Good afternoon, everybody. Thank you so much for joining us. My name is Danilo Gargiulo. I'm the senior analyst at Bernstein covering restaurants and food distributors, and I am delighted that we have again here on stage, Chipotle, with the CEO, Scott Boatwright, first time CEO here at the SDC. Welcome aboard. Thank you. Also, obviously, Adam Rymer, CFO of Chipotle. Before I start asking a few question, I want to remind everybody that you can always send questions through the Pigeonhole, going to pigeonhole.at with passcode 2026SDC. With that, let me get started. Scott, what are the top three takeaways that you think investors should be remembering at the end of this conference? I would say probably first and foremost is that we have redesigned our strategy. We launched the new Recipe for Growth strategy with five core tentpoles late last year that are already starting to show green shoots of recovery for our brand, which I'm really excited about, and those continue to build. The components of the strategy will continue to scale and build throughout the year and will ladder to multiple years of growth for us. The second thing I would tell you is we are strengthening our leadership team and bringing in what I believe to be best-in-class leaders across digital and marketing, as well as supply chain to really help us do a few things. Number one is really have a sustainable, resilient supply chain that'll serve our brand well. As you well know, our supply chain is very fragile in nature because of how bespoke our supply chain is, and it's a supply chain that has grown with our brand through the years because we source ingredients differently than everyone else. Our animal husbandry practices are very unique to Chipotle. Secondly, I think it's time for us to evolve our brand voice. I think it's a really important moment in time for Chipotle. In general, I think the For Real campaign that we have deployed over the past eight years has served us quite well, but I think it's just run a bit dry for the consumer, and we need to evolve the brand voice to really communicate to the consumer not just how Chipotle is unique and different, but what that means for the consumer. In digital, I think we're just behind. I think we had a really, really strong platform for many, many years, and I think it was best in class when it launched, gosh, eight years ago now. I think our competition's gotten better. We're rebuilding our digital strategy, rebuilding our digital ecosystem, through Arlie Sisson, who we hired just recently. Fernando Machado, is an award-winning builder of global iconic brands, joined us. Official start date was June 1st. He's actually in role. I shared with folks earlier, he was actually cooking chicken in the back of a Chipotle restaurant last week and getting indoctrinated in this brand that he has loved for 20 years. Strategy, team, the last thing is we're investing. We're investing in this consumer environment, whether that's investing in our people, investing in technology that'll help us run more efficient, scalable restaurants over time. We're quite frankly, investing in the consumer. Adam can speak to what that looks like in just a moment. Great. Since you became a CEO, what has changed inside Chipotle and what has not changed intentionally? I'll start with what has not changed. Our core belief around how consumers should eat food and this belief that food has the power to change the world has not changed, full stop. We are still delivering handcrafted culinary experiences across 4,100 restaurants globally that are delivering on this idea of food with integrity in the most meaningful way. That hasn't changed, full stop. What is changing is how we think about the world ahead, how we think about navigating consumer uncertainty, how we think about navigating a forever evolving macro environment. Instead of just relying on a tried and true strategy that you can put in place for two to three years, I think you have to be very nimble as an organization today to meet the consumer where they are and to change as the rapid consumer environment changes as well. Mm-hmm. In the past 18 months, we've seen the same-store sales decelerate a little bit for Chipotle. What do you attribute the same-store sales deceleration from historical highs to? Yeah. I started seeing the canary in the coal mine probably in Q4 of 2024. We saw a really slow decline coming out of Q2 that year. It continued in Q3. I saw further weakness in Q4, albeit still positive. I knew we were going to be in for a fight in 2025 as related to growing transactions in this industry. You had all the big brands were competing on value as a price point. That is not a game we play, nor shall we. We think we charge a very fair price for our value offering. We don't compete, at the time, we weren't competing on innovation and the brands that were winning and that did win in 2025, won on innovation in a meaningful way. If you look across the industry, menu innovation stepped up I think 4x to 5x across the industry. We were still relying on a two LTO strategy, running repeat LTOs that we had been successful with in the past versus really leaning into innovation in a meaningful way, which we have transitioned to here in 2026. Mm-hmm. Maybe Adam, that's for you. Given the macro headwinds that have played a major role in the past 18 months or so, if macro were to continue to weaken from here onward, what are the biggest risks to your model and which levers do you view as most effective in protecting traffic without compromising the brand? Yeah, I think the most effective thing that we can do, really, in any environment as well as one where the macro is deteriorating, is focusing on execution and really leaning into our value proposition. When you add to that what we're doing from a marketing and menu innovation standpoint, how we're leaning in on our rewards program, and all the things that are really centered around our Recipe for Growth strategy, I think is the best approach to take, again, in any environment, as well as an environment where the macro's deteriorating. When that's happening, consumers are very much looking for the best experience they can have. They're much more discerning with their dollar. When they come to a Chipotle, and we can wow them with hospitality, we can wow them with an amazing value proposition, entice them with menu innovation and some of the other things we're doing, that's always going to be the best defense in a situation like that. Great. Scott, you were mentioning. I think it's important, Danilo, to expand, if you will, Adam, on how we're investing margin this year to really drive the consumer experience, whether it's our pricing strategy or how we're investing labor in our restaurants, et cetera. Yeah, it's a great point. I'll