Good day, and welcome to the Chipotle Mexican Grill fourth quarter and full year 2021 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Ashish Kohli, Head of Investor Relations. Please go ahead. Hello, everyone, and welcome to our fourth quarter and fiscal year-end 2021 earnings call. By now, you should have access to our earnings press release. If not, it may be found on our investor relations website at ir.chipotle.com. I'll begin by reminding you that certain statements and projections made in this presentation about our future business and financial results constitute forward-looking statements. These statements are based on management's current business and market expectations, and our actual results could differ materially from those projected in the forward-looking statements. Please see the risk factors contained in our annual report on Form 10-K and in our Form 10-Q for a discussion of risks that may cause our actual results to vary from these forward-looking statements. Our discussion today will include non-GAAP financial measures. A reconciliation to GAAP measures can be found via the link included on the Presentation page within the Investor Relations section of our website. We will start today's call with prepared remarks from Brian Niccol, Chairman and Chief Executive Officer, and Jack Hartung, Chief Financial Officer, after which we will take your questions. Our entire executive leadership team is available during the Q&A session. With that, I'd like to turn the call over to Brian. Thanks, Ashish, and good afternoon, everyone. 2021 was an outstanding year for Chipotle, highlighting the organizational strength and resiliency of our brand. Despite an unprecedented environment, our employees remain passionate about their work, dedicated to delivering excellent guest experiences, and aligned with our purpose and values. Our business is as much about people as it is about food, and I strongly believe that we have the best in the industry. I'm very grateful for our team members' monumental efforts, and together we accomplished many incredible things and accelerated business momentum, all of which was fueled by our multi-pronged growth strategy. For the fiscal year, this resulted in sales growing 26% to reach $7.5 billion, driven by a 19.3% comp. Digital sales of $3.4 billion, which grew 25% versus the prior year. Restaurant level margin expanding 520 basis points year-over-year to reach 22.6%. Adjusted diluted EPS of $25.42, representing 137% growth over last year and w e opened 215 new restaurants. I'm also delighted with our fourth quarter performance, even with the surge in Omicron cases that began in December. For the quarter, we reported sales of $2 billion, representing 22% year-over-year growth, which was fueled by a 15.2% increase in comparable restaurant sales. Restaurant level margin of 20.2% was 70 basis points higher than the 19.5% we reported last year. Earnings per share adjusted for unusual items of $5.58, representing an increase of 60% year-over-year. Digital sales growth of nearly 4% year-over-year, representing 42% of sales. We opened 78 new restaurants, including 67 with a Chipotlane. We're encouraged by the recent performance, but what really excites us is the longer-term opportunity as we believe our powerful economic model will deliver best-in-class returns while achieving AUVs well beyond $3 million and significantly expanding the number of Chipotle restaurants in North America, which I'll elaborate on shortly. There's no doubt in my mind that our five key strategies still have a long runway and are positioning us to win today while we create the future. We've revamped them slightly to reflect this transitioning from our turnaround phase to a sustainable growth phase. These now include, number one, running successful restaurants with people, accountable culture that provides great food with integrity while delivering exceptional in-restaurant and digital experiences. Number two, sustaining world-class people leadership by developing and retaining diverse talent at every level. Number three, making the brand visible, relevant and loved to improve overall guest engagement. Number four, amplifying technology and innovation to drive digital growth and productivity at our restaurants and support centers. Number five, expanding access and convenience by accelerating new restaurant openings. Let me provide a brief update on each of these, starting with restaurant operations. The key to happy customers is a wonderful guest experience that provides consistently great tasting food prepared and served quickly. This hasn't been easy, especially as the number of COVID cases spiked and at times impacted our staffing capabilities. We're fortunate to have amazing employees at our restaurants who have stayed focused on safety, reliability, and excellent culinary while adapting seamlessly to the dynamic environment. Their execution, whether it be on new menu introductions or managing the balance between digital and in-restaurant orders, has been exemplary. As always, throughput remains a key focal area and something that we're determined to improve, especially as more guests come back through the front line. A critical success factor is ensuring we have proper staffing, which is currently a challenge for many companies. However, ongoing investments in our people, including competitive starting rates, enhanced benefits, debt-free degrees, development programs, and transparent career progression opportunities, are resulting in better employee recruitment and retention, as well as allowing us to make progress on labor challenges. We know there's more work to do, especially to support our future growth. As a result, we are focused on increasing our staffing stability through investing in human capital technology that will enhance our hourly team member experience. Specifically, we are in the process of implementing a new digital scheduling program, as well as upgrading our learning management portal. Also, I know we've mentioned this before, but it's worth highlighting again the importance of the GM role. Their leadership is crucial in executing the fundamentals of our business and setting the standard for how we run great restaurants every day. Additionally, our GMs help grow the brand and the careers of countless team members, many of whom end up being top-performing leaders in our organization. In fact, during 2021, 90% of our restaurant management roles were internal promotions. Overall, we promoted almost 19,000 team members in 2021. Our goal is to develop and retain diverse talent at every level of the organization and be the employer of choice, a message we will emphasize at our all manager conference in March. After all, our employees need to be ready to support the consistent demand our talented marketing team creates by making Chipotle more visible, more relevant, and more loved. This is done using different advertising channels, including traditional media, to enhance brand awareness and stay relevant. A wonderful example is our short animated film called A Future Begins, which is a sequel to our award-winning 2011 film, Back to the Start, and shines a light on the modern-day challenges the next generation of farmers are facing. While many young farmers value sustainability and ethics in farming like we do, they're struggling with new problems like climate change, technology costs, and access to farmland. Launching this film is one of the ways