1 00:00:00,000 --> 00:00:03,720 Speaker 1: We're talking about Chipotle Mexican grill soaring to a record high. 2 00:00:03,800 --> 00:00:06,480 Speaker 1: Right now, it's up about nine percent, so pretty much 3 00:00:06,760 --> 00:00:09,880 Speaker 1: at its best levels of this session. Forceputter sales from 4 00:00:09,920 --> 00:00:13,399 Speaker 1: profit feed expectations as both transactions and check sizes rose, 5 00:00:13,840 --> 00:00:17,000 Speaker 1: really defining some of the fears of waning consumer sentiment. 6 00:00:17,239 --> 00:00:19,319 Speaker 1: Same store sales growth, folks, you know it. This is 7 00:00:19,360 --> 00:00:21,880 Speaker 1: so key. A gauge that tracks restaurants that are open 8 00:00:21,920 --> 00:00:23,960 Speaker 1: for more than a year. That was eight point four percent, 9 00:00:24,000 --> 00:00:28,120 Speaker 1: surpassing the analyst expectations of seven point one percent. Revenue 10 00:00:28,160 --> 00:00:30,520 Speaker 1: two point fifty two billion timp that also topped the 11 00:00:30,520 --> 00:00:32,479 Speaker 1: two point forty nine billion average estimate. 12 00:00:32,680 --> 00:00:34,880 Speaker 2: Well, with more in the business, we welcome back Brian Nicol, 13 00:00:34,960 --> 00:00:37,520 Speaker 2: chairman and CEO of Chipotle. He joins us on Zoom 14 00:00:37,560 --> 00:00:40,600 Speaker 2: from Newport Beach, California. Brian, good to see you again. 15 00:00:40,680 --> 00:00:43,080 Speaker 2: Good to have you with us. Investors are happy with 16 00:00:43,159 --> 00:00:46,320 Speaker 2: this year, they're happy with the quarter. Analyst community is too. 17 00:00:46,840 --> 00:00:48,760 Speaker 2: My question for you is who do you think you're 18 00:00:48,800 --> 00:00:50,200 Speaker 2: taking share from right now? 19 00:00:51,920 --> 00:00:55,640 Speaker 3: You know, look, I think what we believe is happening 20 00:00:55,760 --> 00:00:58,480 Speaker 3: is our operation is executing better than we ever have 21 00:00:59,560 --> 00:01:04,360 Speaker 3: and Frank, we've just been on a journey to get 22 00:01:04,400 --> 00:01:07,040 Speaker 3: back to executing this business to chipole Standard. 23 00:01:07,200 --> 00:01:08,160 Speaker 4: So you know, we. 24 00:01:08,120 --> 00:01:11,240 Speaker 3: Feel great about our staffing, we feel great about our culinary, 25 00:01:11,360 --> 00:01:13,840 Speaker 3: we feel great about our speed, and I think that's 26 00:01:13,840 --> 00:01:15,479 Speaker 3: why we're being rewarded with. 27 00:01:16,160 --> 00:01:17,080 Speaker 4: Customers coming in. 28 00:01:17,760 --> 00:01:19,800 Speaker 3: And you saw the comp that we delivered that was 29 00:01:19,880 --> 00:01:23,320 Speaker 3: driven by transaction growth, right that that eight percent plus 30 00:01:23,360 --> 00:01:26,600 Speaker 3: comp was driven by seven point four percent transaction growth. 31 00:01:26,680 --> 00:01:29,080 Speaker 3: And I think that's a testament to what our teams 32 00:01:29,080 --> 00:01:31,520 Speaker 3: are doing in our restaurants on all those areas that 33 00:01:31,560 --> 00:01:32,200 Speaker 3: I just mentioned. 34 00:01:32,280 --> 00:01:34,040 Speaker 1: Brian, great to be talking with you again, dig a 35 00:01:34,080 --> 00:01:35,760 Speaker 1: little bit deeper for us. First of all, that same 36 00:01:35,760 --> 00:01:39,080 Speaker 1: storre sales growth really blown away analyst expectations. Is that 37 00:01:39,640 --> 00:01:42,399 Speaker 1: sustainable you think in the current quarter and maybe throughout 38 00:01:42,400 --> 00:01:43,960 Speaker 1: the year to see that kind of growth. 