start with pricing. As we've given pricing in Q1 was somewhere around 0.9%, and that's compared to the industry running closer to 4%. We're taking small step-ups throughout the year as we look at this really slow and measured approach to pricing. That's an investment that we're making in our value proposition, especially at a time where consumers are under pressure. That's a big one. That's creating a margin dislocation, which I'm sure we'll talk about here shortly. We believe it's the right thing to do. With the power that we have operating our own restaurants, with our economic model, we have the ability to do that and really think long term about our value proposition around our guests. The other component, like Scott mentioned, too, about how we're investing labor into our restaurants, it's coming in a few different ways. One is the rollout of the High-Efficiency Equipment Package. That has created several hours of efficiency that we could take out of the restaurants, but we've decided to actually leave those in and make further investments around hospitality to ensure that our crew members are reinvesting that at the times that we need it the most, which is really going to be around that peak lunch and peak dinner to really wow our guests and, again, create that environment. We're looking into some other investments as well. One of them is we've got about 25% or so of our restaurants that don't have an assistant GM. We call it an apprentice, so it's that second salaried manager. We're starting to test where if we add that additional restaurant manager into those restaurants, you get that full peak coverage, right? You've got seven days a week, two shifts a day that can be covered by a salaried manager. We're seeing some nice initial reaction to that, both from a just better KPIs across the board as well as a better guest experience. These are some of the areas that we're looking at in terms of not only just investing into the business, but investing into the experience. Naturally, all these investments need to generate a return. Can you help us understand what returns are you seeing in the investments that you're making today, whether it's a test that you're eventually going to be expanding across the system or something that you've already rolled out? What are the proof points that this is the right decision for Chipotle? I'll use the High-Efficiency Equipment Package as an example. This really helps us in a bunch of different ways, and we're seeing that it's not only helping us from, like, a guest satisfaction scores as well as taste of food scores because it creates better chicken and better steak off of the dual-sided plancha, a better chip experience, just wins across the board. It's also allowing us to get our prep tasks done more efficiently in the morning, which allows our crew members to take their meal breaks, their free Chipotle meal that they get every time that they work a shift, and then be back on the line before the crowd gets there so that we can be fully deployed to execute exceptional throughput. All of these things are laddering up to a nice impact to comps with restaurants that have had the whole package in for about two or three months. We start to see an inflection point. That, in and of itself, is giving us a nice return on investment on that cost of about $100,000 or so for a High-Efficiency Equipment Package retrofit in an existing restaurant. That gives us even more power to really think about investing that labor back into the restaurant and not needing to pull it out to justify the expense. Those are some of the ideas of the proof points that we're looking at in order to really justify that that's the right investment to make in the business. The manager investment is, quite frankly, it's simple, right? You look at the restaurants where we place the second assistant or an assistant apprentice GM, as we call them. Turnover improves, OSAT improves, throughput improves, sales improve. The investment's clear, right? The reason you can't do all 1,200 tomorrow morning is you don't have 1,200 ready, capable apprentices to put in. You have to build them over time out of hourly managers. I think we've said publicly 90% of the promotions that happen at Chipotle happen internally. I think is probably unprecedented in the industry. We promoted 28,000 people last year alone. We have to groom that talent internally to solve for our challenging restaurant environment, which is very unique. What is the typical lag between the investment that you're making and the outcome in terms of sales uplifts? Because you're talking about turnover coming down. Obviously, this doesn't happen overnight after you made the investment. From the turnover coming down to the CSAT going up takes a little bit of a lag. From the CSAT to comps takes another lag. In your experience, how many months out are we talking about for that to be translating into comp uplift as well? Yeah, I think it's faster than you would think. I think it's probably three to six months where you start to see an inflection in the crew morale and crew engagement, which always ladders to a better consumer experience, which drives top-line sales. It's just a function of making the job, and we're spending a lot of time this year really right-sizing the complexity in the operations today to ensure we deliver a better team member experience. The better the team member experience is, the better the consumer experience will be. Mm-hmm. Scott, you were talking about the excitement that you have in new people, reestablishing the foundations, doing some investments into your executive team as well. You made, like, three major hires recently. I would like to hear for each one of them, if you don't mind, what mandate are you giving? If you can start maybe with Jason Kidd, the new COO, if you can help us understand what mandate you're giving him. Moving to Fernando, the new CMO, and then eventually, to Arlie, Chief Digital Officer at some point. Yeah, sure. I'm going to toot my own horn for about five seconds, then I'm going to quickly move to Jason. I ran the brand as chief operating officer for the better part of eight years and built what I believe to be a world-class operating model, building the best operators in the industry. I said this before, I think it's worth repeating. Running a Chipotle restaurant is very unique. Think you're running a mom-and-pop restaurant. You're using pots, pans, knives, cutting boards with fresh bags of onions, fresh boxes of romaine, fresh boxes of peppers. What we do is so unique and special in this industry, which we need to communicate better, we'll get to that point in a moment, is hard to replicate. When I stepped out of the job, it took me about four months to hire Jason, and then it took him about six