Latest / Choppin’ It Up by Bloomberg Intelligence / Chipotle’s Brandt on LTOs, Improving Operations

Transcript

Chipotle’s Brandt on LTOs, Improving Operations · Choppin’ It Up by Bloomberg Intelligence

• 0:13
  Speaker 1: Welcome to Chopping it Up.
• 0:15
  Speaker 2: I'm your host, Mike Hamlon, the senior Restaurant and Food
• 0:17
  Speaker 2: Service analyst at Bloomberg Intelligence. Our Research and that abi's
• 0:21
  Speaker 2: five hundred analysts around the globe can be found exclusively
• 0:24
  Speaker 2: on the Bloomberg terminal. If you enjoy the pod, do
• 0:27
  Speaker 2: me a solid and give us a five star review
• 0:29
  Speaker 2: on Apple or Spotify. Today we're joined by Chris Brandt,
• 0:33
  Speaker 2: President and Chief brand Officer at Chipotle.
• 0:35
  Speaker 1: Welcome to the pod.
• 0:36
  Speaker 3: Chris, Thanks for having me. Appreciate it.
• 0:39
  Speaker 2: Sure thing, man. There's been a couple of senior leadership
• 0:42
  Speaker 2: changes over the last year plus and they've obviously directly
• 0:47
  Speaker 2: impacted you and who you work with on a daily basis.
• 0:51
  Speaker 2: How has Scott put his stamp on the culture and
• 0:54
  Speaker 2: what is new COO Jason Kidds primary focus here in
• 0:58
  Speaker 2: his first year.
• 0:59
  Speaker 3: Yeah.
• 1:00
  Speaker 4: Look, I mean Scott's been around. He's been around it
• 1:02
  Speaker 4: to pute longer than me. I think he started in
• 1:03
  Speaker 4: twenty seventeen, and you know, he he was instrumental in
• 1:08
  Speaker 4: this brand growing. And you know, we own every restaurant,
• 1:11
  Speaker 4: so we're a little bit unique from a lot of
• 1:13
  Speaker 4: places that franchise that we own every single one, and
• 1:16
  Speaker 4: so it's really important, I think, to have an operator
• 1:19
  Speaker 4: in that CEO role here at Chipotle because we do
• 1:22
  Speaker 4: own every restaurant. We have one hundred and twenty thousand
• 1:24
  Speaker 4: plus employees, and he's been instrumental and I think in
• 1:28
  Speaker 4: setting that culture out of the field, and so he's
• 1:31
  Speaker 4: really steppy unfortunately for him. I think he stepped into
• 1:34
  Speaker 4: the CEO role at a really tough time for restaurants
• 1:37
  Speaker 4: in general. Really there's a lot of anxiety and trepidation
• 1:42
  Speaker 4: out there on behalf of consumers and that's lowered their
• 1:44
  Speaker 4: frequency in restaurants as a whole. It's a much more
• 1:47
  Speaker 4: compative environment here in twenty twenty five than we've had
• 1:50
  Speaker 4: in the previous seven years that I've been here a Chipotle.
• 1:54
  Speaker 4: And then Jason Kid's a new addition. He's a great
• 1:56
  Speaker 4: culture fit for us. He's got some great operations experience.
• 2:00
  Speaker 4: It's in QSR but also in retail, and I think
• 2:04
  Speaker 4: the team really likes him and he's tackling all the
• 2:08
  Speaker 4: right issues and he's a great guy to boot. So
• 2:12
  Speaker 4: I think those are you know, Scott's I think doing
• 2:14
  Speaker 4: a great job in his role in a really tough
• 2:16
  Speaker 4: environment and Jason has stepped right in and really fit
• 2:19
  Speaker 4: in with the field most importantly and the rest of
• 2:22
  Speaker 4: the management team in a great way.
• 2:24
  Speaker 1: Very cool.
• 2:24
  Speaker 2: It was a tough first half, you know, to your
• 2:27
  Speaker 2: point for the restaurant industry, fast casual and Chipotle sales,
• 2:31
  Speaker 2: obviously this isn't a position that you and the team
• 2:34
  Speaker 2: are used to. How would you characterize the attitude within
• 2:38
  Speaker 2: the organization right now?
• 2:40
  Speaker 4: You know, I think it's pretty positive. I mean, certainly
• 2:43
  Speaker 4: this is these are not the results where we're hoping for.
• 2:46
  Speaker 4: I've seen these type of cycles and other places that
• 2:49
  Speaker 4: I've been and it's much more hand to hand combat
• 2:52
  Speaker 4: out there every week every day of trying to drive
• 2:56
  Speaker 4: sales versus where we had in the past. But we
• 2:59
  Speaker 4: have the best brand. I think we have the best food.
• 3:01
  Speaker 4: And people have asked me like, gosh, why has Chipotle
• 3:04
  Speaker 4: been so successful? And I'm like, hey, we have the
• 3:07
  Speaker 4: best product, and you know, I think this is the
• 3:10
  Speaker 4: way people want to eat. But there certainly is a
• 3:13
  Speaker 4: value component. And when you say value, I don't mean
• 3:16
  Speaker 4: what you get for what you pay. I think Chipotle
• 3:18
  Speaker 4: is a great value in that front. But people are
• 3:19
  Speaker 4: looking for three dollars four dollars and absolute price points,
• 3:23
  Speaker 4: and that's not a game where we typically play, so
• 3:26
  Speaker 4: we've had to adjust our strategy a little bit. I
• 3:28
  Speaker 4: think we have a lot still of upside. You know,
• 3:30
  Speaker 4: we still we're still building restaurants at a rapid clip.
• 3:33
  Speaker 4: We'll build more than three hundred restaurants this year and
• 3:37
  Speaker 4: you know we're about four thousand. We think we can
• 3:39
  Speaker 4: go to seven thousand. So the growth story is it
• 3:41
  Speaker 4: certainly isn't over for Chipotle. This is a little bit
• 3:44
  Speaker 4: of a hiccup in some bad times, but we're confident
• 3:46
  Speaker 4: we can get back on the growth train here pretty quickly.
• 3:49
  Speaker 2: Are you happy with Chipotle's value proposition following the investments
• 3:53
  Speaker 2: and the portion sizes and how do you think about
• 3:56
  Speaker 2: communicating that value to your guests?
