How Chipotle is embracing AI

All right, after my chat with Scott Boatwright inside Chipotle in New York City, of course, we went and grabbed a bowl and you better believe it. I got double of everything because it was on him and then we had more of a conversation.Scott, I've actually, uh, after all these years of talking to you, I've, I've never actually seen one in person. We've always just come together, uh, via Zoom or other remote services. So it's good to see you inside of a Chipotle.

Uh, this is, this is my sanctuary right here. We spent a lot of time back in the support center working on supporting tactics that help our restaurants run better and more efficiently, but I most enjoy my time in the brand in one of our restaurants, enjoying our food and talking to our team members about their development and growth. It,

uh, and I should mention we're here in New York City, like what, what is it about when you walk into a Chipotle that you'reLooking at, like what do you look for when you walk through the, what do they call it, the lease line? Like it's an oldschool term,

but like it is an old school term. We call it coming over the threshold threshold, OK, right? So, um, you can really tell how the visit is going to unfold the moment you open the door, uh, the sights, the sounds.The smells all really lead you to what's happening in the restaurant. And so the first thing I look for is obviously cleanliness of the restaurant, customers that are enjoying food, um, are they really enjoying their food? Are they having a good experience at Chipotle, which is important.Uh, and then I look for smiles down the line. I want to see team members that are engaging, that are happy, um, that are doing good work. Yeah, we don't want to see frowns. Don't want to see frowns. We talk about a lot at Chipotle smiles down the line don't slow you down. And then I look at the food. I make sure the food is at our quality standard, uh, visually first, uh, and then try the food for taste, texture, and flavor, but the visual look across the line to make sure it's at our standard is really important.We do something at Chipotle which I think is quite unique to our brand because we're actually cooking in our restaurants every day. I mean,

it's,it's, this is a perfect time if you are in food to be cooking with afocus on ingredient qualities.

That's right. You cook your stuff. That's absolutely right. And so we have.Recipes that have to be followed to maintain consistency as you can imagine across 4100 restaurants. But one of the things that's unique about our business is we do a food fact tasting FACT 4 times a day to ensure that the food tastes to our standard. And so, and FACT is an acronym, as you can imagine, as much of life is, it's flavor, appearance, color, and texture.And it has to meet our standard on all, all four of those key attributes, or we remake it, uh, because it's that critically important to our consumer.

I, I did an AI search on you before I did this, and I hope I'm right.You start working in a restaurant cleaning dishes in a steakhouse. I sure do.

Yahoo Scout AI. I wasn't gonna say it. I wasn't, but

thank you. Our new Yahoo comic working absolutely

amazing. $3.15 an hour at a steakhouse called Quincy's in my hometown after school washing dishes, and I remember it like it was yesterday.Uh, I grew up in a very, in a blue collar family to two very hardworking parents. Um, and so my parents taught me a lot of things. One of the things they taught me in spades was values and work ethic are most important, and accountability. And so, when I went to work, I remember I was washing dishes, but I was determined to be the best dishwasher that restaurant had, and I was recognized pretty quickly by the management team.And they sat me down one day and gave me a five-cent raise. Ran,

life-changing,

life-changing. Uh, but anyway, yeah, that's where I started my career. I

relate.I knew I always liked you, but I started working in a country club, uh, cleaning dishes, and then the next step for me, I used to cut meat.When they had parties, very nice. So that was like a big thing. But with that came an extra $1. Yes, this is awesome, and I could be with the meat. Like it was amazingtimes,

but it takes time. What

did youlearn like from those early days? For me, to your point, I realized, you know what, if you do work your ass off, you could move uppretty quickly.

You're absolutely right. Um, I just knew if I, in, in those early days, I knew a couple of things. If I wasn't, if I couldn't beat you with intelligence, I could beat you through workout, but I knew as long as I put in more effort than the person standing next to me, that effort would ultimately be recognized and you'll ultimately be rewarded, and I built a career on that entire premise.Uh, and later in life when I finally got into a leadership position, it all became about development of others. And I don't know if you remember, there was a motivational speaker back in the 80s. His name was Zig Ziglar. And he had a quote that stuck with me to this very day. Zig said that you can always have whatever you want out of life if you're just willing to help enough other people get what they want.And I use that entire that premise to really base my entire career.

Andthen you went to what Arby's?