that we are raising awareness of our mission to influence the 2023 Farm Bill that would facilitate equitable access to up to 1 million acres of land for the next generation of farmers. We also utilize creative social media to successfully drive culture, drive difference, and ultimately drive a purchase. We celebrated the 21-year anniversary of Boorito by providing $5 digital orders and serving up $1 million in free burritos through a virtual Chipotle restaurant on Roblox. We're the first restaurant brand to create a virtual experience on the interactive Roblox platform, which resulted in Halloween 2021 having the most digital transactions of all time at Chipotle. This is a great illustration of us reaching consumers in a unique way to build sales today and the brand for tomorrow. Enhancing our marketing efforts is a consistent cadence of two to three new menu items per year using a disciplined approach to innovation. Not only do these items help bring new guests into the Chipotle family, but they also drive frequency with existing users and give us another opportunity to highlight the brand. In 2021, we launched cauliflower rice in January, followed that with quesadillas in March, and finally debuted Smoked Brisket in September. All of these new items performed very well, driving an increase in both check size and transactions. In 2022, we have already launched Plant-Based Chorizo for a limited time across our U.S. restaurants. This entree is made using all real, fresh ingredients grown on a farm, not in a lab, and proves that you don't have to sacrifice flavor to enjoy a vegan or vegetarian protein. It is off to a terrific start and is helping drive cultural buzz for its health and environmental benefits. There's more on deck. Pollo Asado, the first menu innovation with chicken in our 28-year history, has been successfully validated as part of our stage gate process, and our culinary team is in the early stages of developing other exciting menu items, so s tay tuned. Another important growth driver that accelerated during the pandemic has been our technology transformation, which is helping Chipotle become a real food-focused digital lifestyle brand. During the fourth quarter, digital sales grew 4% year-over-year to $811 million and represented 42% of sales. We're pleased to see our digital sales dollars continue to grow despite lapping tough comparisons and our overall digital mix remain steady at what seems like a new normal. Incredibly, our full year digital sales of $3.4 billion is nearly 3.5 times what we did pre-COVID in 2019. Digital has proven to be sticky as it's a frictionless and convenient experience that has been aided by continuous investments, and you will likely see us increasing technology enablement for our restaurants and support centers to amplify innovation, enhance the customer experience, and optimize efficiencies to improve operational execution. As a result of this pandemic, many new consumers were introduced to Chipotle via our digital channels and are now using us for alternative and, at times, incremental occasions. Having two large and growing businesses that are supported by separate make lines makes it easy for guests to access Chipotle through different channels and is a key point of differentiation. Currently, about 2/3 of our guests use in-restaurant as their exclusive channel, with the remainder using Chipotle's digital ecosystem to conveniently access our real food. This dynamic gives us several future opportunities, including adding more guests, converting more of our in-restaurant guests into higher-frequency digital users, and leveraging our expanding loyalty program. We now have more than 26.5 million members in our rewards program, which is a key enabler of our digital flywheel. We're focusing a lot more on personalization by creating journeys, primarily for new and at-risk customers that can influence guest behaviors and ultimately drive more frequency. As the program grows and we gain more experience, we are constantly learning, evolving, and optimizing. For example, offering greater customization and flexibility to redeem rewards, as well as gamifying the program with personalized challenges and badges, have helped drive engagement and deepen relationships with our guests. Not only have we seen strong positive responses from our most loyal fans, but even more exciting is that these program enhancements have increased engagement from our medium and low-frequency guests. We are delighted with our progress to date and believe ongoing investments and further leveraging of data-driven insights will make us even better. Our last strategic driver is to expand access and convenience, which today is the number one request from consumers, and we're listening. I'm excited to share that over the long term, we now believe we can operate at least 7,000 Chipotle restaurants in North America, up from our prior goal of 6,000, based on the success of small town opportunities that are delivering unit economics at or better than our traditional locations. We're also in the early stages of testing alternate formats, including seam locations, which, if successful, could further expand our addressable market. Additionally, given healthy and improving cash-on-cash returns, we are building a real estate pipeline that will allow us to accelerate new unit growth to be in the range of 8%-10% per year, with greater than 80% of new restaurants having a Chipotlane. Of course, we continue to look for ways to enhance convenience with Chipotlanes, alternative formats, delivery, and catering to provide many ways for our guests to Chipotle. In closing, I can't thank our employees enough for everything they've done to elevate the brand and cultivate a better world for each other, our guests, and our communities, no matter what external restrictions came our way in 2021. As I've said before, challenges create opportunities, and we are now in a much stronger competitive position than we were two years ago. While we're still navigating through what we all hope is the last phase of this pandemic, I look forward to the future with optimism and can't wait to see what 2022 holds for Chipotle. Okay. With that, here's Jack to walk you through the financials. Thanks, Brian, and good afternoon, everyone. We end the year on a positive note with sales in the fourth quarter growing 22% year-over-year to reach $2 billion as comp sales grew 15.2%. Restaurant-level margin of 20.2% expanded 70 basis points over last year, and earnings per share adjusted for unusual items was $5.58, representing 60.3% year-over-year growth. The fourth quarter had unusual expenses related to legal expenses, our previously disclosed 2018 performance share modification, transformation costs, as well as restaurant asset impairment and closure costs, which negatively impacted our earnings per share by $0.89, leading to GAAP earnings per share of $4.69. As we look ahead to 2022, there remains uncertainty on several fronts, including COVID impacts, as well as staffing and inflationary pressures that limit our visibility and therefore make it difficult to provide full year comp guidance. These headwinds were significant in January, which also included some challenging weather, which led to a January comp around 5%. We remain optimistic that as these challenges ease, that our comps will accelerate from the January level. While it's difficult to predict the comp for Q1 with precision, we expect it to