• 3:58
  Speaker 4: Yeah, I think for us, we've been known for big
• 4:01
  Speaker 4: burritos for a long time and we are still known
• 4:05
  Speaker 4: for big burritos. We've we've really emphasized to our people
• 4:10
  Speaker 4: out in the restaurants to be generous. I mean, people
• 4:12
  Speaker 4: want an experience, and I think they didn't. It's interesting
• 4:16
  Speaker 4: that the world really changed with COVID, and I think
• 4:20
  Speaker 4: we're still adapting to that world and for us, you know,
• 4:23
  Speaker 4: we didn't. We had a growing, certainly growing digital business
• 4:27
  Speaker 4: before Covid, but now it's it's really expanded, and so
• 4:30
  Speaker 4: we've asked really our team members to manage a big
• 4:33
  Speaker 4: digital business as well as a big in restaurant business
• 4:35
  Speaker 4: for the last couple of years. And I think that
• 4:39
  Speaker 4: we we our operations are in a really good place
• 4:43
  Speaker 4: right now. I think I'm pretty confident if you go
• 4:45
  Speaker 4: to Chipotle, you're going to get a big old burrito.
• 4:47
  Speaker 4: We're going to be generous with portions, particularly on protein.
• 4:51
  Speaker 3: We always have been. We have.
• 4:52
  Speaker 4: You know that there's a lot of rumors out there.
• 4:54
  Speaker 4: It was like, oh, you changed this, You've tried to
• 4:56
  Speaker 4: save money. We've never changed portioning for Chipotle as a
• 5:00
  Speaker 4: company period. We know we have four thousand restaurants, so
• 5:05
  Speaker 4: some experiences are not going to be as good as
• 5:08
  Speaker 4: other experiences. It's look, that's not the consumer's fault. That's
• 5:11
  Speaker 4: our fault. We have to make sure that we give
• 5:13
  Speaker 4: a great experience. Every time. A brand is a promise.
• 5:15
  Speaker 4: And you know, I can talk Mike about all the
• 5:18
  Speaker 4: great things of all of our ingredients, our food with integrity,
• 5:21
  Speaker 4: and the fact that we spend half a billion dollars
• 5:23
  Speaker 4: more on responsibly raising ingredients versus commodity ingredients that we
• 5:26
  Speaker 4: could purchase, but we don't do that. That's an investment
• 5:29
  Speaker 4: in the food, or, as I like to say, we
• 5:31
  Speaker 4: put our money where your mouth is.
• 5:32
  Speaker 3: But all that blows up.
• 5:34
  Speaker 4: If you go to the restaurant and you don't have
• 5:36
  Speaker 4: a good experience, or the restaurant's dirty or whatever. So
• 5:39
  Speaker 4: we've really that's where the rubber meets the road is
• 5:41
  Speaker 4: inside the restaurant. And I know Jason's been focused on it,
• 5:44
  Speaker 4: I know Scott is really focused on it. Candidly, the
• 5:47
  Speaker 4: whole company is focused on that in restaurant experience. And
• 5:50
  Speaker 4: we're not going to be perfect. We're not claiming to
• 5:52
  Speaker 4: be perfect, but we should be better than we have been.
• 5:55
  Speaker 4: And I think we've made a lot of strides here
• 5:58
  Speaker 4: over the last few months. We were just looking in
• 6:01
  Speaker 4: some data that shows that it's starting to show in
• 6:03
  Speaker 4: the data in a big way. So nothing has changed.
• 6:05
  Speaker 4: We never tried to pull back on portions. That's not
• 6:08
  Speaker 4: our game. But things happen, and so we want to
• 6:11
  Speaker 4: make sure every experience is great. One of the crazy
• 6:14
  Speaker 4: things about Chipotle is I think unfortunately we get maybe
• 6:18
  Speaker 4: we get too much credit for some of the things
• 6:19
  Speaker 4: we do on the good side, but we certainly get
• 6:21
  Speaker 4: a lot of publicity on any hiccups that we have.
• 6:24
  Speaker 4: But hey, that's a good challenge for us to just
• 6:26
  Speaker 4: be better all the time.
• 6:28
  Speaker 1: Yeah, similar to McDonald's and Starbucks, and.
• 6:30
  Speaker 3: That has its pluses and its minuses for sure.
• 6:33
  Speaker 2: Yeah, no doubt, but I appreciate your transparency on that answer.
• 6:38
  Speaker 2: Industry wide, sauces are hot, man, and you know that
• 6:42
  Speaker 2: Chipotle is capitalizing on that with a Doble ranch and
• 6:45
  Speaker 2: red shimmuturi. Our two sauce ltos a year the right cadence,
• 6:50
  Speaker 2: and do you still anticipate about three protein ltos a year?
• 6:54
  Speaker 3: So we're a bit of a quiet period, mic.
• 6:56
  Speaker 4: So, I can't answer a lot of those questions directly,
• 6:58
  Speaker 4: but I'll say this that we've been very pleased with
• 7:01
  Speaker 4: the sauces versu Adobo ranch we did in the summer.
• 7:04
  Speaker 4: Red Chimmy Cherry is off to a great start. And
• 7:07
  Speaker 4: you know, I know I'm a homer for sure, but boy,
• 7:09
  Speaker 4: if you haven't had red chimmy chery, and it's good.
• 7:11
  Speaker 4: We developed it originally for Carnea soada to be an accompaniment,
• 7:15
  Speaker 4: but man, it is good across everything, and the consumer
• 7:17
  Speaker 4: response has been amazing. Though if somebody sent me a
• 7:20
  Speaker 4: note said, man, I would drink this stuff, it is
• 7:23
  Speaker 4: so good. And so we're really pleased with the way
• 7:26
  Speaker 4: that went. And I think just innovation in general, we've
• 7:28
  Speaker 4: really amped up in the second half of the year
• 7:31
  Speaker 4: here in twenty twenty five. I think you'll see a
• 7:34
  Speaker 4: twenty twenty six that looks more like the second half
• 7:36
  Speaker 4: of twenty twenty five than it did the first half.
• 7:40
  Speaker 4: Because in this environment we talked a little bit about
• 7:42
  Speaker 4: price point. I mean it's incumbent upon us to tell
• 7:44
  Speaker 4: people about our value equation of the quality ingredients, the
• 7:47
  Speaker 4: unprocessed food and nothing artificial nature of things.