I did, I did. So I was in hotels. I went from out of school right into hotels and I worked at, um, Jake Island Club Hotel, which is adjacent to my hometown, uh, and started in banquets as a setup guy. I was setting up tables and chairs and someone came to me one day and said, can you wait tables? I said, sure.A couple of months later, can you bartend? I had no idea how to bartend, Brian. I said, sure. And so I was a quick, I was, you know, obviously intellectually curious, and I would learn on the fly, but I kept moving up in that organization, ultimately became the assistant food and beverage director.Uh, at Sea Palms Golf and Tennis Resort, and from there I made the transition over to Arby's where I started my career with that brand.

What isit about you that made you love those early jobs? You know, I, when I'm thinking back to when I was cleaning dishes, I loved.Well, I was doing it by myself, but it was fast paced, and I was able to crank, and there was some form of like instant gratification doing those jobs.

That'sexactly right. It's instant gratification. You're rewarded very quickly. Um, oftentimes you are tip-based in those environments, and the tip was really dependent upon the quality of the service that you could provide.And so I knew I could have a meaningful impact on my personal financial success if I was able to provide the level of service that was exceptional, that met the needs of the consumer, or anticipated, more importantly, the needs of the consumer, and I did quite well in that environment.

When you got intothese bigger companies like an Arby's, how do you notGet lost, like how are youseeing?

It's a great question, Brian. You know, in the early days, I would just raise my hand for the jobs no one else wanted to do. And so when the company would, so there was, the company was called RTM, which was the largest franchise system in the US at that time. They had Arby's, Shoney's, Winner's Chicken and Biscuits, Shoney's. I remember Shoney's, yeah, Big Boy, yeah, from a long time ago.And they would buy markets.Address the operational complexity of the market, fix the financials, and then they would flip that market back out. And so I was the guy who would raise my hand to go clean up the market. And so I became this, this, this fixer for the company, uh, and made myself invaluable.

I don't think a lot of people are, if they have forgotten that follow the Chipotle story. The founder of Chipotle hired you, like Steve Ells. Like what was that call like when he placed it to you? I mean, Chipotle at the time was still going through some challenges and parachuted into like, I don't know, helped save the company.

It's funny, we had just, um, so we are now Inspire Brands just came off our best year ever in 2016, and Rourke Capital owned the brand at the time. Rourke bought that business, uh, at a very low multiple and low valuation. Five years later, we had created extraordinary value which gave them the ability to buy other brands like Buffalo Wild Wings and our Taco, and others. And so we were doing quite well as an organization. I was still highly thought of in the brand.And I get a phone call from Steve asking if I was willing to have a conversation about operations at Chipotle. So that's the, the initial volley was, let's just have a conversation.And I was a huge fan of Chipotle already. I eat, I would probably eat at Chipotle's once or twice a week, even when I was with the other brand. And so I love the food. I love the concept. I love the brand ethos, and it really aligned with my, my thinking on how people should eat food. And so the, uh, the parallels were pretty tight. And so I met Steve here in New York. We had a great conversation. I told him what I would do to fix the brand.Unapologetically, I said, here are your key issues beyond cleanliness, prototype design, menu architecture, pricing, um, to system standards and procedures, and I had a whole list of things that I would do.If I were running the brand,

was he like one of those founders that just sit back and listen and say nothing and let you just like wait for you to put your foot in it?

I put my foot in my mouth on a couple of occasions, especially around design prototype. The gentleman who actually designed this prototype we're sitting in today was at the table, and this is the design prototype I made most fun of because I did not like the plywood box. I didn't like the layout of the restaurant. It wasn't designed with an operator's view pad or through an operator's lens, and Steve just chuckled because he knew Mark was the one that created the design.And so it didn't matter to me. I didn't feel like I was interviewing. I felt like I was consulting and giving my best advice and feedback. And so, um, that, I guess I made quite the impression. I left New York that day and didn't think the conversation was going any further. I got a call, call, I think 2 weeks later to come back to New York and meet with the broader team, and Steve offered me the job. It's so funny. He's, we're at dinner and he goes, hey, I want you to join the brand.And I said that sounds great, Steve, and I, and I welcome the opportunity. What's the position? Where's it located? What does it pay? all this out.

He

goes, we'll work all that out later. We'll work all that later. So anyway, I joined the brand, uh, in May of '17, and I

remember covering it, covering that. It's like a cup of porter. I, I know who you were, but like this guy has a hell of a track record. I think he's gonna dogood, like, and they know, and they neededyou. Um, why do you think the brand broke out back in those days?