land somewhere in the mid to high single digits range, assuming the effects of COVID continue to subside. There's no doubt our restaurant level margin is messy in the near term. Let me provide some perspective on Q4 and what we expect moving forward. Besides ongoing labor pressures, our Q4 margin was impacted by a higher level of commodity inflation than we originally expected, primarily due to elevated beef and freight costs. As a result, we took a 4% menu price increase in the middle of December to help offset these headwinds. Given the timing of this pricing action, it had little impact in the quarter, resulting in our Q4 margin being at the lower end of our 20%-21% guidance range. However, if you look ahead to Q1, where we will see the pricing benefit for the full quarter, our restaurant level margin is expected to be nearly 22%. Normalizing for the elevated marketing spend expected this quarter, as well as transitory COVID-related cost pressures, the underlying Q1 margin would be in the low- to mid-23% range. The bottom line is that our underlying margin remains healthy, and we believe we still have pricing power to use as needed if inflation continues to rise going forward. Of course, we'll be thoughtful and patient as we consider these actions to make sure we continue to deliver an excellent value and dining experience to our guests. Now let me go through the key P&L line items, beginning with cost of sales. While our supply chain team continued to do an admirable job keeping our restaurants in supply of key ingredients and managing the cost of doing so, external challenges were quite extreme in Q4, which led to food costs being 31.6%, an increase of 60 basis points from last year. As I just mentioned, inflation on beef and freight, and to a lesser extent, avocado costs more than offset the leverage from our menu price increases. As we think about Q1, the successful premium brisket LTO has ended, and we get the full benefit of our December pricing. These tailwinds will be partially offset by a full quarter of elevated beef prices, as well as seasonally higher avocado pricing. As a result, we expect our Q1 food costs to be in the 30%-30.5% range. Labor costs for the fourth quarter were 26.4%, an increase of about 100 basis points from last year. This increase was driven by our strategic decision to increase average nationwide wages to $15 per hour in May of last year, which was partially offset by menu price increases and sales leverage. While we're expecting elevated wage inflation to continue, especially given higher isolation and overtime pay because of the Omicron variant, our December menu price increase should provide some offset, resulting in labor costs being in the low 26% range for Q1. Other operating costs for the quarter were 16.3%, a decrease of about 160 basis points from last year, due primarily to price and sales leverage. Marketing promo costs for the quarter were 3.6%, about 30 basis points lower than we spent last year, but as expected, a 120 basis point sequential increase from Q3 to support Smoked Brisket and the latest brand messaging under our Behind The Foil campaign. Like Q4, Q1 tends to be a higher marketing quarter to support new menu items like Plant-Based Chorizo. Therefore, we expect marketing to be in the high 3% range in Q1, but to remain around 3% for the full year. Overall, other operating costs are expected to be in the mid-16% range for the first quarter. G&A for the quarter was $160 million on a GAAP basis, or $133 million on a non-GAAP basis, excluding $18 million related to the proposed settlement of legal matters, $7.6 million for the previously disclosed modification to our 2018 performance shares, and $1.3 million related to transformation expenses. G&A also includes about $100 million in underlying G&A, $30 million related to non-cash stock compensation, $1.8 million related to higher performance-based bonus accruals and payroll taxes on equity vesting and stock option exercises, and roughly $1.4 million related to our upcoming all manager conference. We expect our underlying G&A to be around $101 million in Q1 and grow slightly every quarter thereafter as we continue to make investments, primarily in technology and people, to support ongoing growth. Despite the elevated spend, our goal remains to deliver leverage on this line item relative to our sales growth, just like we did in 2021. We anticipate stock comp will be likely around $30 million in Q1, although this amount could move up or down based on our performance and subject to the 2022 grants, which are issued in Q1. We also expect to recognize around $4 million related to employer taxes associated with shares that vest during the quarter, as well as about $17 million related to our All Manager Conference. Our effective tax rate for Q4 was 20.3% on a GAAP basis and 18.7% on a non-GAAP basis. Both rates benefited from option exercises and share vesting at elevated stock prices. In addition, our GAAP tax rate included a benefit for the write-off of uncertain tax position reserves in the fourth quarter of 2021. For fiscal 2022, we estimate our underlying effective tax rate will be in the 25%-27% range, though it may vary based on discrete items. Our balance sheet remains healthy as we ended the year with $1.4 billion in cash, restricted cash and investments, with no debt along with a $500 million untapped revolver. During the fourth quarter, we repurchased $169 million of our stock at an average price of $1,750. We expect to continue using excess free cash flow to opportunistically repurchase our stock. We're privileged to have the financial strength with which to make ongoing strategic investments, including restaurant design and real estate development growth. I'm really impressed by the hard work of our development and operations team as they opened 78 new restaurants in the fourth quarter, with 67 including a Chipotlane. This is despite all the construction inflationary pressures, subcontractor labor issues, critical equipment shortages, and landlord delivery delays. For the full year, we exceeded our guidance and opened 250 new restaurants, with 81% or 174 including a Chipotlane. We ended 2021 with 355 Chipotlanes, including 16 conversions and 11 relocations. Overall, these formats continued to demonstrate stellar performance. Furthermore, we're gaining more confidence in our conversion and relocation strategy, which will allow us to enhance the Chipotlane opportunity and provide more access and convenience for our guests. As a result, we expect to open between 235 and 250 restaurants in 2022, with more than 80% including a Chipotlane. This guidance includes 5-10 relocations to add a Chipotlane. Looking- past the pandemic, we expect to be able to accelerate openings in 2023 and beyond and move towards the high end of 8%-10% openings range that Brian mentioned. Let me end by expressing my gratitude to our nearly 100,000 team members in the restaurants and in the support centers for overcoming countless issues in the past year to safely serve and delight our guests. Their focus and strong execution have brought us to where we are today, and I believe will be critical to sustaining our industry leadership in the future. With that, we're happy to take your questions. Thank you. We will now begin the question- and -answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will come from Dennis Geiger with UBS. Please go ahead. Great. Thanks for the question. Wanted to