Chipotle Mexican Grill, Inc. (NYSE:CMG) Q1 2024 Earnings Call Transcript

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Therefore you keep the engagement up, and then obviously, when we keep the engagement up, we see the higher spend and the more frequency.

Brian Harbour: Okay. Got it. This is the comment you made, Brian, just about forecasting and deployment in restaurants. So it’s not just equipment. It’s also kind of that piece of it, which I assume you’re referring to kind of the software tools that you’ve put there. Is that — what have you seen from that so far? Has that made a big difference, in your opinion, on throughput and kind of staffing? Could you say more about that?

Brian Niccol: Yes, definitely. Look, I think one of the things that’s happening is because we are getting better forecasting, better at deploying, better at the scheduling, the job is becoming a better job, right? And one of the ways you see it is in our turnover numbers, right? Our turnover numbers are the lowest they’ve ever been. We’ve got some regions well below 100% turnover at the crew level, which I’ve never seen in my time in this industry, I think some of the lowest numbers I’ve ever seen, frankly, at Chipotle. And to be in that 100% range, I think is a testament to us making the job a better experience for our team members. I say this all the time by our folks, I said this at our AMC. Our folks show up at work wanting to succeed.

The more we can do to surround them, so that they have a successful day, the better they feel about the job, the better they feel about the experience that they’re giving. Nobody likes to show up and be out of chicken when a customer gets to that point. And so the more we can do to ensure they prep correctly, they are staffed correctly, they’re deployed correctly, the better the experience is going to be. And I think we’re starting to see that in the turnover numbers. We’re starting to see that in, frankly, just the performance at throughput, right the ultimate kind of metric to see like is the whole system really working. The whole system is working when we get great throughput. And I’m just — I’m delighted to see it happen. I talked about this a little bit in my prepared remarks.

You really see it all coming alive at our AMC because when I had the opportunity to talk to people in the hallways or on our way to breakouts, I think people are just energized, man. They’re fired up about this idea of being successful in their role — being successful as a leader. And that translates into the team. Everybody likes to be part of the winning team. And I think that’s what’s happening in our restaurants. We’ve got leaders that know they’re leading winning teams. So we’re going to do more of that.

Operator: The last question today comes from Chris O’Cull with Stifel. Please go ahead.

Chris O’Cull: Yeah, hi. Thank you. I had a follow-up related to execution during peak periods. And in particular, Brian you’ve talked about helping teams in the stores have better visibility to know how they are performing in their 15 minutes, so they can course correct, I think, in real time. Is this a fairly new system or a dashboard tool that managers have access to. And then maybe to help us understand the opportunity, I was just wondering if you could tell us what’s the difference between the number of entrees during 15 minute peaks for like the top 20% and maybe the bottom 20% performers?

Brian Niccol: Yes. So to answer your first question, it is a new tool that we rolled out in January that gave them real-time visibility, which has been hugely powerful. It is great because now when I visit restaurants and you ask people, hey, how are you doing? They can tell me what their best 15 has been so far. And a lot of them now are so well aware like hey, I know we can do better than that. So like we might have did 25 in the last 15, but I think we are going to do 35 in the next 15, which is really exciting to hear them have that type of visibility and have that type of clarity so that as a team, they know what they’re all working towards. What was your other question?

Jack Hartung: It was the range on throughput.

Brian Niccol: Oh, the range to the top and bottom?

Jack Hartung: Yes. I can take that one. We will see at the bottom, and these tend to be lower-volume restaurants. You’ll see restaurants that are doing in the mid-teens call it. And then I don’t think this is maybe the top 20%. But when we look at the top restaurants, which tells us what the potential is — Brian gave an example during the prepared remarks in Boston. We’ve seen as high as [80] (ph), we’ve seen some even higher than that. But I would say the top-performing restaurants are consistently — or at least on a peak day, it’s not going to be in that 40, 50 range. So it’s a very wide range. And we’re still towards the lower end of that range with a lot of potential ahead of us.

Chris O’Cull: Great. Thanks and congratulations on a great start to the year.

Brian Niccol: Yes. Thank you.

Jack Hartung: Thank you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Brian Niccol for any closing remarks.

Brian Niccol: Okay. Thank you. And thanks, everybody for the questions. Obviously, I appreciate the kind words of recognizing how we are off to a great start. Very proud of the momentum that the business has and really proud of what our operators are doing in our restaurants. I mentioned it in my prepared remarks, but it was so much fun to be at our AMC with all of our restaurant general managers, apprentices, field leaders, team directors, regional vice presidents, talking about the business. Everybody was clearly aligned on what the task needs to be at hand which is great culinary, developing great people, great culture, great teams, right, and then ultimately getting great throughput for our customers. And I think you’re seeing the power of focus, the power of alignment and the power, frankly, of Chipotle’s culture and great people in these results in the last quarter.

Optimistic about where we go from here. It’s exciting to think about how we can double this business going from 3,400 to 3,500 restaurants to 7,000 restaurants, getting to 4 million average unit volumes. And then continuing to make great progress on throughput and surrounding this brand, I think with great digital, great marketing is really — it’s really an exciting moment for the brand and the company. And we are just getting started, which has really makes this a lot of fun. So thanks for taking the time. It’s great to see the business respond with transactions driving the comp. And we are going to stay focused on what we know works. So we will talk to you guys in a couple of months. Thanks, everybody.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect

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