Um, I think there were a couple of things that led to the complications the brand experienced in 2016, 2015, 2016. It had grown much too quickly.Uh, at a pace that was not keeping pace with the development of leaders that could run the business.And so, and then absent system standards and procedures to scale a brand that was already at 1900 restaurants.And so when everyone talks about the food safety problems in, it was never a food safety problem. That was a manifestation of a broader issue, operational complexity, running what I call a mom and pop restaurant because that's what we do every day with our ingredient ethos and our culinary at scale requires.Such intense robust system, standards and procedures to protect the team members and protect the guests. They just didn't exist in the brand at that time. And so that first year I spent in the brand was really bringing on talent that could help support the growth. I don't know if you remember, I slowed development down in 2018. I said we're not going to build

as

many story

ofthe past 12 years

because we just couldn't, we couldn't staff them, Brian. Literally we had restaurants that were ready to open. The keys were handed over, and we didn't have staff to put in them.Which

is, it's almost mind boggling.

It's mind boggling. And so I slowed development that gave me time to catch our breath and I, I redesigned the entire, um, field hierarchy.

Did you come up with the drive-through? Aren't you the guythat Chipotle?

I can't take full credit, but I will take some credit. So we were doing a digital business back in that day that was probably around 2 to 4%, and it was coming through a fax machine. Yeah, I remember that.And they were hanging chips, these receipt tapes on rails, like it was Mel's Diner from the 1950s. And so, I knew we needed to modernize the, the, our digital ecosystem, and that's something Kurt took on, uh, Kurt Garner, our president of strategy, Chief Technology Officer, and did a remarkable job of really developing, taking us from analog to digital.The problem we still had was when the consumer came in the restaurant, they didn't know where to go to pick up their food.And it was the downtown Denver, Colorado location where I said just cut a big hole in that wall, put a shelving unit in it, and just place the orders on the shelves with the consumer's name on it. And people went crazy. They're like, no, you can't do that. People are gonna steal the orders.

No he was doingat the time. It was really kind of no one was doing. Maybe Panera came after you, but

they did. They were fast followers. Digital sales jumped 20% overnight.Because it removed a friction point for the consumer when they came in. Do I stand in the line and wait for this long line? Do I cut the line and go to the register? Now they knew exactly where to pick up their digital order, and so sales jumped immediately. So we immediately launched the shelving units in every restaurant across the country.And then the next rev on that was, what are the other friction points that we can remove for the consumer? What if the customer never had to get out of their car? What if they could just pull up to a window, say, Hi, I'm Brian Sozi, we just hand them a bag, and it was genius. And then we built a handful that were hyper successful. The economics were better than our freestanding, our regular traditional inline restaurant prototype, and so it was a no-brainer.

But I want to go back. I want to go into like the future of Chipotle and everything too, but what was it like? What did you learn?Very few CEOs get to like learn and see.What the like work with the founder. I'm thinking back to like, you know, Tim Cook, now he's being succeeded, he got to work with Steve Jobs, like, what did you learn from Steve Ells and like, what have you taken from him that is still in how you think about this business now?

Yeah, I, I, the first year I spent in this business with Steve Ells, I wouldn't trade for anything in the world. Um, Steve's a visionary, he's an entrepreneur, um, he loves to tinker, that's kind of his MO, uh, and he's really good at it.Um, Steve thinks differently about the world than most people, and that's, as classic, you know, founders that are visionaries do. I mean, he's quite remarkable in that regard. Um, what I learned from Steve in the very early days was really critically and critical and foundational to my success today. It was why he started the brand, how he thought about food in general, uh, how he thought about.This idea that food has the power to change the world and then really buy into this food ethos around food with integrity in a meaningful way, and I consider it my job. One of my primary responsibilities is to protect the integrity of the great brand that we have today that is grounded in this idea of sourcing the best ingredients in the world prepared fresh with classic culinary techniques in Russia.It's easy for someone to come in and commercialize the offer or buy commodity products that just don't taste as good, right? And that's what happens to a lot of brands when they get to our scale is they have to take things to commissary or they have to start doing things or cutting corners to ensure that they can deliver a consistent quality across $4100.

How

long

canyou keep that stuff at bay? Like, I'm looking right now behind it. I don't see any like really scary.Looking machines as human beings like making delicious food. Classic cooking techniques. It's like, like there's like no ice back there. There's like no frozen patties. Like

it's, it's a real grill, real people cooking real food, right guys? There we

go, guys. That'sit. There we go. There we go.Like,

it's just powerful, right? And so it is my job and, and as long as I'm in this chair, mind, we will continue to do things the way we do things today.I'll give you a great example. So our romaine lettuce is cut from a field in Salinas. That head goes into a box. That box arrives at the back door of this restaurant untouched by anyone else. Our teams will pull that head of lettuce out. They will.Wash it, rinse it, dry it, and cut it for today's usage, and nothing gets left over because lettuce doesn't hold, right? Like all of our ingredients, we don't have preservatives or additives or conditioners or artificials, so our products don't, don't hold overnight. And so we have to cook fresh.And maintain the quality of that freshness throughout the day.

