The paragraph introduces the Chipotle Mexican Grill First Quarter 2024 Conference Call and provides information about the participants and recording of the event. The Head of Investor Relations and Strategy, Cindy Olsen, then begins with a reminder about forward-looking statements and risk factors. The call will include non-GAAP financial measures and will be followed by prepared remarks from the CEO and CFO. The company saw a 7% comp sales growth in the first quarter, driven by a 5% transaction growth.

In the second paragraph, the company discusses their strong sales growth, driven by efforts to improve restaurant throughput and successful marketing campaigns. They also mention their focus on developing and retaining diverse talent, maintaining a people accountable culture, and utilizing technology and innovation to drive growth and productivity. They have increased their annual comp guidance and are focused on expanding access and convenience through new restaurant openings. They recently held a conference to celebrate their leaders and emphasize their focus on exceptional people, food, and throughput.

The conference included a variety of employees, including general managers, apprentices, field leaders, team directors, and regional vice presidents. For the first time, long-term crew members were also recognized for their commitment to Chipotle. The company highlighted its growth potential and the importance of promoting from within. In connection with a stock split, GMs and long-term crew members will receive stock grants. One employee shared how working at Chipotle helped her overcome financial struggles.

The article discusses the success story of a Chipotle employee who started as a crew member and worked her way up to becoming a field leader. She was able to utilize her education benefits to earn a college degree and purchase her first home with the stock she received as a restaurateur. The article also highlights the importance of Chipotle's culture of food with integrity and the emphasis on teaching and tasting the food to ensure high quality. The exceptional food and throughput in their restaurants are key factors in their success, with a continuous improvement in speed of service seen in the first quarter.

At the All Manager Conference, the focus is on coaching the four pillars of great throughput: expo, linebacker, meat and plus, and having the best trained crew deployed during peak hours. When these pillars are executed consistently, it creates a positive effect in the restaurants, leading to smoother operations, lower turnover, and faster throughput for guests. This can be seen in the success of a restaurant in Boston, which has experienced significant transaction growth and low turnover. The marketing team has also had a strong start to the year with successful brand advertising and menu innovation.

The paragraph discusses the success of Chipotle's Behind the Foil brand campaign, which highlights their fresh food and real teams. They also promoted their barbacoa as braised beef and brought back the popular Chicken Al Pastor menu item. The marketing team's efforts have increased transactions and made Chipotle more visible and loved. They also mention the growth and evolution of their rewards program, which now has a digital reach of 40 million members.

Chipotle is focused on driving enrollments and engagement in their rewards program through marketing initiatives and a seamless app experience. They are also exploring technology tools to improve productivity and the overall restaurant experience. The company plans to open 285 to 315 new restaurants this year, with a focus on expanding internationally. The recent opening of their first restaurant in Kuwait was a collaborative effort between the Alshaya Group and Chipotle teams to maintain the same food quality and customer experience as in North America.

The Alshaya Group's opening was successful and Chipotle plans to expand across the region. They have made progress aligning their culinary and operations in Europe, and are now expanding the role of their Canadian leader to oversee both Canada and Europe. Canada's economic improvement has led to their success in key operational areas. Chipotle plans to use a similar strategic approach in Europe to improve economics and unlock growth potential. The company's success is attributed to their hardworking employees and their focus on people development.

In the first quarter, Chipotle saw a 14.1% increase in sales and a 7% increase in transactions, leading to a 27.5% restaurant level margin and a 27% growth in adjusted earnings per share. They have raised their full year comp guidance and anticipate the second quarter to have the highest comps due to an extra day from Easter. They also anticipate comps to be driven by transactions in the back half of the year, despite some challenging rollover components. Additionally, they have taken a 6-7% menu price increase in California to cover the 20% increase in minimum wage, which will add almost a full point to total company pricing and help maintain cash flow.