months to get to know the business, to understand, get through training, to meet his team, to make his way around the United States, to meet the various operational leaders. I think we slid backwards a bit in operations. It didn't manifest itself in the KPIs immediately, but I could see slow deterioration in how we were delivering the experience across the business. I'll tell you, since then, Jason has arrested the fall. I think he's heading in the right direction. It's his team now. It's his voice. It's his leadership team. He has the right strategies in place. He's evolved the strategy that I put in place, gosh, eight years ago, on how we grow this brand and scale, being how unique the brand is. Jason's mandate, full stop, is execution. It's delivering on our brand promise and delivering on great experiences seven days a week across lunch and dinner, and he's doing a great job. Great hire, happy about the hire, making a lot of great progress. That was one of the hardest roles to fill because there's no one in the United States today that is operating more than 4,000 restaurants at a time. Everyone has a franchise system. They have franchisees they're managing. No one operates, owns 4,000 restaurants. Trying to find Jason is like trying to find a unicorn. I think we found the right person. He's the right leader. It just took him a couple of minutes to get into the role and get comfortable. With Fernando, what I was looking for was a pivot on the brand voice. I think we needed to evolve our brand messaging. I think the For Real campaign, I think I said it earlier, had served us quite well, but it had become wallpaper. Meaning the person that sees that ad sees a very similar ad that they saw last year. Maybe it compelled them to spend dollars at Chipotle, maybe it didn't. I knew we needed to be more competitive in this competitive environment we're operating in, be more nimble, be more innovative as it relates to menu acceleration, then lean into the consumer in the most meaningful way, whether that's, I think we've talked forever about being a lifestyle brand where we show up in entertainment, we show up in fashion, we show up in sports, which is all well and good, but we used to lead culture at Chipotle Mexican Grill. Now I feel like we follow culture. Ever since the COVID era put us on our back foot. What Fernando will do pretty quickly in short order is get us back to leading culture across the industry yet again. What about Arlie? Arlie brings such deep experience in digital commerce from SPG to Marriott to Hyatt. She's led the Hyatt digital ecosystem for the past four years, 65 million users in the platform, and she really knows how to broaden and strengthen and deepen engagements with consumers across a big platform and create experiences that are unique for each user on the platform. I think that's where we fell behind. I think we ran out of ideas. I think our loyalty program was good, not great. We needed to improve or increase the top of the funnel, get more customers into our loyalty program, and then create reasons why they should stay in the program and engage with them in probably a more deep way or deepen the engagement with the consumer in a more meaningful way than we have historically. Okay. Adam, let's start from the basics. Can you decompose your puts and takes on your long-term same-store sales algorithm? How much do you expect Chipotle to be comping over time in the long term between price, mix, and traffic? What do you think is going to be the main driver of traffic in a slowing macro? I would say, we've got the initiatives in place to get us back to a mid-single digit comp over the next several quarters and going into 2027. When you think about a mid-single digit comp for us, I would think of the breakout being roughly two points of price is what we've seen historically, and that's really just to offset the impact of inflation as it has on our margins. That could ebb and flow up or down, depending on where inflation is coming in at and how we decide to handle that in different circumstances. Like I mentioned earlier, right now we're underpricing inflation, but we're making a strategic decision there. That's about two points a price there, and then from outside of that, it's a combination of transactions and mix. Mix is a tougher one to give a longer-term horizon on. It ebbs and flows with some of the actions that we're taking on our menu, right around menu innovation with sides and sauces, as well as our protein LTOs, depending on where they're priced and how that's comping on a year-over-year basis. The combination of transactions and mix makes up the rest. I would think, a couple of points, if not more from there. That's really that ideal mid-single digit comp breakdown. Great. Which is expected, not aspirational. Yeah. Right? I think there's three points of transactions. You get a point out of execution in restaurant through great throughput and better culinary experiences. You get a point out of digital, you get a point out of marketing. You layer in any pricing action that you may have, albeit modest. You're back at mid-single digits pretty quickly. Then you layer on growth platforms like the High-Efficiency Equipment Package and/or catering and/or group occasions, and you see this acceleration in the business that is meaningful. One of the biggest controversies that we hear sometimes from investors is, you've become almost like a victim of your own success with the limited time offers and the idea that Chipotle needs to introduce increasingly more attractive new menu to successfully be lapping very successful platforms that you had before. What other options do you have at your disposal that will be mitigating maybe a less successful product launch in the future, and what gives you the confidence that next year you'll be able to lap the successes of Honey Chicken and Chicken al Pastor? Yeah. I've worked in brands that were LTO heavy and LTO driven. Most brands I've worked in will see some increase of new customers when they launch an LTO, and those customers leave until the next LTO comes. With Chipotle, when we have a consumer that tries Chipotle Honey Chicken for the first time, their lifetime value to Chipotle increases over a person that didn't try the LTO. Meaning the LTO at Chipotle is stickier than you would find at a traditional QSR or other brand. The reason we went to four instead of two is simply because we were asking the LTOs to work too hard for too long. They start to decay in months four and five, and your media isn't working as efficiently, and you just make your restaurant operations more challenging without the upside. Typically, on an LTO life cycle, 90 days is perfect. You have a 30-day awareness period, you have 30 days of really strong momentum, and you