focus a little bit more on the margin, both for kind of the 1Q. I think Jack and Brian, you talked to a low- to mid-23% sort of underlying. Wondering if you could just talk a little bit more about what goes into that and just kind of the go-forward, if you could kind of give any kind of color as we go through the year, what that margin trajectory looks like and related as it relates to that long-term algorithm you provided. If there's any change there or if, you know, if it's kind of consistent with what you've messaged prior. Thank you. Yeah. I'll start, Jack. To answer your question, the long-term algorithm, you know, we still believe we will achieve that. You know, it's a combination of the sales growth and obviously, you know, pricing where we need to, when we need to. Then we've got a lot of initiatives going on, making sure that we're as efficient as possible. Long term, we've got 100% confidence in what we can achieve. To your specific question about some of the stuff happening in the short term, I'll turn that over to Jack. Yeah. The key things that are happening as you move from Q4 to Q1 are the menu price increase we took. We only got, like, less than 100 basis points of impact in the fourth quarter, so we took that in December. We'll get the full benefit of that in Q1. That's gonna be offset somewhat by the fact that beef inflation has continued. We keep thinking that beef is gonna level off and then go down. It just hasn't happened yet. While we got a partial quarter of beef inflation during the fourth quarter, we'll get a full quarter of inflation during that month. We just mainly those two things alone., t hen brisket. Actually, brisket does, it's a premium priced item, but it also is a premium cost item, so that has a drag on the margin as well. That ended during the fourth quarter. When you look at what our margin is expected to be in Q1, without considering timing adjustments, it's in that kinda high 22% range. We're gonna spend more than average on marketing because we're going to support you know, we already have supported new menu items. We're gonna support our next campaign. When you adjust for the timing of that and some other timing differences That's where our normalized underlying margin should be in that kind of 23% range. Then the other thing I would just add is typically our winter months are not our high margin months. It, of course, depends on what happens with inflation throughout the year. If inflation doesn't get too much worse, we would hope that we would see margins at or above that 23% range going forward. Great. Thanks, and congrats on the results. Thank you. The next question will be from Jared Garber from Goldman Sachs. Please go ahead. Hi. Thanks for the question. I wanted to ask about menu innovation and, you know, 2021 was a year in which you had several really successful innovation coming through the menu. I wanted to just get a sense of how you're thinking about that as we approach 2022 or head further into 2022 and how you think about lapping and maybe what those where you're focused on the menu. Yeah, sure. Yeah, well, you touched on the first part. We were really happy with how all of our initiatives performed. You know, I think it's a testament to our discipline around ensuring what we launch has you know a high probability of success, and that we're able to execute, supply it, and then deliver a great experience. You know, really delighted with what we did in 2021. As I mentioned this in my earlier remarks, the Plant-Based Chorizo is off to a great start. You know, if you haven't had a chance to try it, I highly recommend to give it a try. It's really terrific. You know, the way we think about it is we obviously wanna listen to what our customers say they would like to see on the menu. That's why we've done things like Quesadillas, improved the Queso. We wanna listen to what you know habits and trends are happening, so that's why you see us do things like leading with cauliflower rice, Plant-Based Chorizo. You know, we're gonna lead consumer palates, and that's why you know we're really excited about this Pollo Asado program that we just tested. Obviously, Carne Asada was something that we're really excited about. You know, hopefully you had a chance to try the brisket. That was just, I thought, outstanding. You know, we're gonna continue to probably do two to three innovations a year. We're gonna use kind of those guardrails as where our culinary team is looking, and then we're gonna continue to use our disciplined approach so that we have a pretty good idea of how it's gonna perform when we do roll it out nationally. Thanks. Appreciate the color there. Sure. The next question will be from David Palmer from Evercore ISI. Please go ahead. Thanks. Question on pricing. Is the current year-over-year run rate 12% after that latest increment? What’s gonna dictate your pricing strategy through the year? In particular, you know, I know people are curious about how you view your pricing power. You know, what informs your view about Chipotle's pricing power? Basically, how does that dovetail with your pricing strategy? Thanks. Yeah. David, I think we're more in the 10% range right now, as you look at Q1. If we weren't to take any more pricing for the balance of the year, you know, that ultimately ends up being about a 6% or more, probably a little bit more than 6% for the year. To answer your question on when and why we would take pricing, you know, Jack kind of touched on this. Like, we continue to see pressure on wages. We wanna make sure that we continue to be competitive on that front. We feel like we're in a really good position right now. As a result, our restaurants are staffed better than they were pre-COVID, and frankly, better than they have been for the last two years through this whole COVID period. We don't wanna slip on our wages, so we're gonna keep a close eye on that. Then obviously, we'll look for any inefficiencies to help mitigate that, but we do have the pricing lever there. Then as Jack mentioned, beef and freight and some of these other things that continue to stay elevated, if we don't see it abate, you know, we'll have to take some additional pricing there. You know, it's really the last thing we wanna do, but we're fortunate that we can pull it. You know, we've seen no resistance to date with the levels that we're currently at. I think I mentioned this in my earlier remarks, or maybe this was an interview I did earlier. I mean, keep in mind, when we talk about these percentages, I like to remind people the absolute dollar. A chicken burrito for most parts of the country is still less than $8. Chicken bowl is still less than $8. That's phenomenal value, especially when I see where, frankly, food that I would question the caliber not being what our caliber is, nor with the customization, is you know right in that price point, if not higher. We've got a lot of pricing power. Our customers appreciate the brand, appreciate the culinary, and you know we're fortunate to be in that position. Thank you. The next question will be from Peter Saleh with BTIG. Please go ahead. Great. Thanks. Brian, I think you just touched on this a little bit, but I'm hoping you can elaborate a little bit. You know, you guys just took another price increase, and you're running with about 10%, but what about the value proposition, and how do you ensure you just don't outprice some of your consumers? Is there a benchmark that you're