• 7:53
  Speaker 3: And the best way also we.
• 7:54
  Speaker 4: Can bring new people into the restaurant is through innovation.
• 7:57
  Speaker 4: Because nothing brings either new peace people in or reminds
• 8:01
  Speaker 4: existing people to buy, to come again and buy more
• 8:05
  Speaker 4: than having new things. And so we're going to up
• 8:08
  Speaker 4: our innovation not only on sauces, but but I think
• 8:10
  Speaker 4: on ltos as well, versus where we've been at twenty
• 8:13
  Speaker 4: twenty five.
• 8:14
  Speaker 2: Nice, I'm looking forward to the red trimuturi for sure.
• 8:18
  Speaker 2: How do you plan to use AI to help bring
• 8:20
  Speaker 2: back LAPS customers.
• 8:21
  Speaker 4: So, look, I think there's a lot of uses for AI,
• 8:24
  Speaker 4: and I don't know specifically how we're going to bring
• 8:27
  Speaker 4: back LAPS customers with it. We look on our loyalty,
• 8:30
  Speaker 4: We rely on our loyalty program, and there's a lot
• 8:32
  Speaker 4: of algorithms and things that are working there to try
• 8:34
  Speaker 4: and understand are you about to defect, have you defected,
• 8:40
  Speaker 4: have you swowed your purchases? And so we just had
• 8:42
  Speaker 4: a summer of extras where we really rewarded people for
• 8:45
  Speaker 4: higher frequency and that worked wonders for us over the summer,
• 8:49
  Speaker 4: So I think you'll see more of those things go on.
• 8:52
  Speaker 4: We've really relied on our media to be a mass
• 8:55
  Speaker 4: reach vehicle and our loyalty program to be our frequency vehicle.
• 8:59
  Speaker 4: Those things have been and tried and true for us
• 9:01
  Speaker 4: for the last seven eight years. I don't think that'll
• 9:04
  Speaker 4: change in the future. But you can become a little
• 9:06
  Speaker 4: bit more sophisticated with your targeting and things that we're doing.
• 9:10
  Speaker 4: AI is certainly opening up a lot of different pathways
• 9:12
  Speaker 4: and a lot more understanding about things. But I'll say
• 9:15
  Speaker 4: the big uses for AI for us are maybe things
• 9:18
  Speaker 4: that people don't see. You know, we have cameras inside
• 9:21
  Speaker 4: every restaurant where we can look at like, for example,
• 9:25
  Speaker 4: the number of staff members. One of the things that
• 9:27
  Speaker 4: correlates to success in the restaurant is are we fully
• 9:29
  Speaker 4: staffed on that line at peaks? Can we move people
• 9:32
  Speaker 4: through the line quickly? And so before we don't know
• 9:35
  Speaker 4: how many people were really there. It's a commersome process.
• 9:38
  Speaker 4: Now we could have AI look at the cameras and
• 9:40
  Speaker 4: pretty quickly they can tell you which restaurants are performing
• 9:43
  Speaker 4: well and which restaurants are not. I think there's a
• 9:46
  Speaker 4: lot of AI applications in our forecasting and our supply
• 9:48
  Speaker 4: chain and those kind of things. So maybe less sexy
• 9:52
  Speaker 4: than consumer communication if you ask those people in those goops,
• 9:55
  Speaker 4: probably not less sexy at all. But I think that
• 9:58
  Speaker 4: I think there's a lot of app locations there and
• 10:00
  Speaker 4: we're just scratching the surface.
• 10:02
  Speaker 2: You mentioned Chipotle rewards. It's clearly been a standout in
• 10:05
  Speaker 2: the restaurant industry. Can you talk to me about Chipotle
• 10:09
  Speaker 2: you and what's next for the loyalty program?
• 10:11
  Speaker 4: Yes, so, I think CHIPOTLEU is a really cool program
• 10:15
  Speaker 4: that's kind of an overlay of our existing rewards program
• 10:18
  Speaker 4: just for college students. As people might know, Chipole is
• 10:21
  Speaker 4: very popular in college environments, and we wanted to give
• 10:25
  Speaker 4: those people back a little something extra and a few
• 10:28
  Speaker 4: more rewards and some more customization. It also acts as
• 10:31
  Speaker 4: a bit of a test bed for us for things
• 10:33
  Speaker 4: that you might find on CHIPOTLEU that could eventually roll
• 10:37
  Speaker 4: out to a broader rewards program, So it acts pretty
• 10:39
  Speaker 4: cool that way. I think what you'll see from our
• 10:42
  Speaker 4: rewards program is more consumer engagement, for sure. I think
• 10:46
  Speaker 4: gamification has been successful for us with things like Chipotle IQ,
• 10:50
  Speaker 4: where we ask people questions and you can win Chipotle prizes,
• 10:53
  Speaker 4: but it gets them to know the brand a little
• 10:55
  Speaker 4: bit better, because a lot of people know things about Chipotle,
• 10:59
  Speaker 4: but they don't really know our values piece. The fact
• 11:03
  Speaker 4: that we don't have any freezers or can openers, the
• 11:06
  Speaker 4: fact that we do spend half a billion dollars more
• 11:08
  Speaker 4: on our ingredients to make sure they're responsibly raised versus
• 11:12
  Speaker 4: not versus just regular commodity ingredients. The fact that we're
• 11:16
  Speaker 4: the only restaurant to get an A plus from the
• 11:18
  Speaker 4: Humane Society and Animal wellfa our regulation. So all those
• 11:21
  Speaker 4: things that Chipotle IQ or the other engagement with consumers
• 11:25
  Speaker 4: can hopefully help you buy into our values, not just
• 11:27
  Speaker 4: buy Chipotle, but you'll see more on the loyalty program
• 11:31
  Speaker 4: of engagement. We hope to have things that track your
• 11:35
  Speaker 4: usage and maybe make it a little bit of a contest.