have 30 days of continued momentum, but on the decline. In that month four and five, you just get inefficient. I think four center of the plate, innovation, innovative ideas throughout the year on a quarterly basis, pepper in innovation on sides, dips, and beverage, and you get to a meaningful place for the consumer for that customer. I am invariably, I meet a parent almost every day of the week where I say I work at Chipotle, and they say, "My kid eats there four times a week. My daughter eats there three times a week. Our athletes at school eat there four times a week." I want to give them compelling reasons and new unique flavor differences and unique flavor profiles that are on brand and on trend to get them to come in more often. Great. The average frequency is less than four times a week for Chipotle. What will get the average consumer to be eating more frequently from, is it like once a quarter-ish frequency to a little bit more of, let's call it two to three times and beyond? I think at the end of the day, it's about execution, full stop. If we can give them compelling reasons through LTO innovation, I think that's meaningful and enough, quite frankly. I think we need to be more engaging in our loyalty program. I think it's okay. It's not great. We did a problem detection study last year to understand what are the friction points within loyalty today and why does a consumer opt out of our loyalty program. We know specifically what challenges we need to address there. Some of those you'll see with the new relaunch, the Rewards on Repeat relaunch that's coming here, I think this week, around Summer of Extras. You're going to see some different experiences within the app today. I think it's a step in the right direction. I don't think it's a step change. The expectation for Arlie is: how do you create an app that's best in class, that keeps people inside the funnel and keeps them engaged, identifies when they're at risk or lapsed, and brings them back into the funnel in the most meaningful way while driving better in-restaurant loyalty percentages? Today, 20% of our in-restaurant customer is in our loyalty program. We think that number is obviously very weak, and we've got to improve it somehow to really get access to that consumer data we think is important and relevant. What was the strategic rationale not to be adding a tier system like some of the other peers who have recently relaunched the loyalty program have? I think the work we did both with our third-party consultant on app definition, app design, and app dev specifically, said tiering only works to a point, but it's not the holy grail. The brands that are telling you it's a holy grail, I think differently. I'm not saying they're wrong. I just think about it differently. I think you've got to have engaging onboarding experiences. I think you've got to have customer journeys that are meaningful. I think our customer specifically was looking for flexibility on how they spend their rewards points, trying to get to 1,200, 1,300. How many points is it to get an entree now? Yeah, about that. Yeah. Was just too much. We offered a 50% off of a burrito or a bowl. I think that's the access our customers were looking for and wanting. They want early access to LTO innovation. They want free drops around Cilantro Lime Sauce, and just access to the brand. What was your learning on the launch of the Protein Cup recently? If you expand that point onto what are the other opportunities that you see or that you're contemplating at least to increase the demand during mid-morning or mid-afternoon going forward? Yeah. Our intent there was really to capitalize on this protein movement that's happening across the country today. Who better to be the leader in protein than the company with the best proteins in the world and the best-tasting proteins in the world. We didn't do anything different. We've always had a side of protein available or extra protein, as we call it. We just put it in a cup and put the price point on it, and inciden went up 36%. It really helped us move the needle on transactions, which is exciting. It just shows the strength and the power of the brand and trying to meet a consumer need state at an approachable price point, that gives that whether you're a GLP-1 user or just an athlete who's looking to plus up your protein intake, I think it's meaningful. What else could you be doing from a new occasion standpoint to potentially expand the mid-afternoon, like the shoulder period where the traffic would be a little bit softer right now? Is this something that you're going to be leaning on going forward? What is the timeline for that? Yeah. The chicken taco across the country today is $3.50. People don't use tacos at Chipotle. I don't know why. I think it's an incredible product offering. Whether it's hard or soft tortillas, our taco offering is next level. The reason I mention that is we're going to try a Happier Hour down in Florida where we offer tacos at $2.50 from 2:00 P.M. to 5:00 P.M. to see if we can grow out the shoulder occasion in a meaningful way with some type of beverage innovation that's on trend, that's on brand. We'll see. It may work, it may not work. We will stage gate it, make sure it's right for the consumer, right financially, and right for operations. Great. Another part where you're under-indexing versus your peers is on the group occasions. You have recently piloted catering in Chicago. You've expanded the program also to Boston. What are you currently testing before deciding whether you want to expand the program nationwide by the end of the year? It's a great question. I've been pushing this organization to go faster for a few months now. They keep holding me back, and I think they're probably right to make sure we execute at the right level and make sure it's a great experience for every customer that tries it. We've seen extraordinary success in Chicago by using a platform to help promote the catering platform, but more importantly, load balance across restaurants so we're not disruptive to the operator. Our managers want catering. They've been asking for it for years because it does a couple of things for them. They are bonused on sales performance, so it gives them a nice uplift in total sales for the revenue for the business, but also is the most efficient labor utilization and probably the most margin accretive platform that we have in the business. Our concern is, and always has been, can we operate catering at scale? Our competitors are somewhere between 10% and 15% of total sales. Today, we're at 1.5%. I think our food travels better. I think people love the Chipotle experience when it's right from a catering perspective, and we need to make sure we can deliver on the expectations for the consumer, deliver on