looking at to price against, or is there something else we can look at to get a sense on how much inflation you guys are willing to take on? Yeah, look, we do a couple things. One, we have internal work where we're constantly evaluating the value strength of our brand, you know, through, you know, call it traditional market research. We also do the analytical side of things, where after we take pricing, we really do analyze what happens to transactions. The good news is we have so much data now with our, you know, loyalty database that we're able to understand, are there any behavioral impacts from what we're seeing? We see very little resistance there. We look out into the marketplace. You know, you look at in all this stuff, right? Pricing usually has something to do with your relative options. When you look at the options, you know, again, this is why I think we get such strong value scores. To get our food with our customization, with our access, and, you know, frankly, the quantity that you're also able to get, you know, we're kind of in our own space, and we're very fortunate to be in that space. You know, there's a lot of headroom from what we can tell, and I really hope we never have to use all of it, but we'll be judicious, and when we need to, we will. Thank you very much. Yeah. The next question is from David Tarantino from Baird. Please go ahead. Hi, good afternoon. My question's about the unit growth outlook accelerating. I guess first question is just wanted to gauge your confidence level in being able to ramp up to those types of numbers in the current labor environment we're in, given how tight the labor market has become. I guess, is there certain things you're doing on the staffing side ahead of that acceleration that are worth talking about? The second question related to this is, Jack, I was wondering if you could give us an update on what the return profile looks like for the Chipotlanes that you're developing. Thanks. David, to your first question, you know, we continue to feel really good about, one, the performance of our restaurant openings, right? We opened 215, and the performance was excellent, and that's a testament to our real estate development team, our operators to ensure those restaurants were staffed for the opening. One of the things, I think I mentioned this in the script, you know, we promoted something like 19,000 people to the manager level. One of the things that's great about our company is as we close in on having 3,000 restaurants, and then 4,000 restaurants, our goal is to internally develop our future leaders. The reason why that's important is it's a lot easier to prepare for 300 openings when you're working off of a base of 3,000 or 4,000 or, you know, whatever number of openings we want to achieve. The bigger our base is, the more talent we can develop. I think we're demonstrating we can develop that talent with the fact that we just promoted 19,000 employees. So they'll stay with us. They'll grow with us. They're excited about the growth opportunity. You know, I will tell you, obviously, COVID made it very hard to open 215 restaurants. You know, that wasn't an easy thing. Again, I give it a real hats off to our team for being able to execute that type of new restaurant opening quantity as well as quality. You know, the last thing I'll say before I hand over to Jack is the pipeline is very strong. You know, we're fortunate people want Chipotle in their towns. The landlords want Chipotle in their centers. You know, we just demonstrated now we also have the small town opportunity to add to the Chipotlane opportunity. We're in a really good position. Obviously, I'm hoping we're in the last phase of COVID and some things get a little bit easier versus harder going forward. But it's a real testament to the strength of our operations, the strength of our development team that we're able to open 215 high-quality new units. Jack, I'll let you talk to David's question on Chipotlanes. Yeah. Yeah, David, Chipotlanes continue to outperform, you know, our non-Chipotlane restaurants. That's why you've seen us quickly get up to now 80% of our new restaurants have a Chipotlane and t hey have higher volume. They skew more towards digital, and that skew comes from order ahead, which is a higher margin transaction, and the investment is only modestly higher, call it in that $75,000 range. So if a non-Chipotlane opening get a cash-on-cash return within a couple of years as the sales grow, in that 55%-60% return, a Chipotlane is gonna generate cash and cash returns in the 65%-70% return, s o clearly exceptional, you know, returns. What Chipotlane is also allowing us to do is go into these small towns where we have another convenient access point. An also we're starting to get into these seam locations. We only have a few open, but with the extra convenience channel of Chipotlane, it just makes it, you know, more doable from a financial standpoint and a convenience standpoint to go into these small towns and seam locations. It generates superior returns. Yeah, Chipotlane continues to perform at exceptional levels. Great. Thank you very much. The next question will be from Brian Bittner with Oppenheimer & Co. Please go ahead. Thank you. Can you just update us again on the pace of the loyalty membership trajectory as we enter 2022? Is it still showing a healthy pace of growth? With this now very large base of members in this immense digital ecosystem, Brian, what do you believe is the biggest strategic or operational unlock that still sits in front of you as it relates to loyalty that you believe can be incremental to the business moving forward? Yeah, sure. Yeah, look, we are very fortunate that we continue to grow the loyalty, you know, population in a meaningful clip. Obviously, it's not at the same speed it was you know, a year or two ago. You know, it's one of the things that's kind of interesting is we add more restaurants and we give people more access, the loyalty/rewards program becomes even that much more of an appealing program that they wanna be a part of, so w e continue to see people join. One of the big unlocks for us, frankly, is we still have a lot of people that are only dining room people, and then we have a lot of people that are only digital people, and there's a small group that's doing both. You know, call it the 50%-60% that are dining room only people. I think if we get those people to have a really positive experience using the rewards program, it's just a tremendous unlock for what that rewards program can grow to be. As you mentioned, there's a lot of incremental opportunity in that. Just within the universe of people that we have, you know, the guys have really, I think, learned quite a bit about how to do these journeys so that they communicate and engage the right way so that we get the behavior of more frequency. If we see somebody lapsing, we get them to come back into the business. You know, there's incremental opportunities on just getting all those people that are exclusive dining room people to become, you know, at least comfortable with using our digital platform. Even if they don't wanna order through it, they can at least take the benefits of it. Look, as that database grows, we get smarter in the journeys. We definitely have demonstrated inside here that we can use this tool to influence behavior, both in frequency as well as staying with the business. Thanks. You bet. The next question is from Andrew