• 11:37
  Speaker 4: I remember my son is an avid Chipotle fan and
• 11:41
  Speaker 4: he got an email one time that said he was
• 11:43
  Speaker 4: in the top two percent of Chipotle users, and he
• 11:47
  Speaker 4: was really angry. He goes, man, I got to up
• 11:49
  Speaker 4: my game. What do I got to do to be
• 11:51
  Speaker 4: in the top one percent? So that it's those kind
• 11:54
  Speaker 4: of insights. We also did a tasting of a of
• 11:58
  Speaker 4: a new item in a in a city and all
• 12:02
  Speaker 4: the people we so we invited some of our best
• 12:04
  Speaker 4: loyalty members in that city just to do the tasting,
• 12:07
  Speaker 4: just to see what they said, and they were all like.
• 12:09
  Speaker 3: Am I number one? Where am I am? The top
• 12:11
  Speaker 3: one percent? Where am I where?
• 12:12
  Speaker 4: So everybody wants to know the rank. So I think
• 12:14
  Speaker 4: you'll see more of that from us. There's more localization
• 12:17
  Speaker 4: we can do to show that you the impact that
• 12:19
  Speaker 4: you're having on the environment just from purchases at your restaurant.
• 12:22
  Speaker 4: So there's a whole host of things you'll see with loyalty,
• 12:25
  Speaker 4: making it more fun, making it more engaging, Maybe give
• 12:28
  Speaker 4: you some education about the brand, and you know there's
• 12:30
  Speaker 4: gonna be there's going to be more promotions and things,
• 12:33
  Speaker 4: a la summer of extras, which was so successful for
• 12:35
  Speaker 4: us this summer.
• 12:36
  Speaker 3: Cool.
• 12:37
  Speaker 2: My son's a big fan too, he's a high school senior.
• 12:39
  Speaker 2: He actually he took down a chicken burried all Adam boy.
• 12:43
  Speaker 3: Well, we appreciate your business.
• 12:46
  Speaker 1: Yeah, I don't think he's in the top two percent, but.
• 12:49
  Speaker 3: Aspirational mic, that could be great for sure.
• 12:52
  Speaker 2: What lessons have you learned about connecting with gen Z digitally,
• 12:55
  Speaker 2: particularly on TikTok?
• 12:57
  Speaker 4: Now, I'll tell you that we've always been a brand
• 12:59
  Speaker 4: that's very you has a youthful mindset, and so I
• 13:03
  Speaker 4: think over the last seven eight years we've really taken
• 13:06
  Speaker 4: some of the shackles maybe that we're on our our
• 13:10
  Speaker 4: social program and really let them kind of use the
• 13:13
  Speaker 4: brand a little bit more. But I'll say over the
• 13:15
  Speaker 4: last couple of years, the influencers are really having a moment,
• 13:20
  Speaker 4: even influencing creative that looks like it's from an influencer,
• 13:23
  Speaker 4: and it's more of that one to one where somebody's
• 13:26
  Speaker 4: telling you something I think that has really risen to
• 13:30
  Speaker 4: the four in ways that it was always there, but
• 13:33
  Speaker 4: it wasn't as big as it is now. And so
• 13:36
  Speaker 4: you know, we can look at some of the creative
• 13:38
  Speaker 4: that we've done in digital and social even from just
• 13:41
  Speaker 4: two or three years ago, and things that were the
• 13:43
  Speaker 4: top performers are not the top performers now, and so
• 13:47
  Speaker 4: we've really we could we're constantly looking at that, constantly optimizing,
• 13:51
  Speaker 4: and so we can see that change of how just
• 13:54
  Speaker 4: that influencer voice is so important because you know, they're
• 14:00
  Speaker 4: like friends to so many people, and so you know,
• 14:04
  Speaker 4: the recommendation from a friend is one of the most
• 14:05
  Speaker 4: powerful things, and I think that's where influencers have stepped
• 14:08
  Speaker 4: into four. So that's the biggest change that I've seen. Certainly,
• 14:11
  Speaker 4: these platforms like TikTok and Instagram and reels and those
• 14:16
  Speaker 4: things have gotten much bigger and they're a great way,
• 14:19
  Speaker 4: I think, and people were substituting it. Young people especially
• 14:22
  Speaker 4: are using those as substitutes for TV. They are really
• 14:26
  Speaker 4: engaged on those. The number of hours that they're spending
• 14:29
  Speaker 4: on those platforms is pretty frightening. But from a marketing standpoint,
• 14:33
  Speaker 4: it certainly is an opportunity, but you better engage with
• 14:36
  Speaker 4: them in the right way, and you better have the
• 14:38
  Speaker 4: right way in because you will get called out on
• 14:41
  Speaker 4: it in a second. And we're fortunate here to have
• 14:43
  Speaker 4: a great team that does social They can really find
• 14:46
  Speaker 4: a lot of insights, and we look for things and
• 14:50
  Speaker 4: how to participate in things that are sort of the
• 14:53
  Speaker 4: intersection of Chipotle and culture. And so a great example
• 14:58
  Speaker 4: is we did a promotion early this year on Friday
• 15:01
  Speaker 4: the thirteenth around tattoos, and so in the tattoo community,
• 15:05
  Speaker 4: Friday the thirteenth is a big date.
• 15:07
  Speaker 3: I did not know this, but we picked it up
• 15:09
  Speaker 3: in the social channels.
• 15:11
  Speaker 4: We did a buy one, get one offer for one
• 15:14
  Speaker 4: hour in the restaurants are Friday the thirteenth, and it
• 15:16
  Speaker 4: was an overwhelming success. Now the insight was back at
• 15:20
  Speaker 4: the suit I think it was Super Bowl. I think
• 15:21
  Speaker 4: it was a Super Bowl. In twenty nineteen, Maroon five
• 15:25
  Speaker 4: was a performer when Adam Levine took off his shirt.
• 15:28
  Speaker 4: He has a lot of tattoos, and someone posted that
• 15:33
  Speaker 4: Adam Levine's body looks like a Chipotle bag, and so
• 15:37
  Speaker 4: we ran with that. We reposted it and it blew up.