our brand promise, and not fracture lunch and dinner in a Chipotle restaurant. Chicago gave us confidence to expand to Boston. Boston's gone quite well. We're expanding to Phoenix in June. We could see a full system launch sometime in 2027. When we've seen catering not working in some other concepts, it was sometimes because of operational complexity, and maybe sometimes it came at the expense of customer experience because the crew was most focused on the big volumes, leaving some bags as you were entering, not acknowledging the customer coming in. Sometimes, the catering does require a slightly different real estate or a slightly different kitchen size for that to be fully successful. Given where you are with your current real estate, are you expecting to see some modification to allow catering for the entire Chipotle system, or are you planning to launch it just to a subset of your stores going forward? It's a great challenge to solve. We have obviously different footprints for different restaurants across different geographies. We have some really small restaurants that are probably around 1,600 ft, 1,800 ft. We like 2,400 ft. 500 ft of that is the kitchen engine, the rest of it's consumer areas and capacity for pickup and/or seating. Restaurants that are smaller, we will not likely do catering in those restaurants. We'll load balance orders. Most of it's delivery anyway, so it's agnostic for the consumer. Load balance orders across restaurants with larger footprints. It seems to be working really well. Great. The other element of the group occasion is your Build-Your-Own Chipotle, and you were testing a different sharper price point. What is the early learning from that test? What is the elasticity of demand for consumers, and the responsiveness for you to lower the prices across the board? Yeah. I think we're generating about 1% lift on Build-Your-Own Chipotle. Is that right? Yeah, just under. Yeah, around there. Just under 1% lift. I think awareness is still low. I think we've been too clever and too kitschy with the name. People see it in the app, it's Build-Your-Own Chipotle, they go in and start trying to build a burrito. They really don't know what it is. I've contested from day one it should be called Family Meals, we had to get really clever about it, we called it Build-Your-Own Chipotle. We just tested calling it Family Meals in two markets. Sales went up 10%. I'm a genius. They were wrong. I think building awareness on what it actually is for groups of four to six people. Originally, when we launched it, there was a $10 off your first order? We saw a really good pickup at that $50 price point. It was originally priced, I think, at $58. $50 really moves the needle. It's still margin accretive. It's proven to be highly incremental. We feel comfortable getting a sharper price point, naming it correctly, and really promoting it effectively through social channels and digitally that it'll have a meaningful uplift on the business. Great. Then finally, maybe Adam, the other unlock from a traffic standpoint, you mentioned the High-Efficiency Equipment Package eventually driving some traffic. How has the program fed so far? What are the most important KPIs that you are seeing today, and what kind of comp uplift are you expecting from the full rollout of the equipment? Yeah. There are several KPIs that are leading to a nice comp lift in that couple 100 basis points range. Some of them are as simple as guest satisfaction scores and taste of food scores as the food coming off of the dual-sided plancha and some of the other items is just that much better, and our guests are realizing it. That's lifting our sales. Plus the efficiencies that it's creating in the morning, especially around the produce slicer, the three-pan rice cooker, as well as the dual-vat fryer. Those are allowing our crews to more likely get all of their tasks done at a much more efficient pace, so they can take their breaks and then be fully deployed at lunch, and that's allowing us to be stronger at throughput and increase not only our execution at throughput in terms of making sure that we have an expo in place and a linebacker in place, but also increasing our Max 15 in those restaurants. All of that is laddering to a better guest experience, a better crew experience, which is coming through in sales. Like I said earlier, a couple hundred basis points, and really excited to see this continue to roll out throughout the country because we believe it's a huge unlock. I have to emphasize again the crew experience with it as well. It takes about 30 days or so for them to get proficient with the new equipment, and another 30 or 60 days, like Scott mentioned earlier, to kind of start to see that inflection point. What we're hearing from our leaders in these restaurants is that it's much easier to train someone and get them proficient at our most difficult position in our restaurants, which is grill. Having that dual-sided plancha has been a huge unlock there. It's been really exciting to see it, and we're excited to roll out. I believe we're going to hit around 2,000 restaurants or so by the end of this year and hopefully get to the whole system in 2027 or early 2028. Great. There's also a thesis out there that maybe Chipotle is trying really hard, maybe doing a little bit too much, and results are not still showing up in a sharp inflection in same-store sales. How do you respond to investors who are worried about prioritization? Maybe can you share the timeline on when these opportunities are going to be restoring the mid-single digit growth in a comp standpoint? Yeah, I'll start and I'll flip the conversation over to Adam. We've always done a lot. This isn't new. We are always trying and testing and trying to prove out new ideas, innovation on the digital platform, innovation in marketing, innovation in LTO and our strategy around LTOs. We're just being more transparent about it. People understand. Because of what's happened in the business over the last 12 months, just want to make sure everyone understands that we're not sitting idly by and hoping the world makes a shift. We will control the narrative. We will win in any macro environment. We're proving that this year. You add a little bit of tailwind to consumer sentiment. If you look at restaurant performance transactions to consumer sentiment, the correlation is incredibly tight. Right now, the world is suffering from, the industry is suffering from a declining consumer backdrop who thinks food out of home has just gotten too expensive, their pocketbooks are being taxed, they're choosing different avenues on how they feed their families or feed themselves individually. I think things need to correct themselves. You're starting to see food at home starting to increase in inflation