Charles with TD Cowen. Please go ahead. Great. Thank you. Brian, you were very proactive getting the average wage to $15 an hour back in May of last year. I was curious about your multi-year view for where wages could go as more national retailers enact formalized programs to get to $17 an hour as you strive to keep Chipotle as an employer of choice. Yeah, look, I think wages are gonna continue to go up. You know, I think the combination of having the right wage and the right development or growth opportunity is what gets people excited to be a part of a company. That's why I think it's really important. That's why I chose to share. You know, look, even in a tough environment, we still promoted 19,000 people, which tells you two things. One, they grew with us and they stayed with us. You know, we're gonna always make sure that we've got the right wage to get people into our company and then we also wanna make sure that we're growing them so that they're excited to stay with our company. I think your point's a good one. You know, I don't wanna fall behind. I like being in the position of people viewing Chipotle as a leader in the space. I think our jobs are great. I think our company is special. If we can get people to experience that, they have a real opportunity to grow with us and ultimately change their lives and potentially their family. You know, that's one of the luxuries I think we get to have at Chipotle, is you can really change people's lives with a career here. Very helpful. Thanks. The next question is from John Glass with Morgan Stanley. Please go ahead. Thanks very much. I wanted to circle back on the small town opportunity. One, how many are there today? Like, what's the evidence that you have for this incremental opportunity? Years ago, there was something called an A model, so it was like a lower CapEx, you know, good return, but lower volume unit. Are these lower volume but better returns because they're lower CapEx, or how should we think about both the returns and the volume calculus as we think about the small market opportunity and just how many there are so far so we can gauge, you know, where you are on that? Yeah, I mean, the one thing that is nice is it's definitely a little bit higher margin because the cost of, you know, the lease is a little bit lower. What we're seeing though is no trade-off in volume. Actually, it's probably outsized, call it revenue or sales. It's kind of, you know, a really great proposition because a little bit cheaper to put in some of the fixed costs and then, you know, people view us as an employer that they wanna be a part of. We have a really good success rate in staffing them, and then the towns are really excited to have a Chipotle. We see great, you know, sales, opening sales and then sales that stay with us. You know, look, we feel really good about it. I think there's, you know, hundreds of these that we can easily find and build. You know, Jack, you'll have to correct me here, but I think, you know, when we're talking about small towns, we're not talking about, you know, 5,000-10,000. We're talking about like 40,000+. It's still pretty good size. It's small for Chipotle, but, you know, I wanna make sure we qualify that for you so you realize what we're talking about when we say small town. Jack, I don't know if you wanna add anything to that. Yeah, you know, there are some that will be smaller than that, but, you know, it might be like on an expressway or something. I think the key is that these are restaurants that are not in a, you know, a metropolis, you know, so it's not in an area with a lot of Chipotle or Chipotles. So they tend to have zero impact. The margins are higher, the volumes are about the same, so the returns are higher as well. Typically, the construction cost is higher as well. The challenge really is just to make sure that we have a strategic process or strategic approach so that we can keep an` eye on these. A field leader, for example, if they have to to travel 300 mi to get to a remote, you know, small town location, that's very hard to do. If you string a bunch of small towns together where there's one that's 50 mi away and another that's 50 mi way, you string these, you know, along so that a field leader can, over a number of days, make sure that he gets touches with those restaurants, develops the leadership in those restaurants. From a financial standpoint and from bringing a special dining experience to these small towns, it's a home run. Thank you. The next question is from Joshua Long with Piper Sandler. Please go ahead. Great. Thank you for taking my question. I wanted to see if we could circle back into loyalty and the growing digital base of users that you have. Curious how that's informing your lifetime value considerations for your customers. I think maybe that dovetails into some of the journeys that you talked about. Curious if you're able to act on any of that now or how you think about that working into your pipeline going forward. Yeah, look, it's high priority. You know, we were really excited about the size of the database, and then we're really excited about how much learning we've had over the last couple of years so that we can do exactly what you just talked about. We know when we get people into the rewards, you know, call it system, you know, the average ticket goes up and the frequency at which they shop with Chipotle goes up. You know, we're winning share of occasions and, you know, that's ultimately what we're after. You know, I think making access easier, making people aware of that access, really engaging with people in a personalized way, you know, we're able to gain more occasions. You know, that's really what we use the data to understand. Then the other thing that's powerful too, in the data, is we can see where we maybe aren't, you know, executing the experience we'd want to. It gives us the opportunity to save, you know, what was a less than ideal experience to turn that person from being a lapsed user into an, you know, coming back to the business and staying with us. You know, that's really the mission. We're very fortunate that we've got such a robust data set now, and we've got a really talented team that's, I think, eager to learn every day and build on what we've done to date. You know, we're not gonna be complacent, right? We have a real opportunity here to build on the momentum that we have. Thank you. The next question is from Brian Vaccaro with Raymond James. Please go ahead. Hi. Thanks, and good afternoon. I wanted to circle back on labor, if I could. You know, with seven to eight months under your belt since increasing wages and making the other labor investments, I guess I'm just curious to get your assessment of how effective those changes have been. Obviously, understanding Omicron's had an impact, but how much of an underlying improvement have you seen in retention, application flow or you know, say, the percentage of stores that are still significantly understaffed? Then if you think more needs to be done, what form would that likely take? Is it more wage increases, or is it more than just the money issue in the stores that remain meaningfully understaffed? Yeah. I mean, look, here's what I'll tell you is, you know, we've made tremendous progress, you know. Even with the Omicron surge, I would tell you we've learned a lot, right, over the last two years, so that we knew how to go into the markets where we were having a problem. We