WEBVTT - Chipotle CEO Scott Boatwright Talks pricing & expansions

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. So breaking news we've

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<v Speaker 1>learned at Chipotle, the text mes chain that is primarily

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<v Speaker 1>based here in the United States, is set to open

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<v Speaker 1>its first location in Mexico later this week. It's a

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<v Speaker 1>substantial expansion that will eventually extend to Mexico City in

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<v Speaker 1>twenty twenty seven, and it's part of a broader international expansion.

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<v Speaker 1>Our relatively new CEO, Scott Boatwright. We had a chance

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<v Speaker 1>to sit down with Scott just a few minutes ago.

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<v Speaker 1>Here's what he had to say about the opening.

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<v Speaker 2>We believe, you know, Mexico is a really important milestone

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<v Speaker 2>for our great brand as we continue to lean into

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<v Speaker 2>our global strategy.

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<v Speaker 3>It's an important country for us.

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<v Speaker 2>We recognize and admire the culinary heritage that is a

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<v Speaker 2>part of the Mexican culture, and we respect what we

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<v Speaker 2>believe to be some of the best food.

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<v Speaker 3>In the world.

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<v Speaker 2>What we're working to do is really tackle this emerging

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<v Speaker 2>trend that we see around the globe. We also see

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<v Speaker 2>it down in Mexico, this idea around fresh ingredients being

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<v Speaker 2>prepared same day, freshly in restaurants, and we believe what

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<v Speaker 2>we do and what we offer will really resonate with

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<v Speaker 2>the Mexican community.

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<v Speaker 1>I know you've had to have done a lot of

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<v Speaker 1>market research, and there's been a lot of talk about

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<v Speaker 1>this idea of just how prolific not just Mexican takoias are,

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<v Speaker 1>but obviously all of the sort of unauthorized stands. Anyone

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<v Speaker 1>who's walked around Mexico City, Monoray, these big cities, they

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<v Speaker 1>are everywhere.

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<v Speaker 3>And I saw one.

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<v Speaker 1>Stat that said that basically, if you live in an

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<v Speaker 1>urban area in Mexico, you don't have to go more

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<v Speaker 1>than two or three hundred feet before you find a

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<v Speaker 1>taco cart of some kind or another. Have you factored

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<v Speaker 1>that into your equation, that you're not just competing against

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<v Speaker 1>established chains, but basically that ma or pa so to speak,

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<v Speaker 1>on the street selling food from their carts.

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<v Speaker 2>Yeah, it's a great question, and we have and so

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<v Speaker 2>we have partnered with what we believe to be a

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<v Speaker 2>world class partner, and I'll say in Mexico, who has

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<v Speaker 2>brought other US brands into the country at a very

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<v Speaker 2>successful pace of growth with brands like Starbucks and Cheesecake Factory,

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<v Speaker 2>and they've.

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<v Speaker 3>Done an incredible job.

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<v Speaker 2>So we believe the right partnership, strength of the partnership

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<v Speaker 2>and the opportunity to go into Monterey first and showcase

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<v Speaker 2>the brand in a really unique way down in San

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<v Speaker 2>Pedro is really step one. As we continue to move

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<v Speaker 2>through Monterey and open up and expand, we'll have our

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<v Speaker 2>site set on Mexico City next. But we believe what

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<v Speaker 2>we offer, the idea of the best ingredients in the world,

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<v Speaker 2>prepared fresh in restaurant daily at an abundance and variety

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<v Speaker 2>and speed really which is unmatched at a really competitive

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<v Speaker 2>price point, will resonate well with the consumers in the market.

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<v Speaker 4>Well, Scott, as you mentioned you you're starting in Monterey,

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<v Speaker 4>you have plans to expand into Mexico City a little

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<v Speaker 4>bit later. In terms of timeline here, talk to us

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<v Speaker 4>about that cadence. Why you chose to start in Monterey,

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<v Speaker 4>What sort of boxes that region checked for you.

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<v Speaker 2>Yeah, if you haven't been to Monterey's it's a really

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<v Speaker 2>beautiful city, really.

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<v Speaker 3>Progressive city in Mexico.

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<v Speaker 2>We love the trade area, we love the consumer profile

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<v Speaker 2>in that market. Specifically, we plan to expand at a

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<v Speaker 2>very measured pace to show that the brand can work

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<v Speaker 2>and really any geography around the world.

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<v Speaker 3>We think Monterey is a great starting point.

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<v Speaker 2>For us, We'll launch the brand there, moved to a

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<v Speaker 2>number of restaurants, and then moved to Mexico City, where

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<v Speaker 2>we think we can be hyper successful in a really

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<v Speaker 2>large metro city that is probably one of the largest cities.

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<v Speaker 3>In the world.

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<v Speaker 4>Well as really and sort of hinted out, there's a

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<v Speaker 4>little bit of irony when it comes to the fact

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<v Speaker 4>that Chipotle Mexican Girl is opening up expanding into Mexico.

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<v Speaker 4>And with that in mind, what changes do you have

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<v Speaker 4>planned for Mexico when you think about pricing your menus,

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<v Speaker 4>potentially your ingredients, what are you adapting to Mexico? What

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<v Speaker 4>are you keeping the same?