• 15:40
  Speaker 4: It went viral at a second, and so we've always
• 15:43
  Speaker 4: had this kind of affinity for the tattoo community because
• 15:47
  Speaker 4: of that looks like a Chipotle bag and the busy
• 15:49
  Speaker 4: writing and stuff that we have on there. And so
• 15:51
  Speaker 4: that that insight, that evergreen insight, kind of led us
• 15:56
  Speaker 4: to Friday the thirteenth. And I remember when the team
• 15:58
  Speaker 4: came to me and said, hey, did you know Friday
• 16:01
  Speaker 4: the thirteenth big in the tattoo community. I don't have
• 16:03
  Speaker 4: any tattoos, so I did not know this, but it
• 16:06
  Speaker 4: turned into one of the best promos we've ever done,
• 16:09
  Speaker 4: and the engagement in social the engagement inside the restaurant
• 16:13
  Speaker 4: was amazing. So it shows how you got to have
• 16:16
  Speaker 4: your pulse on what's going on in culture and then
• 16:19
  Speaker 4: think about how does it apply to your brand and
• 16:21
  Speaker 4: what's the unique way in for your brand. That was
• 16:24
  Speaker 4: very unique for us, that whole Chipotle back Tattoo thing.
• 16:27
  Speaker 4: We made it really fun. We had multidimensions to it.
• 16:30
  Speaker 4: But it's a great example of kind of looking at
• 16:33
  Speaker 4: culture and find and getting onto something that's happening out
• 16:37
  Speaker 4: there and making it big and making it your own.
• 16:39
  Speaker 4: And you know, we've done that with National Burrito Day.
• 16:43
  Speaker 4: Wasn't a thing before Chippote started doing it. National Avocado Day,
• 16:47
  Speaker 4: that's our jam right with in late July. And so
• 16:50
  Speaker 4: we've made those we call them almost their holidays that
• 16:53
  Speaker 4: chip we call them Chapote Days. But we've really made
• 16:57
  Speaker 4: those into cultural moments that we can continue to take
• 16:59
  Speaker 4: it vantage of year after year.
• 17:01
  Speaker 2: Yeah, it's so important to listen on social media and
• 17:04
  Speaker 2: listen to your fans.
• 17:05
  Speaker 1: It's cool.
• 17:06
  Speaker 2: And showing off some of your social media creators and
• 17:09
  Speaker 2: your super fans on a TV ad was was pretty cool.
• 17:12
  Speaker 2: Even though I can't get down with a triple wrap burrito,
• 17:17
  Speaker 2: you know, that would go right to my head, I think,
• 17:18
  Speaker 2: But you know, it highlights your point about how important
• 17:23
  Speaker 2: influencer marketing is and has become. So what are some
• 17:26
  Speaker 2: of the other ways you're leveraging them.
• 17:29
  Speaker 3: So we've done that.
• 17:30
  Speaker 4: We leverage them at almost all of our product launches
• 17:33
  Speaker 4: certainly have an influencer component we put there there. We
• 17:38
  Speaker 4: were one of the first companies to really put your
• 17:40
  Speaker 4: your order is a very individual thing, like you, as
• 17:43
  Speaker 4: a Chipotle fan, will know that it's very individual. One
• 17:45
  Speaker 4: of the best pieces of swag we ever sold were
• 17:49
  Speaker 4: customized T shirts you just put your order on the
• 17:52
  Speaker 4: T shirt itself, and so we know how personal that
• 17:55
  Speaker 4: is online almost any other place, and so we started
• 17:59
  Speaker 4: putting people's orders inside our app, and so you can
• 18:03
  Speaker 4: actually order what, you know, what this particular influencer has,
• 18:07
  Speaker 4: or this athlete has or whatever what they what they
• 18:10
  Speaker 4: get every day. And so that's been a way we've
• 18:12
  Speaker 4: really from Gosh, we'd started doing that years and years ago,
• 18:17
  Speaker 4: and those have been really successful for us. It's a
• 18:20
  Speaker 4: great way to experience the same thing your influencer does,
• 18:24
  Speaker 4: and it's really attractive for them too. I mean, they
• 18:26
  Speaker 4: become you know, Instagram famous, right if you will, by
• 18:30
  Speaker 4: having their Chipotle order in the app, and it's a
• 18:32
  Speaker 4: point of pride. And I think the other big thing
• 18:33
  Speaker 4: for us is we're only interested in working with people
• 18:37
  Speaker 4: who are already big Chipotle fans. We're not trying to
• 18:40
  Speaker 4: convert somebody who doesn't like Chipotle or introduce somebody who
• 18:44
  Speaker 4: doesn't like Chipotle. The beauty is we have a lot
• 18:47
  Speaker 4: of athletes that do it. We have a platform called
• 18:49
  Speaker 4: Real Food for Real Athletes, where we want to be
• 18:52
  Speaker 4: the training table for athletes of all ages and abilities
• 18:56
  Speaker 4: throughout the country. And because that's actually what they do.
• 19:00
  Speaker 4: There's a number of athletes who have writers in their
• 19:02
  Speaker 4: contract that when they go on the road, they're going
• 19:04
  Speaker 4: to eat Chipotle. We know some major sports teams put
• 19:08
  Speaker 4: Chipotle on their jets when they're going to games. We
• 19:11
  Speaker 4: know this is how they eat and so, and the
• 19:16
  Speaker 4: beauty of it is is whether you're trying to gain weight,
• 19:19
  Speaker 4: whether you're trying to cut weight, whether you're trying to
• 19:21
  Speaker 4: be whole thirty, whether you're trying to be vegan, whether
• 19:22
  Speaker 4: you're trying to be high protein, you can eat it
• 19:25
  Speaker 4: really easily at Chipole, so it's very customizable. So there's
• 19:28
  Speaker 4: a lot of nutritionists at universities that actually use Chipole
• 19:32
  Speaker 4: on the road because they can give each person their
• 19:34
  Speaker 4: own order. And by the way, it tastes great, so
• 19:37
  Speaker 4: it's not doesn't feel like a penalty. So we try
• 19:39
  Speaker 4: to promote those things as much as we can, and
• 19:42
  Speaker 4: it's like, this is the real food that real athletes
• 19:44
  Speaker 4: really eat. We've had Team Chipotle for the Olympics, We've
• 19:47
  Speaker 4: had Team Chipote for other things of various athletes who
• 19:50
  Speaker 4: now being in their twenties, they've grown up with Chipotle.