I got to behonest, I thought you, when you, when that announcement that you were taking over as CEO, I'm like,Guy, it's awesome. But he's gonna come in, he's gonna take this autocado machine that was like peeling like avocados, and you got like chippy, this thing making like dunking these chips here. I'm like, he's gonna roll these things all over the place, but you haven't done that. Actually, I don't think, are you still even using thosethings?

You know, we still have them in test and we're still working with our partners on, on, you know, the problem is, it's a very bespoke piece of equipment that you're trying to, it's hard trying to pull together. It's hard to clean. It doesn't core the avocados the way a human does, right? So you have some waste that you have to manage.And so we're working through that, Brian, but I'll tell you, I'll never do anything that'll sacrifice the quality of the offering for the consumer. I just won't. And so the reason I bring up the lettuce story is people have been putting lettuce in bags for 20 years now, right? And every time I try to take that out to a commissary and get a bag into our restaurant, it tastes like a chemical taste to it or a chlorinated taste to it. It's just not the same product.And that's one ingredient that we take that same approach with every ingredient on the menu, all 53, we treat with the same love, care, and respect, which pays respect to the farmers that grew it and to the team members that are making that product for every consumer that walks in thedoor.

When I was coming in those early Chipotle's wearing my, my bro Patagonia vest, I was still in finance. I was still crunching numbers and spreadsheets. The menu that I'm looking at right now pretty much looks the same as it was back then. Will that ever change?

It could, it could evolve, Brian. Uh, we'll never say never. I think the most recent addition, permanent addition was queso. Uh, it took us years to make queso. People go, it's just cheese and some peppers. What, what takes

so

long?Our queso has about 7 ingredients and all of which you can buy at your local grocery, and so quesos around the world have lots of things in the queso stabilizers, conditioners, additives, coloring agents, and that is not who we are. And so it took us a long time to figure out how to create a queso that is with real ingredients that's made fresh that people can enjoy every day that's clean and good for their body. It's not as easy as people think. That's why we have so much trouble with desserts.So we don't have known allergens in the business today, so we don't have milk and dairy or eggs. Most desserts do. You're

teeing up my breakfast question, which I've asked you every single time I talked to you,

but dessert is just hard for us to crack on a high quality product that is on brand that meets.Our food with integrity standards,

not easy to do. Do

you

want

dessert here? We're not giving up on it. We're still, we're still innovating on ideas back at the ranch, and I think we'll ultimately get there, but the menu has remained very consistent since 1993.

You know, I am now that I'm sitting here, usually I order and pick up, but now that I'm sitting here for like an hour, I understand why I think.You don't have breakfast. Like I, I get it in a different way. I'm like watching them cut meat and prepare things, but I don't see how you would.Launch that here without more machines and muck and slowing up the operations with no necessarily.Like there's other places thatsell breakfast.

You're absolutely right. You're absolutely right. Breakfast is not our, our strong suit. It's not what we do. I don't think we've ever sold breakfast, right? Could we break into the breakfast category? It's very difficult. Just look no further than the brands that have fits and starts at breakfast. They put it in. They run it for 2 years, try to make it work, and pull it. Wendy's, it's just hard to break into that category or in that day part rather. And so I think there's still so much growth ahead of us at lunch and dinner.That we don't need to launch breakfast. I always say breakfast is a play brands take when they run out of growth.When they don't have enough upside or they need a layer of sales growth, they'll add in breakfast and they'll experience some bump for some period of time, but oftentimes not as profitable as they'd like. Fish tacos.I love the idea, Brian. We don't have, we don't have freezers. This is the first time I've seen you in person, but I have to like ask him these things. We don't have freezers. And so most places you're getting fish from, the fish comes in frozen, or that shrimp or the fish that's coming in frozen, that is not, that doesn't align with our food either. So we don't do frozen, we don't do frozen fish.

When you, um,You're past a year into this job officially as, as CEO. Those 1st 6 months, how did you acclimate to this role? It's life-changing. The job itself is, you're very prominent now, more, I mean, you have people like me asking you for interviews all the time. Like, what was that 1st 6 months like?