39 00:01:45,240 --> 00:01:48,240 Speaker 3: You know, what we've guided is mid single digits for 40 00:01:48,360 --> 00:01:51,360 Speaker 3: the year in twenty twenty four. And you know, the 41 00:01:51,400 --> 00:01:54,120 Speaker 3: way we take this approach is we want to make 42 00:01:54,120 --> 00:01:57,640 Speaker 3: sure we've got a strong value proposition, which based on 43 00:01:57,680 --> 00:01:59,760 Speaker 3: all our data, we continue at feedback that the value 44 00:01:59,760 --> 00:02:01,040 Speaker 3: position is really. 45 00:02:00,800 --> 00:02:03,160 Speaker 4: Strong, and then we want to make sure that when 46 00:02:03,200 --> 00:02:06,560 Speaker 4: customers come in, they get the experience that they want. 47 00:02:06,720 --> 00:02:10,359 Speaker 3: And so what we've seen over the fourth quarter and 48 00:02:10,400 --> 00:02:12,400 Speaker 3: as we walked into the first quarter is people are 49 00:02:12,400 --> 00:02:13,799 Speaker 3: telling us they like what they see. 50 00:02:13,840 --> 00:02:17,040 Speaker 4: You know, our teams are in position, our food is 51 00:02:17,080 --> 00:02:17,600 Speaker 4: ready to go. 52 00:02:17,720 --> 00:02:21,560 Speaker 3: The culinaryes dial in, it tastes delicious, and we're working 53 00:02:21,600 --> 00:02:24,480 Speaker 3: really hard on the speed aspect so that people don't 54 00:02:24,480 --> 00:02:26,000 Speaker 3: have to stand in line too long, so they get 55 00:02:26,000 --> 00:02:28,000 Speaker 3: down the line get to the business of enjoying their 56 00:02:28,000 --> 00:02:30,800 Speaker 3: breed over bowl. I think we stay focused on that 57 00:02:30,840 --> 00:02:32,600 Speaker 3: will continue to deliver really good results. 58 00:02:32,760 --> 00:02:34,760 Speaker 1: You know, I'm curious. You know, others in the space, 59 00:02:34,800 --> 00:02:37,959 Speaker 1: something like a McDonald's, the've talked about low income consumers 60 00:02:38,000 --> 00:02:41,280 Speaker 1: pulling back on their spending. You guys, your consumer base, 61 00:02:41,840 --> 00:02:44,240 Speaker 1: what do you expect in terms of us consumer behavior 62 00:02:44,280 --> 00:02:46,520 Speaker 1: this year? What can you tell us about how the 63 00:02:46,520 --> 00:02:48,480 Speaker 1: consumer is doing and how they are spending Because you 64 00:02:48,520 --> 00:02:52,000 Speaker 1: do talk about transactions up check size is rising, But 65 00:02:52,080 --> 00:02:53,920 Speaker 1: what more can you give us in terms of how 66 00:02:53,960 --> 00:02:54,880 Speaker 1: the consumer is. 67 00:02:56,000 --> 00:02:58,120 Speaker 3: Yeah, you know, so we look at this very closely 68 00:02:58,160 --> 00:03:01,120 Speaker 3: as well. And first we start with what are people's 69 00:03:01,120 --> 00:03:04,080 Speaker 3: perceptions of our brand? And the perceptions are really strong 70 00:03:04,160 --> 00:03:06,400 Speaker 3: right now. You know, people are getting the idea that 71 00:03:06,680 --> 00:03:09,440 Speaker 3: we're all about fresh food, we're all about food with integrity. 