and starting to see restaurant inflation normalize. I think that's a really important inflection point for the industry at large. Again, we will win and get back to mid-single digit growth. You add a little bit of tailwind from the consumer, and it's game on. We really saw an inflection point, as you saw too, from Q4 to Q1. In Q1, we returned to positive transactions, that was despite the huge winter storm that closed roughly half of our restaurants for several days, which caused about 100 basis point impact in the quarter. With that on there too, transactions would've been even more positive. As you look at this recipe for growth strategy, these initiatives and how we've layered them on, whether it's menu innovation, whether it's the rollout of the High-Efficiency Equipment Package, catering, you can start to see how these layers build to return us to that mid-single digit comp in out quarters. I think you'll see that continue to build throughout the year. Right. It was weather and investing in our pricing strategy. Mm-hmm. Absolutely. Talking about operations, you recently launched a mystery shopping analysis to identify what items are slipping a little bit from an operational consistency standpoint. What are the early learnings that you have so far, and what are the initiatives that you are starting to put in place for that to be course corrected? Yeah. I will tell you, in full transparency, we lost access to the consumer feedback for the in-restaurant experience. We used to have a survey program I thought was pointless. We were spending millions of dollars on the program where the customer would take the receipt, they'd call a survey, they'd give a rating on if they had a bad experience, they'd tell you why they had a bad experience. We were getting all of that information through our digital properties, and our online customer, which we felt was a good proxy for it. We felt like we'd gotten to a point with OSAT, which was best in industry, but really wasn't moving materially, I pulled the program. What I failed to realize, this is a bit of a mea culpa, is how it held our restaurant teams accountable to ensuring that in-restaurant consumer was having a good experience. What the mystery shopper program will do, will help us bring back that accountability for the GM to ensure they're giving consistently great experiences and are aware of what's going on in the dining room, the drink station, and restrooms, and the hospitality of their teams. We've leaned into both of those things this year. We've made a lot of great progress. We put in what we call three and three every 15 minutes, where someone is dedicated to dining room. Every 15 minutes, they're going out, touching the three areas, spending three minutes cleaning those up, and getting back to the line for throughput, having a meaningful impact. When we put in Tractor Beverage, we inadvertently took out the waste container at the drink station because it now sits over the top of what once was a waste receptacle. Now if you're a Chipotle customer, I'm sure you have experienced this, hopefully you've been in a Chipotle restaurant, and you go get your straw and you pull the wrapper off and you hold it in your hand, you go, "What do I do with this?" Guess what they do? They throw it right on the counter. I don't blame the customer. I would do the same thing, right? Probably not, but I get the point. We've got to put those receptacles back in place to make sure our drink stations are tidy through lunch. We got to make sure the three and three is working correctly. We launched a hospitality campaign, back in March at our all manager conference with 6,000 people in Las Vegas. We talked about hospitality. We brought in Will Guidara, if you know Will, he wrote a book called "Unreasonable Hospitality," to speak to the team about how do we get back to this culture of great hospitality. We're giving assets back to the general manager so they can do recovery in restaurant real time, which we've stripped out under the last marketing initiative. Surprise and delight moments, where the manager just has a pocket full of free chips and burritos or chips and guac in their pocket for a customer that's been in three times this week. Hey, on your next visit, have some chips and guac on me. There's little touch points that seem small, that ladder to the overall experience that are critically important for the guest, and we're getting back to that in short order. Great. Chipotle has always been known for strong ownership culture among managers across the company, promoting from within. How is the turnover of tenure regional managers fared and maybe other mid-level leaders? This is turnover, so it could be a leading indicator of comps eventually, but a leading indicator of turnover might be the satisfaction level. If you're measuring the satisfaction from your own teams internally, how is that changing over time for Chipotle? It's a great question. We saw a small tick up in crew turnover last year. That was largely due to sales deceleration. Our labor algorithm is built on a fixed component to open the restaurant and then a variable component based on sales. Think sales per man-hour, if you will. When sales fall, hours available fall, availability for team members falls. We had some attrition on the periphery that caused crew turnover to push up. Albeit still underperforming or performing better than industry. What I'm most proud of is this year, it's right-sized, it's back to historical lows, and that GM turnover specifically is the lowest I've seen it in my 10 years with the brand. Engagement scores, we ran our crew engagement survey just six months ago, eight months ago, with high marks on engagement, company. OSAT is through the roof. If you were in attendance at our all-manager conference back in March, I said this to a couple people earlier, the energy, the excitement, the enthusiasm, how people are engaged with this brand, and cultural moments where I had a general manager on stage talking about how she moved here from Mexico. She bought her first home with her Chipotle stock. She has now sent her daughter through college and moved the entire room to tears. Just tells me culturally, we're in the right place. We're in the right place. Our people are engaged. They're all in. They believe in this brand as much as they ever have. For us to have such low turnover numbers and still be a high-growth brand, I think is next level. I think there's no one else doing what we do. Adam, do you need to be reinvesting in the business with incremental labor investments in the next few years for you to maintain this level of customers engagement from your employees? Or do you think that the investment level you have today in the stores is enough? In other words, are the stores properly