Yeah, I'll tell you, Brian, it was, if, if I didn't tell you it was challenging, I'd be, I'd be dishonest, um.There's nothing that prepares you to take the top job in an organization, right, because you're typically you're in a vertical and you have adjacencies to other verticals and you work collaboratively with other departments, but you really don't have, you don't have responsibility or accountability for those functions. But when you're in the top chair, the buck really stops with you, right? And so you're leading the organization at a high level. You have investors that have expectations, you have board members that have expectations. You have consumers that have expectations.And all the while I'm primarily focused on a couple of things the 135,000 people in this organization that depend on me to make the right decisions that protect their livelihood, create opportunity for them, and grow them personally and professionally. Job one. Job two is protecting and building a brand that we can all be proud of in the next 5 to 10 years, building the type of brand we want to build regardless of quarterly expectations.That's a hard piece for any CEO across any, any industry in my mind is how do you, how do you manage quarterly expectations from the investment community, but continue to build the type of brand that you want to build that you can be proud of.

How haveyouHow have you grown into this role? Like what, what has beenyour a little

trial by fire. I gotta be honest with you. And so, and then last year from a consumer perspective was a tough year for the restaurant industry and other industries, but the restaurant industry specifically as investors cycled out of, uh, consumer goods and retail, uh, and into safer places to put their cash, which I fully respect and understand.And so managing that, trying to keep people inspired, focused, and driven in a market that's challenging to operate in at a at a brand our size is really, really hard,

and abrand that is only known growth,like only known growth,

yes.Saved the Great Recession in 2015 to 2016, we've been on an absolute rip, and soBut the fundamentals of the business are still fully intact, whether you're looking at restaurant level profitability, whether you're looking at the quality of the offering, the fandom around our brand is as strong today as it ever was. And so we know we have a great brand. We know we're doing meaningful work. We continue to open restaurants at 9% new restaurant growth with the same economics we've had. How many will last this year?350 to 370 new restaurants this year. We'll open a new Chipotle restaurant every 24 hours, which is unprecedented growth and still getting the same returns we were getting 10 years ago.

What do you think has been the toughest decision you've had to make in that seat so far?

Um,Redesigning the strategy, taking a strategy that worked really, really well for gosh, 78 years, Brian, turning it on its head, looking at where we have gaps in the consumer demand spaces, where we have a right to win, where we have a right to win, and we have a gap to that right to win, and then designing a new strategy and then building a new team. Very difficult decisions, um, and you've got to use surround yourself with smart people.Even partners in the business to understand, are you making the right decision? You got to synthesize large volumes of data, but at the end of the day, you gotta make a call. And so, uh, it's a hard pivot, it's a hard pivot.

What, you know, as I look out over the next two years, what will be your big bets if it's not fish tacos, it's not breakfast, maybe a little dessert, like.What is that vision?

It really is grounded in our recipe for growth strategy.If you think about at its core, the 5 tent poles of that strategy are critically important. Number one is protect and maintain the core, right? So what these guys do every single day in this restaurant, supply chain, ensuring we have abundance of ingredients that are sourced our way in a in a supply chain that is resilient and scalable, ensure we meet the needs of every consumer that walks in the restaurant, so protect and strengthen the core is most important.And then from there is how do we modernize the restaurant operation, leveraging tech and AI to bring forward meaningful innovation that allows this team to do their job more efficiently, faster, and more effectively, which will improve team member morale.The satisfaction of our guests will never exceed that of our employees. So if I can improve their experience, I know it will ladder to a better consumer experience.The next is really evolving our brand messaging, leaning into menu innovation in a meaningful way, and then leveraging group occasions, which we haven't done as a brand.

What catering,

catering and BYOC. We just finished up our catering test in BYOC, Build your own Chipotle.

OK.

It's a, it's a, it's a catering-like option for people, groups of 4 to 6.Highly incremental

to just myself.I'm just ordering for myself. Yeah,I always

order

double. Like

it's, it's true. Or, or people that want to do food prep, right, on a Sunday night, order BYOC and they can prep their meals for the week, but, um.Catering is a significant layer of growth that will be meaningful to our company in the months and years to come. Our Chicago test has proven to be highly successful. We leveraged a third party platform to promote catering at Chipotle, and we're seeing hundreds of basis points of comp lift in those restaurants already. We expanded to Boston just recently, and we have, we'll be in hundreds of restaurants by year end with hopes of a national launch in 2027.Fast casual brands in the space today enjoy catering somewhere between 10 and 15%. Today we're at 2%. And so I think there's meaningful layers of growth in in group occasions in the years to come.

You mentioned AI, and I've seen so many changes or improvements on the Chipotle app under your watch even before you got this position.How will this ordering experience change further because of this new technology?

