Chipotle 3Q15 Earnings Call Notes

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2.6% Comps growth

“we generated revenue of $1.2 billion, an increase of 12%, on comparable restaurant sales growth of 2.6% and the opening of 53 new restaurants.”

Opened 7th London restaurant

“during the third quarter, we opened our seventh restaurant in London and I recently visited the fantastic team there and was pleased to be able to sign them off as Restaurateur. Our European operations team, which is led by Jacob Sumner, a team leader and Restaurateur, has been building outstanding teams to ensure the customer experience we are providing in these new markets meets our high standards and he continues to develop Restaurateur cultures in these restaurants quickly.”

Chipotle remains a preferred tenant

“Chipotle remains a preferred tenant for many landlords, and that places us in a strong position to negotiate favorable lease and tenant improvement terms. It also helps us get into properties even where demand is very high”

Raised wages proactively

“just because of general competition for employees, just the expectation that we want to hire top performers and we want to be the employer of choice, we’ve been very proactive in making sure that not only our starting wages are competitive, but we also took a look at a number of our hourly managers during the summer to make sure that we’re paying fair rates to them as well. So that was proactive.”\

2/3 of our business eaten outside but only 7% ordered outside

“about two-thirds of our business is eaten outside of a restaurant, but only 7% of our business is ordered outside of a restaurant. And so, there’s a big gap between our customers who choose to or end up eating somewhere else other than a restaurant. So kind of makes sense for us to provide the convenience to order outside of a restaurant. And we do have – we have iPhone, we do have Android, but we can make that whole process more efficient.”

Deliberately under-marketed our mobile ordering

“Well, we’ve deliberately under-marketed our mobile ordering, and the reason for that is fairly simple. We just have not quite optimized the experience in the restaurants to the point where we feel comfortable driving a large number of people in there. I mean, we’re working on all of those improvements. So we don’t want somebody to go in, make a mobile order and go in and have a degraded experience.”

We’ve had these waves of comps, our goal is to ignite another one

“what we’re hoping will happen is, we’ll be able to ignite another trend, another three-year trend. When that will happen with the order of magnitude of that happening is very difficult to predict, but over the last 10 years-15 years, Chipotle has these kind of waves of comps, and most of it is around creating awareness and appreciation for what we do at Chipotle.”

Still opportunities to educate people around Chipotle

“there is still this opportunity to educate people, one, that we exist, which that is changing over time because as we are in more markets, more and more people know about Chipotle but they don’t necessarily know that we are using classic (46:14) cooking techniques.”

Shophouse and Pizzeria Locale behave a lot like Chipotle 12-15 years ago

“We are accelerating to a certain degree, but I assume what you mean is to really ramp it up aggressively. They’re still in the nurturing phase, it’s still in the brand building phase. When we open up a new restaurant, it behaves a lot like Chipotle 12 years, 15 years ago, when we went into a new market where it’s an unfamiliar brand, it takes a while for customers to figure out what ShopHouse is. Pizzeria Locale, while it’s pizza, it’s pizza that may be unfamiliar to customers that are used to traditional pizza. ”

Television really tailored to call to action, not brand building

“The problem with television beyond the expense, is that it’s really, really tailored toward 30-second spots which really only deliver if you have some sort of promotional or call-to-action message in them, which is a very slippery slope. So we’re going to stay the course on telling this brand story”