In the second quarter, the company's restaurant-level margin will decrease by 20 basis points due to increased cost of sales, labor costs, and other operating costs. Cost of sales decreased by 40 basis points due to a menu price increase, but inflation and a protein mix headwind offset this. Labor costs decreased by 20 basis points due to sales leverage, but wage inflation and higher performance base compensation will increase them in the second quarter. Other operating costs decreased by 100 basis points due to sales leverage, lower delivery expenses, and lower marketing and promo costs. G&A for the quarter was $204 million on a GAAP basis or $191 million on a non-GAAP basis.

G&A expenses for the quarter include $126 million in underlying G&A, $34 million in non-cash stock compensation, $21 million for the All Manager Conference, and $10 million for bonus accruals and payroll taxes. Underlying G&A is expected to increase each quarter due to investments in people and technology. Stock compensation is expected to be around $36 million in the second quarter. Appreciation for the quarter was $83 million, and is expected to increase slightly each quarter. The effective tax rate for the quarter was 22%, and is estimated to be between 25-27% for fiscal 2024. A 50-for-1 stock split was approved by the board of directors, pending shareholder approval in early June. The company has a strong balance sheet with $2.2 billion in cash and no debt.

In the first quarter, the company was unable to repurchase many shares due to the timing of their announcement of a stock split. They opened 47 new restaurants, with 43 having a Chipotlane. They plan to open more in the future and move towards higher margins. The CEO reiterates the company's unique economic model and competitive advantage. The operator then opens the floor for questions, and the first question is about speed of service.

Brian Niccol, CEO of the company, gives credit to the operators for the significant improvement in transactions in the first quarter. The company has seen progress every month and is now close to reaching their goal of mid-20s. The focus on staffing, scheduling, and deployment, along with better reporting, has contributed to this improvement. Analyst David Tarantino asks if this could become a significant comp driver for the company in the coming years.

Lauren Silberman from Deutsche Bank asks about the impressive traffic numbers and notes that this trend has continued into April despite challenges in the overall industry.

Lauren Silberman from Deutsche Bank asks for more information on the trends seen in the quarter and into April, as well as the performance of high-income versus low-income consumers. Brian Niccol responds by stating that there was a step-up in transactions after bad weather in January and the timing of the Easter holiday in March and April. The company has seen consistent mid-single digit transaction growth, which is attributed to improvements in restaurant throughput and successful marketing campaigns. Niccol also notes that the strength in sales is coming from all income cohorts, from low to high income consumers.

The company is receiving positive feedback from various groups about their value proposition, which offers quality ingredients at customizable price points. Transactions were up 5.5% during the quarter, driven by part check and offset by a little negative mix due to group size. The company expects their throughput efforts to compound over time as customers recognize the improved operations and have a better experience. The in-store channel is the fastest-growing channel, with an increase in both in-store customers and a shift from order-ahead customers. This is due to the faster-moving lines and improved restaurant operations.

The speaker congratulates Brian Niccol on the quarter and a question is asked about transactions. Jack Hartung explains that it is difficult to determine the exact impact of throughput on transactions, but they complement each other and both play a role in driving transaction growth. He also mentions that great LTOs and advertising, along with strong throughput, will lead to increased transactions.

The speaker is discussing the success of the company and how throughput has contributed to transaction growth over the years. They also mention the possibility of expanding to a second concept, but it is not a focus at the moment. The company is currently focused on turning the brand into an iconic one and taking advantage of opportunities within the brand.

The speaker asks about pricing and mix in the previous quarter and upcoming quarters. The speaker clarifies that pricing was around 2.7-2.8% in the previous quarter, and will increase to around 3.5% in the next two quarters due to the California pricing. However, in the fourth quarter, pricing will decrease to 1.5% due to comparisons with last year. The speaker also mentions a shift towards in-store purchases and how it is impacting group size and side attachments. The speaker notes that while group size is declining, there is a positive impact on side attachments, particularly in-restaurant. This is mainly due to extra meats, chips, and queso, rather than drinks.