Yes, so we're leveraging an AI engine right now that's helping consumers along journeys, whether that's a welcome journey, a lapsed journey, or a frequent consumer that comes in. We want to make sure we target them with the right messaging, but the AI decision engine then looks at your uses, what you typically order, and will offer up deals or free Chipotle drops to you to ensure we keep you engaged with the brand.

I've notgotten anything.3. We'll take it off.

Are you on the app?

I am on the app. OK,

I am. Well, so we just relaunched the app and it has new, it has new features now which include monthly Fripotle drops.It includes choose your own rewards, so it allows you flexibility to choose how you, um, redeem your rewards which I didn't have before that I didn't have. There's even a 50% off an entree reward redemption now. So we're giving you a more customized experience with more choices that you make, uh, and more ways to redeem points, uh, through loyalty as well.

Are you integrating with the, with the models? Like I think I saw something from like Walmart a couple of months ago, and I can go on one of these models and shop. Like it's wild.

Sure, um, so we haven't, we're not there yet. We're not quite there yet. We're working, we're running down how do we widen the top of the funnel, create a, a more bespoke experience when you're in the funnel, uh, but more importantly, only 20% of our in-restaurant, uh, consumers use the app in restaurant. It's almost 90% on digital. And so we're trying to create a more frictionless experience in restaurant. So tap and pay, I can get my points immediately. There's not this, this, um, I think it's a little.Um, clunky today, for lack of a better word, you got to scan for your points here. I got to pay here. It's all done separately versus just a scan pay. I get my, my points and reward points and

move

on.

And there's stillhumans make this business. I'm just like watching how they interact behind you, um.Is it hard to find the next generation of talent, that store manager who's gonna run a great location? How much, how much is it if a store manager can make, can they maketoday?

It's harder than it used to be, Brian, but I think if you, and for us, we maintain a very high level of staffing across the organization today, and our retention is probably the best in the industry, uh, compared to other brands I've worked in and other brands I'm familiar with. Our turnover is super low at the GM level or even even at the crew level.I think it's a combination of things. I think it's best in class pay performance, um, best in class benefits, and best in class culture. But

youalso have given them, I think, through the years, line of sight to improvement. I mean, how important is that?To have in this industry because to your point, not a lot of folks get that working in fast food, even though I don't really consider youguys fast food. Sure,

well, one of the benefits we also have at Chipotle's we're growing so quickly, we're creating opportunities almost daily for people to move up in their career. We have a career roadmap that is posted on the back office wall that shows from team member all the way to region vice president. It shows the compensation that's tied and arranged to each one of those levels. So you could go from being a team member at Chipotle.No formal education, no advanced college degree, no matter what your background is, if you're willing to put in the work.Be purpose-driven, right, and believe in this idea of cultivating a better world, within 3.5 years, Brian, you could be making over $1,000,000 a year. It's that easy. Just gotta put in the work, show up every day, put in the work, support your teammates, run a great restaurant.

I mean, theoretically, the next CEO of Chipotle could be in this restaurant right now.

Absolutely, yeah. I hope it is my ambition that the next CEO of Chipotle is in this room.

I wasthinking before a lot before we came and did this, and it's gotta be great.Moment to be at Chipotle. There is so much focus on ingredient quality in this country.Beef towel. Like I was talking about beef towel. I didn't even know what that was. I knew what it was, but nobody was talking about it two years ago.What is this momentFor your business, what has this meant to you with all these focuses on ingredients? And are you going to lean into it and really like.Blast TV, say, hey, you know what?We sell Whole Foods and we actually cut the stuffourselves.

We absolutely are. I said one of the core tenets of the strategy was evolve our brand messaging. That's exactly what we're going to do. We're going to spend more time talking about and celebrating our points of differentiation, meaningful differentiation from everyone else in the restaurant space, um, and shine a bright light on the fact that food does have the power to change the world, uh, that fresh food tastes better.And it's better for you, and we're bringing this food to food deserts around the world in places where we're proving, we're proving that eating a high quality, great tasting meal prepared with culinary techniques.Isn't an elitist pursuit, meaning I don't have to have hundreds of dollars, go to a chef-driven restaurant with my significant other, and spend all, you know, gobs of money trying to eat a great meal. You can have that under $10 chicken bowl across the country today, Chipotle Mexican Grill.

I,uh, I was talking to the team at, uh, PepsiCo, and they are reinventing their products. They're adding protein in. They're taking colors out. Have you had to do any rearchitecting of the menu to support this maja movement?