put a very focused effort on making sure people knew those employees that go out on exclusion, they're coming back. You know, so your team is not all of a sudden lost the folks that went out on exclusion. They're coming back. Oh, by the way, as your business grows, you know, what we call being at A model, we are out actively recruiting so that you're going to have staff so that you can perform as this business grows. I think we've just gotten a lot better at, one, seeing, okay, this restaurant is about to have a real challenge. We put a very focused effort on that restaurant. We ensure we've got the right wage, the right communication of what this job is all about. I'll tell you what, the one thing that we were probably surprised by, and we weren't leveraging enough initially, is telling people the growth story. Like, the number of people that I've met that have joined Chipotle that might have been a multi-unit operator at another organization, but they were willing to join our organization as a team member, ultimately maybe a service manager because they want the opportunity to grow with us because they felt like they were capped out where they were. We've really ramped up that communication. You'll see that in our marketing materials on what it means to get a job at Chipotle. It's not just the job you're getting now, but you're potentially, if you want to stay with us, what you can grow into. Look, we've made tremendous progress. I think we made the right choice with using the DML as the tool to throttle up and down based on the challenges we were having with staffing. I'm happy to say, you know, that's now happening in, like, less than 2% of our restaurants, which is great. The reason why it's so low is because our staffing is so much better across, you know, the enterprise. With that said, we're about to move into the season where we sell even more burritos, and it's gonna require even more employees so we're staying after it. We think we've learned a lot, and you know, we're seeing pretty good yield as a result of our efforts to date. We love the position we're in. I really hope we don't have another surge. You know, putting that aside, I love what Scott and Maurice have done to ensure that our restaurants are staffed. All right. That's great. I guess I'll circle back on the food cost situation, if I could. Jack, I think you said you saw beef and freight and a little bit of avocado pressure. I'm curious to what degree you're seeing inflation on the chicken side, which I believe is your number one protein. I know visibility is low and a lot of things can change on a dime during this environment, it seems. Your best guess or view of the outlook here, is it reasonable to expect high single-digit inflation for a couple more quarters perhaps, and then you start to lap some of the increases moving through the second half of 2021? Just curious to get your broad perspective there if it differs from that materially? Yeah. Listen, I'm glad you said it's really hard to predict the future because this has been the toughest I've seen in terms of predicting the future about availability and about pricing, really in my whole career. Having said that, I would say it's gonna take at least a few quarters. Like, I wouldn't expect to see, you know, much relief. Hopefully, things won't get too much worse over the next few quarters, but we're not expecting to see much of a relief until later in the year. You know, having said that, you asked about chicken in particular. Chicken, knock on wood, has not been that bad. We've had some near misses during the year. It was more driven by availability of labor and, you know, people who had to be excluded because they were either they came down with COVID or, you know, were with somebody who had COVID. There were some near misses in terms of our suppliers, maybe being unable to meet, you know, our demand. Our supply chain team with Carlos has done a great job of working with suppliers and moving capacity around as needed. What we've seen over the last several months and what we expect we'll see more of in the future, more pressure on beef, more pressure on freight. Avocados, we think, is, you know, that's more of a seasonal thing, that's more of a cyclical thing. That doesn't feel like a you know a classic kind of supply chain issue that we're seeing in this environment. But I wouldn't be surprised if there's gonna be another ingredient or two. There's just been so many disruptions. Hopefully things will be reasonably normal. We think we've taken the pricing action we need to for what we've seen so far and then we'll wait and see what happens in the next quarter or two. All right, very helpful. I'll pass it along. Thank you. The next question will be from John Ivankoe with JP Morgan. Please go ahead. Hi. Thank you. I wanted to get back to the conversation on store-level staffing, but focusing on the GM. Has there been any change, you know, in turnover, you know, throughout 2021? Has there been any unusual maybe blips, you know, in the quit rate that you've noticed? As you know, think obviously about a growing business, you know, going forward, is there anything about training or compensation or the type of person, you know, that you're looking for perhaps looking to promote, you know, that might change with Chipotle as Chipotle grows, as you think about the next era? Yeah, no. You know, look, I gotta tell you, we're very fortunate with the general managers we have in our company because, you know, those guys through all this showed up to the restaurants every single day, you know, and figured out how to flex with whatever new thing came their way, whether they were, you know, people calling off, whether it was people unfortunately coming down with COVID. There was a time period where people didn't even really know what COVID was, and these guys and women showed up every day to lead their teams. You know, we're very fortunate to have that caliber of leader running our restaurants. You know, and we're also very fortunate that because we're a growing company, those leaders are the leaders that then become our field leaders and our team directors and then ultimately our VPs. You know, they see it. You know, one of my favorite things to do in my company is have the opportunity to go visit them in their restaurants. I'll tell you what, they are so proud of their team, they're so proud of their results, and they're so proud of where we are. You know, we're working on being better with our learning and training tools. I think we mentioned this in the call. We're rolling that out for them. We're rolling out for them a new labor scheduling tool. Then obviously, we're looking for ways to make the job more efficient, more consistent, so that, you know, they can continue to do the great work that they do on the culture and the people and the culinary. We're very fortunate. You know, we've not seen, you know, the great resignation that you read about on or hear about at our company, and definitely not at our general manager level. You know, hopefully, some of them are listening right now because I would brag about them for this whole call if I could. You know, thanks for asking the question. Thank you. Thanks so much. The next question is from Brian Mullan with Deutsche Bank. Please go ahead. Hey, thank you. Just a question on the international development opportunity outside of North America. Can you share what the focus is right now, you know, in the