• 19:54
  Speaker 4: We have some great photos where they took their own
• 19:57
  Speaker 4: from their own photo library when they were eight or
• 19:59
  Speaker 4: ten years old, going to Chipotle all the time. So
• 20:01
  Speaker 4: that's been a really fun thing for us to engage
• 20:03
  Speaker 4: with too. So there's a lot of different ways I
• 20:05
  Speaker 4: think we use that to your point, use that Chipotle
• 20:08
  Speaker 4: fandom as a as a beacon for good and as
• 20:11
  Speaker 4: certainly as a as proof that you know, this is
• 20:15
  Speaker 4: where those people really eat. We're not trying to, you know,
• 20:18
  Speaker 4: pull one over on you that so and so you know,
• 20:21
  Speaker 4: eats at this particular place, but even though everybody knows
• 20:25
  Speaker 4: they don't eat any bread. So that's that's the opposite
• 20:27
  Speaker 4: of what we're trying to do. We really try to
• 20:29
  Speaker 4: be authentic at every touch point that we have.
• 20:32
  Speaker 2: Yeah, it's critical because because you know, authenticity, it really
• 20:36
  Speaker 2: shines through, you know, and people can tell when people
• 20:39
  Speaker 2: are real super fans and really love the brands.
• 20:41
  Speaker 1: I think that's free.
• 20:43
  Speaker 2: In the second quarter earning's call, Scott mentioned some of
• 20:45
  Speaker 2: the recent innovations made to the mobile app to remove
• 20:48
  Speaker 2: friction from the customer experience.
• 20:51
  Speaker 1: What were those changes?
• 20:54
  Speaker 4: So there are some things that are sort of more
• 20:56
  Speaker 4: behind the scenes that might affect iOS in particular, or
• 21:00
  Speaker 4: an Android Android platform. In particular, we rolled out a
• 21:04
  Speaker 4: new updated beginning of the year. There were some older
• 21:07
  Speaker 4: versions that it wasn't as compatible for us for with
• 21:10
  Speaker 4: at iOS. We had some just hiccups from a technology standpoint.
• 21:14
  Speaker 4: The good news is most of those things are sorted
• 21:17
  Speaker 4: and so that's a big part. But we also added,
• 21:20
  Speaker 4: you know, we added tiles to the to the app
• 21:22
  Speaker 4: where you can scroll through so we can put more
• 21:24
  Speaker 4: customized offer We could put more personalized offers in there.
• 21:27
  Speaker 4: We can show you how many reward points you have available.
• 21:30
  Speaker 4: We can show you if you have a reward available.
• 21:32
  Speaker 3: We can.
• 21:35
  Speaker 4: You know, drive awareness to our lt O s, to
• 21:38
  Speaker 4: new things like our new sauces, to digital only items
• 21:41
  Speaker 4: like Case of DIA. We just did a free case
• 21:43
  Speaker 4: idea for national Case of da day, so we can
• 21:46
  Speaker 4: do all kinds of those things in the app that
• 21:48
  Speaker 4: we weren't able to do before and kind of all
• 21:50
  Speaker 4: at the same time.
• 21:51
  Speaker 3: So it's it's certainly has been a win for US.
• 21:54
  Speaker 2: International expansion is of growing importance right now. How are
• 21:58
  Speaker 2: you and the marketing team adapting the brand menu and
• 22:00
  Speaker 2: message to the international markets.
• 22:02
  Speaker 4: So our biggest one that we have right now is Europe,
• 22:06
  Speaker 4: and we've got a new business leader in Europe and
• 22:08
  Speaker 4: she's just done a terrific job for us. But in Europe,
• 22:11
  Speaker 4: you know, we're small. I mean, we have about twenty
• 22:14
  Speaker 4: five restaurants or so, mostly in the UK, but we
• 22:16
  Speaker 4: have a couple in Germany and a cup and six
• 22:19
  Speaker 4: in France. We are really going back to the beginning
• 22:23
  Speaker 4: kind of at Chipotle. People just a lot of there
• 22:26
  Speaker 4: certainly is a lot of brand recognition of Chipotle from
• 22:29
  Speaker 4: people who've been to America and Americans that.
• 22:31
  Speaker 3: Are over there.
• 22:32
  Speaker 4: But for a lot of people, is this, how do
• 22:35
  Speaker 4: we distinguish ourselves as not just another American fast food brand,
• 22:39
  Speaker 4: but really bring our food ethos there. So we've gone
• 22:42
  Speaker 4: back into some of the archives when they first first
• 22:45
  Speaker 4: launched Chipotle here and used a lot of clever one liners,
• 22:49
  Speaker 4: right like this isn't this is real food fast not
• 22:52
  Speaker 4: fast food, and those kind of things to really introduce
• 22:55
  Speaker 4: Chipotle to people from the beginning so they don't associate
• 22:59
  Speaker 4: just us with everybody else. Our launch in the Middle
• 23:03
  Speaker 4: East has been an overwhelming success. Some of those restaurants
• 23:06
  Speaker 4: are just doing you know, forty and fifty thousand dollars
• 23:10
  Speaker 4: per day when they roll out. So it's been incredible,
• 23:13
  Speaker 4: and you know, we've signed on some new partners in
• 23:16
  Speaker 4: Asia as well as in Mexico, and so we're very
• 23:20
  Speaker 4: excited about the globalization of Chipotle. We want that experience
• 23:23
  Speaker 4: at Chipotle in those places to be just like the
• 23:26
  Speaker 4: one you'll have here in the United States. One of
• 23:28
  Speaker 4: the hardest things for us, Mike, is really getting the
• 23:31
  Speaker 4: food supply chain because of our food with integrity, because
• 23:34
  Speaker 4: we don't use any artificial flavors, colors, or ingredients.
• 23:36
  Speaker 3: Or any of those things.
• 23:38
  Speaker 4: It's hard to get that stood up in a lot
• 23:40
  Speaker 4: of places, and Europe has been hard to mimic exactly
• 23:43
  Speaker 4: what we're doing here, but in different plants. With sometimes
• 23:47
  Speaker 4: sight we modified ingredients. For example, most of the avocados
• 23:51
  Speaker 4: in Europe do not come from Mexico or where we
• 23:55
  Speaker 4: source some here in the United States, and so they
• 23:57
  Speaker 4: can be a little different. So how do you adapt
• 23:59
  Speaker 4: the recipe because there's real cooking going on in our restaurants,
• 24:02
  Speaker 4: there's really fresh food, making sure that all is happening
• 24:07
  Speaker 4: in the right way in other countries can be a challenge,
• 24:10
  Speaker 4: and so we think we've got that stood up really
• 24:13
  Speaker 4: nicely in the Middle East, We've got it stood up
• 24:15
  Speaker 4: much better than it has been in Europe, and so
• 24:19
  Speaker 4: we're very excited about the global nature and making this
• 24:22
  Speaker 4: brand not just an iconic brand in America, but an
• 24:26
  Speaker 4: iconic brand globally as well.