Nothing at all. As a matter of fact, we, we met with the team last week at the USDA and others to talk about what we do and how we do it and how we can help, uh, really advance this idea of Americans eating healthy food.We've been doing it since 1993. We want to help others along this journey. I know it's not easy creating a supply chain for a company our size, not easy. We co-invest with our farmers. We ensure we have future farmers. We invest in the Future Farmers program. I think we invested up to $5 million over the last many years in the future of farming.Uh, to get people back out on their farms, raising food the right way, right, locally sourced produce. I think we had 50 million pounds of produce last year was locally sourced, which is unbelievable.

Uh, look, you've been clearly doing this a while.What happens, I'm not gonna mention any names. So last weekend I got.An egg white flatbread.And the egg came out of a plastic package, and I was washing this. I needed something quick. I just, it was on the go, not my normal gym.And I'm like, this is what it tastes so horrible, but it came out in a plastic package where it's clearly not an egg. There's like, I don't know what else is in this. What happens to fast food more broadly? Yeah, as the country says, you know what, we're gonna focus on ingredient quality, well, we want to live healthier. And I, I don't know how these big chains are going to evolve. I, I don't, I don't see it. I don't think.They are doing enough to change, and I think it's really going to come and bite them in the ass very soon.

I completely agree. I think some of the larger brands that are that are entrenched will have a very difficult time making a pivot, um.So it's really up to the, the, the fighter brands that are emerging brands that are on the way up to really get it right from day one. And that way you don't have to worry about a hard pivot later in life. Um,And I think many are doing it, right? They're trying to bring forward high quality, great tasting food. At the end of the day, we just know fresh just tastes better, you know, and so if we can, if we can convince others of that same idea.To invest alongside what we do, we spend hundreds of basis points of margin every year on just the idea of food with integrity, right? Our animal husbandry practices are the best in the industry. Um, we treat our animals fairly. We don't give them hormones and animal byproducts or antibiotics. We give them a great life, right? You know, 365 days access to pasture. We don't raise pigs in gestation crates. That's not who we are. They're raised in deeply bedded pens out in fields and where they can raise their young andWe just do what's right. You do what's right by the farm, the farmers,

and I love, Ilove hearing this, and I haven't heard it in a while. I remember reading the Chipotle 10Ks when I was still coming up. I'm like.I don't know. Special cows, special, like what are they talking about? But I like this is something that feels like it has to be brought back in a big way.

I agree. I completely agree. I think, you know, we have been on a search for a new CMO. Uh, we have found someone that will join the brand very soon, uh, that we're super excited about. And so, and that's the whole idea is how do we continue to, to, to.Educate and communicate to the consumer our points of differentiation around how we raise animals, how we source produce, how we grow our food on farms, how we're doing what's right by the environment, and ultimately by the consumer.

Two more before we wrap this one up. Number 1, not having the person.What do you say to those that say that guac costs too much and shouldn't be extra?

I think that guac is rightly priced for all the love and care that goes into the product, either by the farmers that made the onions, the jalapenos, the cilantro that's grown organically, the avocados that are the best avocados sourced around the globe. We bring to our restaurants, we hand cut the avocados, scoop avocados, we hand cut the jalapenos and onions every single morning.And we mix it with love and care, and I think it's, I think it's rightly priced for the product offering.

CanI still get a $10 burrito?

Absolutely, absolutely. The average price of a chicken burrito in America today is still under $10.Maybe not here in New York City, Brian. The average price is still only 10 bucks.

Can you keep it somewhat affordable? I mean, you hear all this.

Absolutely we can. As a matter of fact, our approach to pricing this last year and a half has been very modest, very slow, and very measured. I think the industry right now is running 4% pricing. We're at 0.7%, Brian, and so we're continuing to widen that gap, that price gap as compared to our peer group.Which I think is meaningful and the right thing to do for the consumer at this time when they're under pressure from inflationary stuff like gas prices, etc.

and Chipotle is for everyone. Clear it up for us. It is for everyone. You must have been pulling your hair out when you saw that takeoff because I was on that Sam Murray's call. It'sunbelievable. I thought it was ridiculous,

unbelievable. We have.Affordable price point for all walks of life, and we're for everyone. We want everyone to have access to wholesome, nutritious food that's prepared with classic culinary techniques at a price point that is approachable, that's affordable, and makes a difference in theirlives.

One more, what do you say to those that come in and say, uh, Chipotle didn't give me, give me enough food?