72 00:03:09,720 --> 00:03:12,399 Speaker 3: They're getting the idea that, hey, this is a great 73 00:03:12,520 --> 00:03:14,640 Speaker 3: value when I think about what I pay for, what 74 00:03:14,680 --> 00:03:18,600 Speaker 3: I get, the customization, the speed, okay. And so when 75 00:03:18,600 --> 00:03:21,520 Speaker 3: we look at this among different income cohorts, so less 76 00:03:21,520 --> 00:03:24,280 Speaker 3: than forty thousand, between forty thousand, one hundred thousand, over 77 00:03:24,280 --> 00:03:27,959 Speaker 3: one hundred thousand, we're seeing we're making progress in every 78 00:03:28,040 --> 00:03:33,080 Speaker 3: income coport. So we've seen sales gains with every income group. 79 00:03:33,520 --> 00:03:36,480 Speaker 4: One thing that I think is happening is especially the 80 00:03:36,600 --> 00:03:37,640 Speaker 4: lowering co consumer. 81 00:03:38,040 --> 00:03:39,960 Speaker 3: You know, they are saying, hey, we're going to be 82 00:03:39,960 --> 00:03:41,880 Speaker 3: really choosy with the money that we choose to spend. 83 00:03:42,480 --> 00:03:44,880 Speaker 3: You've got to give us what we want on our terms. 84 00:03:44,920 --> 00:03:46,680 Speaker 3: And one of the things that's really great is Chipotle 85 00:03:46,800 --> 00:03:48,960 Speaker 3: is able to do that. Right, we can get you 86 00:03:49,120 --> 00:03:51,880 Speaker 3: the exact food experience that you want, hopefully have a 87 00:03:51,920 --> 00:03:54,600 Speaker 3: speed that delights you, and then when you walk away, 88 00:03:54,640 --> 00:03:56,760 Speaker 3: you feel like you know, that was money well spent 89 00:03:56,960 --> 00:03:58,280 Speaker 3: and I'm going to come do it again. 90 00:03:58,840 --> 00:04:01,280 Speaker 1: Well, when I go back to sales, in terms of 91 00:04:01,320 --> 00:04:03,480 Speaker 1: your outlook that you guys. Put Brian, why do you 92 00:04:03,560 --> 00:04:07,160 Speaker 1: think you see growth though continuing but at a slower 93 00:04:07,480 --> 00:04:10,280 Speaker 1: slightly slower space, I mean pace. 94 00:04:10,320 --> 00:04:12,920 Speaker 4: Excuse you, Yeah, yeah, I Look. 95 00:04:12,960 --> 00:04:16,280 Speaker 3: The way we think about this is we want to 96 00:04:16,320 --> 00:04:19,200 Speaker 3: continue to focus on executing the basics. Obviously, January we 97 00:04:19,240 --> 00:04:21,719 Speaker 3: had to deal with some bad weather across the country. 98 00:04:22,200 --> 00:04:24,719 Speaker 3: The good news is the days where we haven't seen 99 00:04:25,480 --> 00:04:29,000 Speaker 3: bad weather, the businesses strengthen right back up, and so 100 00:04:29,720 --> 00:04:32,719 Speaker 3: we're optimistic about where we can get to. You know, 101 00:04:32,760 --> 00:04:36,080 Speaker 3: we've switched back to what our pre pandemic practice was, 102 00:04:36,080 --> 00:04:38,880 Speaker 3: was just guiding for the full year. You know, Hopefully 103 00:04:38,880 --> 00:04:41,640 Speaker 3: what happens is we're able to beat those expectations. That's 104 00:04:41,680 --> 00:04:44,479 Speaker 3: always our goal, and we'll see how it all unfolds 105 00:04:44,520 --> 00:04:46,800 Speaker 3: over the course of the year. But we're set up 106 00:04:46,920 --> 00:04:50,000 Speaker 3: very well to open a lot of restaurants deliver I 107 00:04:50,000 --> 00:04:54,440 Speaker 3: think really strong in store experiences and digital experiences, which 108 00:04:54,480 --> 00:04:57,800 Speaker 3: hopefully we'll build on the momentum that we've achieved thus far. 109 00:04:57,960 --> 