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<v Speaker 2>Yeah, so we to use the same menu we have

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<v Speaker 2>here in the United States in Mexico, will locally source

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<v Speaker 2>as much of the product we bring over the border today,

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<v Speaker 2>as it relates to avocados and tomatoes and peppers, will

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<v Speaker 2>locally source those. But it'll be the same menu we've

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<v Speaker 2>launched in Western Europe, the same menu we launched in

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<v Speaker 2>the Middle East with our partner Alshia.

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<v Speaker 3>We have fifteen restaurants open.

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<v Speaker 2>In that region today and the brand really resonates well

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<v Speaker 2>when we deliver on standard, the same execution and same

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<v Speaker 2>menu that we have in the United States.

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<v Speaker 1>With regards to your partnership with ALSEA, I mean, this

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<v Speaker 1>is a licensed model, and I am curious that given

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<v Speaker 1>that you pretty much own your stores here in the

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<v Speaker 1>United States, how do you sort of ensure that you know,

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<v Speaker 1>quality control both on the ingredient side, but also in

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<v Speaker 1>terms of service is going to be up to the

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<v Speaker 1>same standard that anyone would expect at any other location.

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<v Speaker 2>Yeah, I think it's really about when you go into

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<v Speaker 2>a new market, is really assessing the partner quality. Believe

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<v Speaker 2>in this idea of a slow measured approach to global expansion.

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<v Speaker 2>We're not opening restaurants at a fast paced just for

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<v Speaker 2>the sake of opening restaurants. We're going to protect the

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<v Speaker 2>quality of our great brand through the strength of the partnership,

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<v Speaker 2>management of the supply chain, and then oversight on how

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<v Speaker 2>we deliver the experience each day to each community in

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<v Speaker 2>which we serve, where that's in the Middle East, Latin America,

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<v Speaker 2>and or Southeast Asia, which will open up later this year.

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<v Speaker 1>Well, I'm curius, how far do you want to take

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<v Speaker 1>this international expansion. Obviously, you're a relatively mature company thirty

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<v Speaker 1>plus years old, primarily here in the US. You have

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<v Speaker 1>the partnership in the Middle East, you reference a partnership,

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<v Speaker 1>and I believe in South Korea and now in Mexico

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<v Speaker 1>Latin America. Is this the longer term growth story for

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<v Speaker 1>Chipotle under Scott boat right, it is as.

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<v Speaker 2>We continue to expand in North America. We have a

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<v Speaker 2>really strong business model here. We have an incredible team

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<v Speaker 2>that is opening up restaurants at a record pace. We'll

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<v Speaker 2>open up in North America alone this year north of

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<v Speaker 2>three hundred and fifty restaurants. So we feel like we

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<v Speaker 2>have a really good foothold here and we understand how

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<v Speaker 2>we deliver the model and how we deliver on consumer

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<v Speaker 2>expectations and preferences in a really meaningful and unique way.

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<v Speaker 2>What we endeavor to do now is we build Chipotle

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<v Speaker 2>to a global iconic brand. Is really showcase that the

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<v Speaker 2>brand works in every region of the world. At the

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<v Speaker 2>heart of the menu, it's really rice beans, heavy protein,

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<v Speaker 2>and heavy vege prepared fresh, which we know is not

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<v Speaker 2>unique around the globe.

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<v Speaker 3>And we're going to.

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<v Speaker 2>Showcase in a very slow and measured way that we

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<v Speaker 2>can be successful in every region of the world.

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<v Speaker 4>Well, Scott, you mentioned heavy veg and I want to

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<v Speaker 4>apologize for this next question since we are talking about food,

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<v Speaker 4>but we have to talk a little bit about cyclospory assis.

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<v Speaker 4>I hope I'm saying that right. It's that parasite that's

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<v Speaker 4>been linked to severe diarrhea. We've seen outbreaks in more

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<v Speaker 4>than thirty US states and they're usually linked to basil,

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<v Speaker 4>cilantro lettuce, things that I'm sure you use a lot

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<v Speaker 4>at Chipotle. So what have you seen? What do you

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<v Speaker 4>know about this? Have you seen any notices from your

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<v Speaker 4>suppliers or anything along those lines.

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<v Speaker 2>Well, first and foremost, the care and safety of our

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<v Speaker 2>team members and our guests is always our highest priority.

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<v Speaker 3>We have gone through our supply.

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<v Speaker 2>Chain ingredients with our partners to understand if any of

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<v Speaker 2>our ingredients have been indicated in the cyclospora outbreak, and.

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<v Speaker 3>They haven't to date.

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<v Speaker 2>We don't expect that they will, but we'll continue to

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<v Speaker 2>monitor our supply chain and be hypervigilant to ensure we

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<v Speaker 2>are protecting both our team members and our guests in

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<v Speaker 2>our fullest way and

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<v Speaker 4>Our thanks again to Chipotle CEO Scott boat Right talking

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<v Speaker 4>about the chain's expansion into Mexico.