staffed right now to allow for this turnover to be low? Yeah, we think they are properly staffed right now, especially with the investment that we're making in ours through the High-Efficiency Equipment Package. There's still opportunities that come up, like the apprentice one that we talked about earlier, or adding that assistant general manager into roughly the 25%, 30% of restaurants that don't currently have one because they don't qualify from a sales perspective. We'll continue to look for those opportunities and really if there is a good reason from a transaction-building initiative, from an ability to create better experiences for our guests, for our crew members, and it's a responsible way of going about it, we'll absolutely look for those investments and continue to make them along the way. Proud to say that we've made several over the last couple of years, and we'll continue to look. How do you expect the margin profile for Chipotle to be evolving from today's level to 2029, 2030? How's the progression of margin going to be changing over time? Historically, you were reaching 27%, talking about potentially reaching 30%. Given where you are in your stage of maturity, do you still believe that this is the right algorithm that we should be thinking about? Are you more in the camp of we should be considering more investments in the business, therefore, 25%-26% is a good rule of thumb for this business? Yeah. Our current margin profile, it's under pressure because of the price that we're taking is very much under inflation that we're running right now. For example, in Q1, we took about 90 basis points of price. Our inflation was actually over about 3%. That creates a couple 100 basis points of margin dislocation on a year-over-year basis. Similar numbers for Q2. Price is stepping up to about one and a half. Inflation is also stepping up due to some things with avocados as well as dairy that we expect those to tick up a little bit, as well as beef. Right now, there's that dislocation. As we continue this slow and measured approach to pricing, we expect to be able to correct that dislocation over time. Once we get to that point, you're back to that kind of mid-20% range, call it 25% or so margins, roughly at the volume that we're at now, especially when you take out some of the other transitory things that we're seeing right now around freight and utilities and some other items. From there, that's at a roughly $3.0 million-$3.1 million AUV. As we continue to march AUVs north through the initiatives that we have in place over the next many years, we expect our margins to grow as well. It kind of goes back to that algorithm of our mid-single-digit comp breakdown. If you're getting a couple of points of price to offset inflation, you're not growing margin there, or you're growing it on those incremental transactions. If you can get transactions of 2% or 3% each year, you're flowing through those additional transactions at about 40%. With that said, we're not married to it in the sense that if there are opportunities to invest in the business, invest in labor like we just talked about, we'll absolutely take an approach and communicate that effectively and kind of really see where it is that we believe that is the right thing to do or where we're going to get the returns from that. With all that said, you can start to play with the math and as you march north of $3 million in AUVs towards $4 million, those margins should go from that mid 20% range to approaching 30%. I believe the margin algorithm is still very much intact. Okay. You're currently growing the stores at about 8%-10% per year. What gives you the confidence that the unit growth is still sustainable even with more compressed same-store sales growth? How should investors think about the theoretical maximum number of stores that you can be opening on an absolute basis on an annual basis? Maybe Scott. Yeah. Last year we built 334 new restaurants in North America. This year we'll build 350. We had line of sight on, so the trajectory for a new restaurant is probably 21 months out today. When you're building that pipeline, as you can imagine, the pipeline is fully built for 2027. We were marching towards a 375, 400 number. I stalled the organization and I said, "I like 350. Let's just stay at 350." I don't know why the world is in such a rush for me to get to 7,000 restaurants. I'm not in that big a rush. If we can show sustainable, durable returns, 350 restaurants a year, which we are, I think it's the right spot for our organization. Right now, we're still seeing 60% year two ROI on the investment. We're still seeing 80% of productivity for new restaurants, and we're still seeing about 1% cannibalization, which has been consistent for the last 10 years. If something fractures there, that'll cause us to pause or pull back. Even if I turned it off tomorrow, I'm still going to build 350 restaurants this year. I'm still going to build 350 restaurants in 2027. Those deals are already signed and in flight. I'm sure there are dead deal costs we could probably absorb as an organization. I don't see a need to do that today. What about the remodeling of your own stores? Do you think that the layout and the format of the stores is conducive to the customer experience that we are seeing today, or the customer occasions that you're aiming to drive going forward? Are you expecting the next three to five years to see a remodeling cycle to shift a little bit the interior design of your stores? Yeah. We have not had a remodel program at Chipotle Mexican Grill in 33 years. As you can imagine, we have some assets that are very old at this point, approaching 30 years or 30+. I've asked the team to go back and let's take a hard look at different levels of investment on a remodel to see what the returns will be. We have a test this summer with 20 restaurants across three different DMAs, where we're going to test varying levels of expense to see what the return will be. Provided those tests go well, whichever one wins the day will inform a remodel strategy going forward. I think there's probably 1,000-1,500 restaurants today that are just dated. They're dated. If you remember when I joined the brand in 2017, our assets were in distress. We had broken tile, busted light lenses, torn booths. You name the gamut of problems. Our buildings were really dark red on the interior, I don't know if you remember those days. We used an incandescent lamp that was really low light in the restaurant. One of the first things I did is I cleaned up all those problems. I remember asking the board for $50 million to go fix. We only had 1,900 restaurants at that time. $50 million just to go fix some of the deferred maintenance out in the system. While I was doing that, I painted all the walls