existing markets, France, Germany, the U.K.? Are you also exploring new markets in Western Europe or even elsewhere at this point in time, or just really focused on those existing markets right now? Yeah. For right now, we are just focused on those existing markets and really just France and the U.K. As you probably have read or know, you know, Germany's been very slow to kinda get out of the COVID challenges. Look, I'm optimistic on what all Western Europe can be. Fortunately, we've had some really good recent openings in both France and the U.K., and I'm optimistic about how we can grow in those countries. You know, once we feel like we're in a really good spot there, we'll definitely think about how we expand beyond it. You know, one thing I know for sure is when you look at consumers in other countries, they like our proposition. You know, clean food with integrity, high levels of customization, culinary happening right in front of you, flavors that, you know, resonate. You know, chicken, rice, and beans, those are pretty globally accepted ingredients. So, you know, I'm optimistic about the future. But right now, you know, we're focused on making sure we've got a winning proposition in the markets that we're currently in, and then we'll expand from there accordingly. Thank you. The next question is from Chris Carril with RBC Capital Markets. Please go ahead. Hi. Thanks for taking the question. Can you expand on delivery mix today and how the margins for those orders compare to other channels with the incremental delivery menu pricing you've taken over the past year plus? How are you thinking about delivery mix and impact to margins from delivery as we move further into 2022? Thanks. Yeah, sure. You know, obviously, delivery, we've got two kind of businesses there, right? We've got our in-app delivery business or what we call white label, and then obviously, we have the third-party partnerships we have with, like, Uber Eats and DoorDash, in Marketplace. You know, you mentioned this, we took some pricing so that, you know, the margin issue became less of an issue. You know, unfortunately, or I guess the reality is that channel comes with additional cost. If you want that convenience, it comes with some additional cost. What we've seen is people recognize that and are willing to accept that for those occasions. You know, our digital business is roughly, you know, 42% of the business. You know, today, delivery is about probably a little less than 20%, roughly 20%. The go od news is our order ahead business continues to grow as we build Chipotlanes and as we continue to frankly market against the idea of order ahead and pick up yourself. You know, not nearly the margin dilution that delivery used to be, but still our best margin transaction is the digital transaction where you order ahead and pick up. Jack, I don't know if you want to add anything to that. No, Brian, you said it perfectly. Thank you. Thank you. The next question will come from Andy Barish with Jefferies. Please go ahead. Hey, guys. Good afternoon. Just wanted to circle back on some of the operational efficiencies, Brian, that you've mentioned a couple of times now, making you know kind of the team members' jobs a little bit easier or implementing technology. Can you give us an example or two of where you're heading down that road and what maybe also what things you know would be a non-starter you know in terms of you know Chipotle's credo? Yeah, sure. You know, look, we're trying to find. Well, first of all, as I mentioned, right, just getting a better labor scheduling tool that uses artificial intelligence and analytics that doesn't rely on just looking back the past four weeks, but can look at things happening in real time so that the team is able to prep accordingly. You know, we should then end up in a scenario where we don't run out of guacamole at the end of the day, right? We're working on technology where just that occurs. You know, how do we help our team members know when to cook more chicken throughout the day, when to make guacamole, and how much guacamole to make after lunch? Because we wanna be in, you know, the Chipotle business from open to close. Nothing disappoints our teams more than when a customer shows up at eight or nine o'clock and they're out of something. If we can give them tools where they don't have to worry about making too much or not making enough, it just makes their job so much easier. It eliminates one stress. They don't wanna disappoint a customer. We're working with that type of technology to help them do just that. We're also looking at technology, whether it's robotics, you know, automation. You know, how do we get rid of the jobs people frankly don't love doing, right, cleaning dishes all day, not a fun job, hard job, frankly, wet job, you know. It's like, if we can find ways to eliminate those tasks, right, like, we're always gonna be cutting and coring avocados. If there was a way to cut and core the avocados so that all our team member has to do is mash and, you know, add the salt, add the lime, add the onions, that would make their job so much better. It's those types of things. We're not going to walk away from having great quality. You're always gonna see our chicken sizzling on the plancha. All right. That's just one of the sounds and sights of Chipotle and, frankly, the smell that I think makes our experience unique. Obviously, we're looking for ways to be even more accurate and more timely on the digital make line. There's real opportunities there. You know, I think we've got a great system, and I think we can build on what has really been something that's worked really well for us. That kind of gives you a flavor of the various things we're looking at. Very helpful. Thanks. Sure. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Brian Niccol for any closing remarks. All right. Thanks, everybody, for all the questions and, you know, dialing in. Obviously very proud of our team, everybody in the restaurants. You know, 2021 was a lot of ups and downs, but I think I couldn't be prouder of the results. To deliver a comp, you know, north of 19%, you know, business now bigger than $7.5 billion, $3.5 billion digital business. You know, these are all big milestones for our company. You know, we opened 215 restaurants. I mean, we're literally achieving new highs in all fronts. You know, our average unit volumes are, you know, well beyond the $2.5 million now. Obviously the fourth quarter had some challenges. Inflation is something that we'll continue to deal with. Staffing, we've made tremendous progress on. You know, as I look at where we are in 2022, I just believe we're positioned to execute the Chipotle business better than we probably have in a while. It's exciting to be staffed at pre-COVID levels again. It's exciting to see people getting promoted in our organization, and it's exciting to see, you know, the customer reward us with their business every day. You know, again, really strong position for our company. I think it demonstrates our pricing power, our resilience, and the strength of our culture and people. Luckily, we get to celebrate with everybody at our all manager conference in March. You know, I look forward to catching up with everybody next quarter. Thank you for all the questions, and hopefully you get out there and try the Plant-Based Chorizo. All right. Take care, guys. Thank you. Bye. Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.