.

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Speaker 4: It's a promising LTO.

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Speaker 5: We feel a limited time offering which tested off the charts.

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Speaker 5: As it relates to consumer testing back this summer when

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Speaker 5: we ran it.

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Speaker 4: It's a super exciting product.

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Speaker 5: It comes in kind of sweet on the front end

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Speaker 5: with a little back end eat. And what we do

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Speaker 5: with LTO specifically is try to give the consumer something

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Speaker 5: new and drive incremental transactions as well as you get

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Speaker 5: our current consumers to come in more frequently.

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Speaker 2: I look at your stock today, Scott, and it's down

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Speaker 2: one tenth of one percent, basically unchanged. You could even

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Speaker 2: say it's up in a market that is down about

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Speaker 2: two and a half percent, in part because analysts have

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Speaker 2: cited things like your enviable balance sheet, talking up your

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Speaker 2: ability to have optionality when it comes to investing in

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Speaker 2: stores or spending as you mentioned on technology.

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Speaker 3: And new development.

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Speaker 2: What is your single biggest priority when it comes to

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Speaker 2: spending on development. Is it to continue to expand our menu?

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Speaker 2: Is it something more internal back of the house.

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Speaker 4: Yeah, it's a great question.

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Speaker 5: So we think about every dollar that we have in

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Speaker 5: the business today, and you are correct. We have an

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Speaker 5: extraordinary balance sheet, a fortress balance sheet, if you will,

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Speaker 5: very little debt, and probably one and a half to

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Speaker 5: two billion in cash, and we believe that that preservation

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Speaker 5: of cash is important to weather tough times just like this.

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Speaker 5: So we'll continue to lean into new restaurant development. We

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Speaker 5: said publicly we'll build three hundred and fifteen to three

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Speaker 5: hundred forty five new restaurants this year alone. We'll continue

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Speaker 5: our stock buyback programs and deliver more value to the shareholder,

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Speaker 5: but we'll also lean into what I'm calling back up

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Speaker 5: the house modernization, where we're going to bring forward equipment

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Speaker 5: innovation that has been in our stage getting paid now

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Speaker 5: for over two years to help drive more efficient efficiency

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Speaker 5: in the back of house. Else create a better team

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Speaker 5: member experience, which we know will always lot better to

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Speaker 5: a better consumer experience.

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Speaker 2: What does that mean for hiring as you continue to

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Speaker 2: expand that investment in the back of house operations, Because

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Speaker 2: there's a lot of concern now that the labor market's

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Speaker 2: going to get tighter if we see the pool of

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Speaker 2: labor workers in the labor market shrink.

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Speaker 4: You know, as we.

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Speaker 5: Stand here today, and we head into what we call

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Speaker 5: our Brito season, which is really springtime. We are better

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Speaker 5: staffed today at Chipotle than we've been in my eight

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Speaker 5: years with the brand, perhaps in the brand's history, and

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Speaker 5: I really think that's attributable to our investing class wages

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Speaker 5: and our industry leading benefits, and what I believe to

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Speaker 5: be a world class culture that we've created around people, people,

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Speaker 5: development and growth in the organization. We'll continue to invest

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Speaker 5: in our most important asset, which is the one hundred

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Speaker 5: and thirty thousand team members out in our restaurants, which

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Speaker 5: I've said before I'll say again are really the backbone

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Speaker 5: of our great organization.

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Speaker 1: Do you plan to expand the footprint of Chipotle more

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Speaker 1: stores this year?

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Speaker 4: We absolutely do.

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Speaker 5: Romaine, We're gonna build three hundred and fifteen to three

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Speaker 5: hundred and forty five new restaurants here in North America.

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Speaker 5: We'll have additional growth in Canada this year. We're looking

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Speaker 5: at expanding our footprint in Western Europe. Our partnership with

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Speaker 5: Alshai in the Middle East will produce additional Chipotle restaurants

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Speaker 5: in that region. We're also looking at additional partnerships around

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Speaker 5: the globe. As I stand here, today really in this

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Speaker 5: idea of really moving Chipotle into a global iconic brand.

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Speaker 1: All right, Scott, I really appreciate you taking time for us.

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Speaker 1: Scott Boat right here is the CEO of Chippotlan.