You should ask for a little more. It has always been our brand ethos and it is still to this day. We serve big, beautiful bowls and burritos. Full stop. No questions asked. If you want more, just ask the team member, I promise you.There's never a team member on that line that's going to say no to you, so you're not skipping people. We are not. I tell my team all the time, put as much food in that bowl and burrito as you possibly can. I want the consumer to tell you it's toobig.

Are you still using, are you testing those cameras to like measure how much goes in bowls? Is that still a thing?

We are. So we're using an AI visioning system. We're in a handful of restaurants now, and so it's evolving, and we can leverage.Detect for other things like ringing accuracy, deployment, etc. We haven't gotten it dialed into a science yet, but we're working on it.

Butyou don't want to get to the point where like it's measuring like a quarter inches in food. Likethat's where this is going

is not what we're talking about here. We will continue to put heaping spoonfuls of food in bowls and poos. Cool stuff. Again. That's how we built this great brand and that's how we'll continue this great brand in the future. That is not who we are. We're about abundance. We're about value.And I think about and I talk about this often, value equals benefit over price, right? If I can hold the price constant, which I am working hard to do, even in the face of mid-single digit inflation that I'm seeing in my business this year, I'm not passing it off to the consumer. We're absorbing.And right, so what I can do is improve the benefit of the offer. How do I improve the benefit? By giving you abundance, by continuing to source the best ingredients in the world, by ensuring it's made fresh, prepared correctly every day, and then give you menu innovation that is meaningful and compelling for you to come in and try something different every 3 months.

Your sales back to growth, um, the biggest single ingredient for why that happened.

On back to growth

sales growth,

um, yeah, I can't, I'd love to say it's hinged on this one item. Um, I think Al Pastor was a really meaningful lift for the consumer. Uh, cilantro lime sauce, I know it's not red gin. I cilantro,

I wanna clear this up. I love this sauce. I was just, I, what I had been doing was buying the chi and jewelry.In like 4 containers like this and using it in other food, uh, but in addition, in addition to buying your food, I mean you have to bring this stuff back. Stoptaking it off

you, but I think what those items did for us, it got consumers back into our restaurant and reminded them why they love this brand so much. I think our team.Teams in the restaurants did an amazing job running clean restaurants, great accuracy, friendly hospitality, and fast speed of service, and we leaned in on the food in a meaningful way. I'm sure the recipes were perfect, and we delivered on the abundance here.

Good tosee you, man. Great to see you. Good to see you in person. I

Thank you, Brian.

What, do you cook at home?

We love to cook. We love to cook. Um, my wife and I love to be in the kitchen. Yeah, my son, my 5 year old will sit across the table and across the counter and watch and, you know, play games or something, and my wife and I are in the kitchen cooking when I'm not traveling like this.My son, he doesn't know what it means, but he knows there's a Chipotle, uh, down the street from our house, and every time we drive by, he goes, My dad works there, works there. He goes, I work, I do, I work right there, son. I do. Come on up, bro. I'm gonna come in behind you. What do you, uh, pick up? So I'm gonna make my order normally, OK, how are you? Good to see you, uh, like I normally do, brown brown rice, yes, um, double chicken.You have a 2 for too, yeah.Hi soup chicken. Would you like a black. Wait, sorry, that I have any hacks that I need to move here. No hacks. We used to do a couple of weird things before we got quesadillas in the digital, digital line. I'll have a bowl as well, please, sir.Um, we look for here, please. Um, I'm gonna brown rice, just a small scoop.Yeah, black, black beans and al pastor, that's perfect.Black beans and al pastor please double if you have it.That looks like double. You can get double out of that. So Brian, when we look at the table here, we're looking at the food, we're looking at the vibrant colors. That's perfect. And I can look at the product and tell whether the cut sizes are right, if we need to coach on cut sizes. I'm looking.A bright green cilantro but not big flakes. I'm looking for ingredient usage in the sauces.

You alwaystalk about in the call is line. How obsessed you are with like getting things through this lineand how long is it?

I'll let her answer that question. How obsessed are we with getting people through the line?How, how obsessed are we with throughput?Crazy.The team is having, and these guys will tell you, it is most fun when you have a long line and the challenge of getting everyone through that line. It's, it's creates fun and excitement and the

last

like

peakhours. What's the, what's the, how long does it take for you to get out of here?

Um, you can order from here to here in about 15 seconds. We have restaurants that deliver 9 2nd service from tortilla to cash.90 transactions in 15 minutes. This is great. Isn't that unbelievable? Um, I'll do pico de gallo, please, and a little bit of cheese and a side of guac. I'm paying for this. I'm paying for this. It's like a $25 bowl. I love it. I love it.