white, and I re-lamped every restaurant with a really bright bulb, just to brighten up the asset and make it look approachable and a place you'd want to sit and have a meal. I think that worked well for about 10 years, and I think we've gotten to a point now where some of our assets, no matter how much we reinvest in maintenance costs or maintenance capital, just need a facelift. Right? There's a proliferation of competition. I think there's some really cool concepts out there that are having a meaningful impact on consumer experiences. Our new habanero prototype, I don't know if you've seen that, I think you can see it online. Someone said they saw it earlier. It's such a modern, forward-looking design of Chipotle. It's such a stark contrast to the legacy restaurants that were the old tin and trim with the pipe bollard seats, and the mushroom tops, that I think there's an opportunity there. I'm hopeful that the test will work, because I'd like to pull together a remodel strategy to address those older assets. What are, roughly speaking, the three levels of investment that you're looking to make? I know it's early days, but what is the rough quantum that we are talking about here? Call it $200,000, $400,000, $600,000, from interior design, exterior design, and kitchen efficiency. It's been a long day. Kitchen efficiency, to make sure we're delivering the best experience. Great. In the final few minutes that we have, there is also increasing questions that we are receiving from investors regarding the state of competition, and specifically, how have rapidly expanding fast casual competitors affected competition for talent and real estate? We took a hard look at CAVA specifically growing aggressively in New York and Florida. We did a pretty comprehensive deep dive analysis to understand the competitive intrusion. While we saw some marginal sales pressure within the first six months, it recovered very quickly. What ended up happening is those CAVA restaurants are bringing more consumers to that trade area, and they're making a choice about CAVA and Chipotle. What we're seeing is they're choosing Chipotle. I think there's two reasons. I think our food's better. I'll put our food up against anybody in the world. I think we're much faster, and we deliver a quicker experience, which is probably one of the Achilles' heels of that brand. I think they're doing fantastic work. Don't misunderstand my comments. I think it's a great brand. I think they're really doing some really cool things, but I just think when I think about competition, I will build almost the same number of restaurants they have in total just this year. You think about the size and scale and the growth trajectory of Chipotle, I really don't see competition standing in the way. As it relates to talent, we've lost two people in the organization, two really key C-level roles that were VPs that moved to C-level roles, and which we applaud. I never said you had to start at Chipotle and grow here and stay here. I have always said, "Come to us, grow here. You can go anywhere." If we can help people achieve their career goals, we'll always support that in a meaningful way and make sure people are taking advantage of the best opportunities for them and their families. Full stop. We're an incubator for great talent. It's something we hang our hat on at the end of the day, whether that's operational talent or talent in the support center. I think that's important. I think it should be applauded, not criticized. Great. Adam, what kind of comp progression are you expecting this year? What are some of the key milestones for you this year? As we look for 2027, you're probably going to have some tougher lapping from this year, given the launch of the four LTO instead of two LTOs, the dips and sauces, the catering that is progressing, as well as the relaunch of the loyalty program. How are you thinking about the building blocks for 2027? How do we make sure that there is a successful, quote-unquote, "lapping" in 2027? Yeah, I think it really is the build. I think the momentum builds with a lot of these initiatives. When you go to the LTO strategy, it's bringing new guests into the funnel, and they come back again and again once they're introduced to Chipotle. So there's a building mechanism of your LTO strategy, then you get into the rollout of the High-Efficiency Equipment Package, starting to really speed up the catering rollout. These are all initiatives that are meant to build that comp profile throughout this year, that gives you a head start going into 2027, and you're still rolling out the High-Efficiency Equipment Package. You're coming up with new, exciting, enticing menu innovation. You've got Fernando coming in and starting to, by that point, having a real grip and change in our brand messaging. I just look at it as a continuous build to get us back to that mid-single digit ultimate goal and keep us there moving forward, if not greater. Meaningful growth in the digital commerce engines. Yes. Yeah. Great. Scott, to wrap up, how will Chipotle be different five years from now, and what is the hardest choice that you think you'll be making in the next five years? What a great question. It has been my intent and my endeavor to keep the brand consistent. I think the brand is beautifully simple in nature, very hard to execute. I think that's what created this competitive moat that we have around the business that's hard to replicate. I think it's important as us as leaders, as stewards or shepherds of the brand to always keep front and center what is pure and beautiful about this brand and keep it just that way. Whether that's supply chain, how we deliver the experience in restaurant, I think that's most critical. I don't think the brand changes. I think it evolves from an asset perspective. I think it needs to evolve. I think the new habanero design is probably the way of the future. I think we prove, and which we're already on track to do, that it is an iconic global brand, not just a U.S. brand. We're proving that in the Middle East. We're proving that now finally in Western Europe. We'll open Mexico this year. We'll open Seoul, South Korea this year. Singapore will be a fast follow. I've been to these markets. I've talked to the people in these markets. They are clamoring to get Chipotle Mexican Grill. I think you'll start to see this brand really take root, and we will solve for food challenges around the globe in the most meaningful way. Proving yet again that people should have access to wholesome, nutritious food, regardless of your income level or your lifestyle, right. We're proving you can do just that at a great price point. Excellent. Scott, Adam, thank you so much for joining today. Thank you. Thank you, everybody here. Thank you. Thank you, guys.