The company is seeing improvements in attachment rates in both channels, and believes this is due to better staffing and presentation of extras and sides. Drink sales have remained steady. The company is not sure how their frequency compares to competitors, but their rewards program members have higher engagement and spend. The base business is growing due to better operational execution and marketing efforts, as well as new menu items like Chicken Al Pastor and the return of barbacoa.

The company is seeing growth in new users and increased frequency of existing users, which is contributing to the success of their core business. The CEO discusses the potential for growth in the Canadian market and how they plan to apply lessons learned there to their expansion into Europe. They have confidence in their leadership and the appealing concept of clean, customizable food.

The speaker is optimistic about the future of the company due to various factors, including an increase in both new and existing customers, broad-based growth across income and meal times, and improvements in food, people, and throughput. The company's digital and marketing programs are also becoming more effective due to better execution of operations.

During a recent earnings call, Chipotle CEO Brian Niccol was asked about the success of bringing back past favorites to the menu and if it has changed their approach to menu innovation. Niccol stated that there has been no shift in their strategy and they plan to continue with one or two new items per year, mixing in proven favorites with new flavors. He also mentioned that the company has a talented culinary and marketing team to help them find new flavors that will resonate with customers. Niccol also provided an update on some near-term operational initiatives, including the clamshell, Autocado, and Hyphen, and mentioned that the company is looking for opportunities to accelerate the Chipotle brand through their Cultivate Fund.

The company has expanded the use of dual-sided grills in high-volume restaurants for more consistent and efficient cooking. They are also making progress on energy usage and plan to introduce new equipment in the back half of the year. The company is also investing in various areas to improve the supply chain and provide customers with better culinary experiences.

During a conference call, Sharon Zackfia from William Blair asked about the recent price increase in California and how it has affected average ticket prices and consumer behavior. Jack Hartung, the operator, responded by stating that the average ticket in California is similar to the rest of the country and that the company is not seeing any changes in consumer behavior yet. He also mentioned that Chipotle still offers a great value in California compared to other competitors. Sharon also asked about Chipotlanes, which have been successful.

The speaker, Brian Niccol, is discussing the automation and initiatives at Chipotle. He mentions that they do not envision a non-digital drive-through as it could disrupt the customization experience. He also talks about using robotics and AI for productivity in other areas. In response to a question about the rewards program, he mentions that they have seen improvements in frequency and engagement from same-user members due to personalization of offers.

The speaker discusses the success of using machine learning and AI to identify infrequent customers and keep them engaged. They mention the team's effective use of data to personalize the customer experience and increase engagement, leading to higher spending and more frequent visits. The speaker also mentions the positive impact of improved forecasting and deployment tools on staffing and turnover rates.

The speaker believes that achieving 100% success in their job is a testament to making the job a better experience for team members. They aim to surround employees with the necessary support to have a successful day, leading to better job satisfaction and performance. This is reflected in reduced turnover and improved throughput. The speaker also mentions the positive energy and motivation among team members and leaders, who feel like they are part of a winning team. The company is working on improving execution during peak periods by providing managers with a new system or dashboard tool for real-time performance tracking and course correction.

The speaker is discussing a new tool that was rolled out in January that gives real-time visibility to employees, allowing them to track their performance. The difference in throughput between the top and bottom performing restaurants is significant, with the top restaurants consistently achieving higher numbers. The company still has a lot of potential for growth. The call concludes with the speaker thanking the participants for their time.

Brian Niccol, CEO of Chipotle, thanks everyone for their questions and acknowledges the company's strong start. He praises the hard work of the restaurant operators and their alignment on goals. He is optimistic about the future and excited about the potential for growth. He emphasizes the importance of focus, alignment, and the company's culture in driving results. He ends by thanking everyone and expressing his excitement for the future.

This summary was generated with AI and may contain some inaccuracies.