• 24:28
  Speaker 2: And so the difficulties with the supply chain, does that
• 24:31
  Speaker 2: make you more inclined to continue to franchise new markets?
• 24:35
  Speaker 4: Not necessarily. I think it's a market by market determination.
• 24:38
  Speaker 4: For a place like the Middle East, you really need
• 24:40
  Speaker 4: a partner, and we have a great partner there that
• 24:43
  Speaker 4: can get you into the malls. Everybody's that I'm all
• 24:45
  Speaker 4: there because it's so hot, you have to have people there.
• 24:49
  Speaker 4: We don't necessarily need a franchise partner in places like Europe,
• 24:53
  Speaker 4: so we will own our restaurants there, but we'll be
• 24:56
  Speaker 4: adaptive to the different markets and where we think that
• 25:00
  Speaker 4: a franchise agreement can add some value, and we make
• 25:03
  Speaker 4: sure we're only working with the best, the people that
• 25:06
  Speaker 4: know how to do this, that want the brand for
• 25:10
  Speaker 4: the right reasons, for its brand ethos, and that are
• 25:13
  Speaker 4: like minded about that brand ethos and can deliver what
• 25:16
  Speaker 4: we think will be a great Chipote product. So our
• 25:18
  Speaker 4: business model will vary depending on where we go. Some
• 25:22
  Speaker 4: will own, some will franchise, some will do some hybrid
• 25:25
  Speaker 4: of both, but that will be a market by market determination.
• 25:29
  Speaker 2: What would you say to investors that are concerned about
• 25:31
  Speaker 2: Chipotle's ability to return to consistent mid single digit teams
• 25:35
  Speaker 2: store sales growth.
• 25:37
  Speaker 4: I mean, I would say, look, this is a tough environment,
• 25:39
  Speaker 4: maybe the toughest environment for fast casual that's been around
• 25:42
  Speaker 4: in a while. Every other time, chipotlet, every brand has
• 25:46
  Speaker 4: its ups and downs over it's I think we were
• 25:48
  Speaker 4: founded in nineteen ninety three, so we're on thirty two
• 25:51
  Speaker 4: years now. Every time there's been a hiccup, we've come
• 25:54
  Speaker 4: out of it stronger. I don't see why this is
• 25:57
  Speaker 4: this one will be any different. I will stress there's
• 25:59
  Speaker 4: no fundamental problem with our brand here. This isn't a
• 26:03
  Speaker 4: food safety issue like we've had in the past. This
• 26:05
  Speaker 4: is more macro driven. Are there things we can do better? Sure,
• 26:10
  Speaker 4: we will work on that hard. I think we've got
• 26:12
  Speaker 4: a great and talented team here from a management standpoint
• 26:14
  Speaker 4: as well as all the way through the organization, much
• 26:17
  Speaker 4: better than we had in the past. And so I
• 26:20
  Speaker 4: would just let history be your guide that you know
• 26:23
  Speaker 4: we'll get right back up and keep on humming. And
• 26:25
  Speaker 4: I don't see any impediment to our growth. And there's
• 26:28
  Speaker 4: no fundamental problem wrong with Chipotle. This is more of
• 26:32
  Speaker 4: a macro driven problem than anything else.
• 26:36
  Speaker 2: Yeah, the team obviously has a phenomenal track record. And
• 26:39
  Speaker 2: I got a chance to listen to Scott on a
• 26:41
  Speaker 2: fireside chat at the Prosper conference in August, and I
• 26:45
  Speaker 2: was very impressed.
• 26:46
  Speaker 3: He's a great ambassentor for the brand for sure.
• 26:49
  Speaker 1: Yeah, all right.
• 26:51
  Speaker 2: Selfishly, I know beef prices are kind of high now,
• 26:55
  Speaker 2: but when are're bringing brisket back.
• 26:57
  Speaker 4: So you know, we'll keep our is very close to
• 27:01
  Speaker 4: the best. Brisket is one of my favorites that we've
• 27:03
  Speaker 4: ever done. You know, if I were wagering, and I'm not,
• 27:08
  Speaker 4: I would say that you know, you might see that
• 27:10
  Speaker 4: sometime in twenty twenty six, but we'll just have to
• 27:12
  Speaker 4: see how things play out. It is to your point,
• 27:15
  Speaker 4: the beef prices are extraordinary and brisket is certainly we
• 27:19
  Speaker 4: almost buy. One of the challenges for Chipotle as we've
• 27:23
  Speaker 4: gotten more and more restaurants, so now we're at four
• 27:25
  Speaker 4: thousand restaurants, is getting enough supply to meet the demand
• 27:30
  Speaker 4: that we have, and so the amount of brisket in
• 27:33
  Speaker 4: a particular animal is pretty small. So we are almost
• 27:37
  Speaker 4: in our food with integerty requirements and our animal welfare
• 27:41
  Speaker 4: requirements mean only about five percent of the beef in
• 27:44
  Speaker 4: America qualifies to be for Chipotle. So one of the
• 27:48
  Speaker 4: biggest challenges for us in a program like brisket is
• 27:52
  Speaker 4: just getting enough raw material and can we have enough brisket?
• 27:56
  Speaker 4: Can we source enough that meets our food with integery
• 27:58
  Speaker 4: requirements to meet twelve or fifteen week limited time offer timeline.
• 28:03
  Speaker 4: So our supply chain team scours the globe for folks
• 28:07
  Speaker 4: that have like minded animal welfare requirements to make sure
• 28:12
  Speaker 4: we can source that. But it is it is a
• 28:14
  Speaker 4: challenge for sure. It is a precious ingredient and I
• 28:18
  Speaker 4: think it tastes that way, which is why people love it.
• 28:20
  Speaker 2: I'm gonna have to check and see if brisket in
• 28:23
  Speaker 2: twenty twenty six is on polymarket.
• 28:26
  Speaker 1: You have to read so what's your go to order?