00:05:00,680 Speaker 2: Hey, Brian, let's talk more. When it comes to fifteen 110 00:05:00,720 --> 00:05:02,800 Speaker 2: percent of your restaurants are in California. You're joining us 111 00:05:02,800 --> 00:05:06,599 Speaker 2: from Newport Beach right now. We saw California minimum wage 112 00:05:06,680 --> 00:05:09,760 Speaker 2: raised this year to sixteen dollars per hour. It's going 113 00:05:09,800 --> 00:05:11,880 Speaker 2: to continue to rise this year and over the next 114 00:05:11,880 --> 00:05:16,400 Speaker 2: few years. How else apart from raising prices, is Chipotle 115 00:05:16,480 --> 00:05:19,479 Speaker 2: going to cope with California's new minimum wage law. 116 00:05:20,960 --> 00:05:21,159 Speaker 1: Yeah. 117 00:05:21,200 --> 00:05:23,440 Speaker 3: Look, I mean we're always working hard on what can 118 00:05:23,480 --> 00:05:26,320 Speaker 3: we do be more efficient so that we don't have 119 00:05:26,400 --> 00:05:29,520 Speaker 3: to pull the pricing lever, you know, and you've heard 120 00:05:29,560 --> 00:05:32,480 Speaker 3: us talk about things like autocado where we're automating how 121 00:05:32,520 --> 00:05:35,600 Speaker 3: we cut core and scoop avocados. We're working on some 122 00:05:35,680 --> 00:05:39,839 Speaker 3: things automating our digital makeline. We're also exploring things on 123 00:05:39,880 --> 00:05:44,960 Speaker 3: how we could potentially cut our onions peppers in the. 124 00:05:44,920 --> 00:05:47,760 Speaker 4: Restaurants in a more efficient fashion. So we're going to 125 00:05:47,839 --> 00:05:48,640 Speaker 4: invest in those things. 126 00:05:48,680 --> 00:05:53,119 Speaker 3: The unfortunate fact is the wage increases moving much faster 127 00:05:53,200 --> 00:05:55,960 Speaker 3: than these efficiencies that we're going to be able to find, 128 00:05:56,000 --> 00:05:58,960 Speaker 3: So price will be part of the puzzle in order 129 00:05:59,000 --> 00:06:02,520 Speaker 3: to handle the inflation that's looming. But we're going to 130 00:06:02,560 --> 00:06:04,680 Speaker 3: do everything we can to avoid having to pull that 131 00:06:04,720 --> 00:06:07,560 Speaker 3: pricing lever, and you know, you'll continue to see us 132 00:06:07,560 --> 00:06:10,480 Speaker 3: innovate on what we're calling cobotics, so hopefully we can 133 00:06:10,480 --> 00:06:14,560 Speaker 3: make the job, more efficient, more effective. Team members like it, 134 00:06:14,600 --> 00:06:17,359 Speaker 3: and it gives the great culinary output that our customers 135 00:06:17,400 --> 00:06:18,200 Speaker 3: have come to expect. 136 00:06:18,320 --> 00:06:22,400 Speaker 1: Totally get it. Other costs, other input costs, coren avocados, 137 00:06:22,920 --> 00:06:25,400 Speaker 1: the cost of ingredients. What are we seeing on that front? 138 00:06:25,440 --> 00:06:29,640 Speaker 1: Are you seeing prices actually going down or increases not 139 00:06:29,760 --> 00:06:31,880 Speaker 1: as significant as they were before? What can you tell 140 00:06:31,960 --> 00:06:32,200 Speaker 1: us there? 141 00:06:32,279 --> 00:06:33,840 Speaker 4: Yeah, yeah, that's right, that's right. 142 00:06:33,839 --> 00:06:36,560 Speaker 3: We're not seeing any deflation, but we've definitely seen a 143 00:06:36,640 --> 00:06:37,880 Speaker 3: slowdown in the inflation. 144 00:06:38,200 --> 00:06:40,560 Speaker 4: You know, it's more in the load to mid single digits. 145 00:06:40,960 --> 00:06:43,480 Speaker 3: There's a couple of pockets where we're still watching things 146 00:06:43,520 --> 00:06:46,960 Speaker 3: like on beef. We're always careful with where the avocado 147 00:06:47,000 --> 00:06:50,120 Speaker 3: market might be moving. But for the most part, that's 148 00:06:50,279 --> 00:06:53,000 Speaker 3: I would say started to normalize, with exception of a 149 00:06:53,040 --> 00:06:55,240 Speaker 3: few pockets of inflation that we're. 150 00:06:55,120 --> 00:06:55,760 Speaker 4: Still dealong with. 151 00:06:55,920 --> 00:06:57,880 Speaker 2: Brian, do you see yourself raising prices this year? 152 00:06:59,640 --> 00:07:02,720 Speaker 3: You know, we always try to wait till we get 153 00:07:02,760 --> 00:07:04,320 Speaker 3: to about the end of the year to assess what 154 00:07:04,320 --> 00:07:06,960 Speaker 3: we think we need to do. You know, obviously this 155 00:07:07,120 --> 00:07:10,480 Speaker 3: California minimum wage movement, we'll have to assess how that 156 00:07:10,520 --> 00:07:13,680 Speaker 3: it really impacts the business and will take action accordingly, 157 00:07:13,760 --> 00:07:15,640 Speaker 3: But for the bulk of the business, we usually wait 158 00:07:15,680 --> 00:07:17,680 Speaker 3: till around the end of the year. See where all 159 00:07:17,680 --> 00:07:20,280 Speaker 3: the inflation lands, see where our growth lands, see where 160 00:07:20,240 --> 00:07:23,680 Speaker 3: our productivity lands, and then if we need to retake pricing, 161 00:07:23,760 --> 00:07:26,080 Speaker 3: usually in that one to two to three percent range. 162 00:07:26,280 --> 00:07:28,720 Speaker 1: Hey, one thing I'm thinking about also, and we saw 163 00:07:28,760 --> 00:07:30,920 Speaker 1: it play out with some others about the impact of 164 00:07:30,920 --> 00:07:33,880 Speaker 1: the Middle East East conflict. You guys last year talked 165 00:07:33,880 --> 00:07:37,840 Speaker 1: about entering Kuwait and the UAE. This year, has the 166 00:07:37,880 --> 00:07:41,040 Speaker 1: conflict in the Middle East Brian impacted that timeline at. 167 00:07:40,920 --> 00:07:43,040 Speaker 4: All, you know, not yet. 168 00:07:43,080 --> 00:07:45,440 Speaker 3: Our partner over there is the Alshiy Group, and they're 169 00:07:45,440 --> 00:07:49,200 Speaker 3: a terrific operator. They have a lot of brands and 170 00:07:49,280 --> 00:07:51,160 Speaker 3: a lot of experience of operating over there. 171 00:07:51,520 --> 00:07:53,400 Speaker 4: So as of right now, we're still on schedule open 172 00:07:53,440 --> 00:07:53,840 Speaker 4: this year. 173 00:07:54,400 --> 00:07:57,000 Speaker 3: Obviously, Bay will be the first ones to tell us 174 00:07:57,000 --> 00:07:58,720 Speaker 3: that if we need to change that timeline. 175 00:07:59,200 --> 00:08:01,400 Speaker 4: The good news is we think they're a great partner. 176 00:08:01,480 --> 00:08:03,520 Speaker 4: We think they're a great operator, and I think the 177 00:08:03,560 --> 00:08:06,760 Speaker 4: folks are going to love Chipotle when we're able to 178 00:08:06,800 --> 00:08:08,720 Speaker 4: finally open our restaurant in that part of the world. 