• 28:30
  Speaker 4: My go to So mine kind of changes around a
• 28:33
  Speaker 4: little bit, But right now I'm back on burritos. I mean,
• 28:36
  Speaker 4: I think there's nothing better than one of our big
• 28:38
  Speaker 4: but I was doing bowls for a long time. But
• 28:40
  Speaker 4: I have a bowl every Monday. We have Chipotle here
• 28:43
  Speaker 4: at our headquarters offices every Monday, so I always get
• 28:46
  Speaker 4: a bowl there. But when I'm in the wild on
• 28:48
  Speaker 4: my own, I get a burrito, a little bit of
• 28:51
  Speaker 4: white rice, black beans, chicken, I have cheese, I have
• 28:56
  Speaker 4: picodagayo or mild salsa, and of course have to have guak.
• 29:01
  Speaker 4: And all that wrapped up is great. One one pro tip.
• 29:04
  Speaker 4: A lot of people put all of the you know,
• 29:07
  Speaker 4: all of the sauces and stuff on there. So they'll
• 29:10
  Speaker 4: put pico, and they'll put hot sauce, and they'll put
• 29:13
  Speaker 4: corn on there, and it's great if you want to
• 29:16
  Speaker 4: load it up, awesome, But the original design for Chipotle
• 29:19
  Speaker 4: was to have like one of those sauces. And there
• 29:21
  Speaker 4: are one or two of those sauces, so you might
• 29:24
  Speaker 4: try it sometime if you're a Chipotle user, Hey, just
• 29:27
  Speaker 4: pick one or two. You'll find the flavors really shine
• 29:30
  Speaker 4: through a little bit more. The brito might stay a
• 29:32
  Speaker 4: little bit hotter, too, So pro tip, just one or
• 29:35
  Speaker 4: two sauces rather than mowd them all in.
• 29:36
  Speaker 3: But hey, if you like.
• 29:38
  Speaker 4: Them all, you know what the beauty of Chipotle is
• 29:40
  Speaker 4: you could have it exactly how you want and you
• 29:42
  Speaker 4: don't have to listen to anybody about what's the best.
• 29:45
  Speaker 4: But that's a pro tip. Maybe just one or two instead.
• 29:47
  Speaker 2: Of them all. I no doubt I'll have to, you know,
• 29:50
  Speaker 2: I usually I go just hot sauce, but I'm not
• 29:53
  Speaker 2: gonna lie. You've got me hooked on the spunke Chipotle Tabasco,
• 29:56
  Speaker 2: so you know that's got to go on well.
• 29:58
  Speaker 4: And you know, if you haven't tried the red chimnychurity
• 30:01
  Speaker 4: that comes on the side, so you can you can
• 30:03
  Speaker 4: meter that out however you want, and it is absolutely
• 30:06
  Speaker 4: great on any protein. Put it on chicken, put it
• 30:10
  Speaker 4: on whatever. That red Timmy Chery sauce is certainly something
• 30:13
  Speaker 4: you should miss. The other one is our build your
• 30:15
  Speaker 4: own Chipotle, So we designed that so we saw the
• 30:19
  Speaker 4: insight was there's a lot of people wanted something that
• 30:22
  Speaker 4: they could have for small groups. Particklar dinners at night
• 30:25
  Speaker 4: and our building own Chipotle. You can order it right
• 30:27
  Speaker 4: off the app and it's for four to six people.
• 30:30
  Speaker 4: It's a it's a it's an abundant amount of food.
• 30:32
  Speaker 4: So if you just have four or five people, you
• 30:34
  Speaker 4: certainly will have leftovers. It's like a mini Chipotle line.
• 30:38
  Speaker 4: Everyone who tries it loves it, and so you can
• 30:41
  Speaker 4: order it right in our app It is really an
• 30:44
  Speaker 4: outstanding product and gives everybody, lets them build.
• 30:48
  Speaker 3: Their own right at home.
• 30:49
  Speaker 4: For I think it's like fifty sixty bucks, so you're
• 30:53
  Speaker 4: feeding at least six people for that much.
• 30:56
  Speaker 3: It's a great value too.
• 30:59
  Speaker 2: Yeah, and I guess you know it's it's a good
• 31:03
  Speaker 2: way to expand your catering business, right which I think
• 31:05
  Speaker 2: is a point of focus right now.
• 31:06
  Speaker 3: Yeah, catering.
• 31:08
  Speaker 4: So you know we have one of the challenges with
• 31:10
  Speaker 4: catering is right now for so catering would be for
• 31:14
  Speaker 4: you know, ten people or more. It's a challenge for
• 31:18
  Speaker 4: the restaurants to get when you have to order twenty
• 31:22
  Speaker 4: four hour advance. That's to allow our restaurants because of
• 31:24
  Speaker 4: our fresh ingredients, because of our fresh supply chain, we
• 31:27
  Speaker 4: need to make sure we have enough food for them
• 31:29
  Speaker 4: to be able to make it in the restaurants. And
• 31:31
  Speaker 4: so we love our catering business. We're testing some different
• 31:35
  Speaker 4: technologies that allow us us that will allow us to
• 31:38
  Speaker 4: expand it a lot more, a lot more than we
• 31:41
  Speaker 4: have right now because we're sort of under index and
• 31:43
  Speaker 4: catering I think could be a whole other growth layer
• 31:45
  Speaker 4: for us, because there's nothing like bringing that full Chipotle
• 31:48
  Speaker 4: line to your house, which is really what catering is about.
• 31:52
  Speaker 3: Man, everybody loves that.
• 31:53
  Speaker 4: But this four to six people build your own Chipotle
• 31:57
  Speaker 4: is a great way to start good stuff.
• 31:59
  Speaker 1: I think we'll wrap it up there. Thanks for doing this, Chris.
• 32:02
  Speaker 4: Hey, Mike, thanks for having me on. I appreciate it.
• 32:04
  Speaker 2: I want to thank the audience for tuning in. If
• 32:06
  Speaker 2: you liked our conversation, please share it with your friends
• 32:08
  Speaker 2: and colleagues. Check back soon for a discussion about California's
• 32:12
  Speaker 2: Senate proposal requiring restaurants to labor major food allergens with
• 32:16
  Speaker 2: Dylan McDonald and Erica Anderman of Fudini