179 00:08:08,840 --> 00:08:10,559 Speaker 1: Hey, just got about a minute or so left. Speaking 180 00:08:10,600 --> 00:08:12,840 Speaker 1: of timelines, I've got two quick questions for you. You 181 00:08:13,960 --> 00:08:15,600 Speaker 1: have been at the company for almost I think you're 182 00:08:15,600 --> 00:08:18,800 Speaker 1: coming up on your six year anniversary. How are you 183 00:08:18,840 --> 00:08:21,720 Speaker 1: thinking about that timeline? I mean, investors are happy stock 184 00:08:21,760 --> 00:08:25,640 Speaker 1: is up almost one thousand percent in that time, So 185 00:08:25,880 --> 00:08:28,680 Speaker 1: how are you thinking about kind of the next leg 186 00:08:28,720 --> 00:08:31,440 Speaker 1: of that timeline for you? Because I've got to imagine 187 00:08:31,480 --> 00:08:33,560 Speaker 1: there are people knocking at your door saying, can you 188 00:08:33,559 --> 00:08:36,400 Speaker 1: come do what you did for Jibotle for us? And 189 00:08:36,400 --> 00:08:39,480 Speaker 1: I'm also curious if there's any timeline for stocksplit because 190 00:08:39,520 --> 00:08:42,520 Speaker 1: it's an expensive stock. I thought about a minute. 191 00:08:43,200 --> 00:08:43,920 Speaker 4: Yeah, yeah, sure. 192 00:08:44,000 --> 00:08:45,920 Speaker 3: Look, well, what I hope is the next few years 193 00:08:45,920 --> 00:08:48,280 Speaker 3: are like what these last six years were from a 194 00:08:48,320 --> 00:08:50,480 Speaker 3: total performance standpoint. I could do without some of the 195 00:08:50,480 --> 00:08:54,720 Speaker 3: macro shops. But you know, it's been a tremendous honor 196 00:08:55,160 --> 00:08:57,760 Speaker 3: leading this brand. We've got wonderful people, We've got a 197 00:08:57,880 --> 00:09:01,640 Speaker 3: terrific purpose and product that we provide, and I couldn't 198 00:09:01,640 --> 00:09:03,800 Speaker 3: be happier to be leading this company. And I'm really 199 00:09:03,800 --> 00:09:05,400 Speaker 3: excited about all the growth that's in front of us. 200 00:09:05,400 --> 00:09:07,360 Speaker 3: You know, we're going to go from thirty five hundred 201 00:09:07,360 --> 00:09:08,959 Speaker 3: restaurants to seven thousand restaurants. 202 00:09:09,000 --> 00:09:12,000 Speaker 4: We're going after four million average unit volumes. So there's just. 203 00:09:12,040 --> 00:09:14,800 Speaker 3: Tremendous growth in front of us, which I'm super excited about. 204 00:09:15,000 --> 00:09:17,959 Speaker 4: Yeah, you know, everybody asked us about the stock split. 205 00:09:18,920 --> 00:09:20,439 Speaker 4: We'll have to wait and see. 206 00:09:20,320 --> 00:09:21,560 Speaker 2: What city ratted. 207 00:09:21,640 --> 00:09:23,360 Speaker 1: It's now like a street high over three things. 208 00:09:23,400 --> 00:09:25,760 Speaker 2: How I would it have to get for you to split? Yeah, briefly? 209 00:09:25,880 --> 00:09:27,120 Speaker 1: Is there a level? Real quickly? 210 00:09:28,400 --> 00:09:28,760 Speaker 4: You know what. 211 00:09:28,800 --> 00:09:32,080 Speaker 3: We never have a defined level, but it's something we 212 00:09:32,120 --> 00:09:33,520 Speaker 3: talk about and if it makes. 213 00:09:33,360 --> 00:09:34,080 Speaker 4: Sense to do, we'll do. 214 00:09:34,280 --> 00:09:36,560 Speaker 1: All right. Listen, you are always so generous with your time. 215 00:09:36,600 --> 00:09:39,720 Speaker 1: We really appreciate it. Be well and thank you so much. 216 00:09:39,760 --> 00:09:42,200 Speaker 1: Brian Nickel, of course, he's the chairman and chief executive 217 00:09:42,200 --> 00:09:43,680 Speaker 1: officer of Chapotle Mexican Growth