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Chipotle Mexican Grill, Inc. Q1 2010 Earnings Call Transcript

Chipotle Mexican Grill, Inc. Q1 2010 Earnings Call Transcript

Chipotle Mexican Grill, Inc. (CMG)

Q1 2010 Earnings Call Transcript

April 21, 2010 4:30 pm ET


Kate Giha – Director, IR

Monty Moran – Co-CEO

Jack Hartung – CFO


Jeff Omohundro – Wells Fargo Securities

John Glass – Morgan Stanley

David Tarantino – Robert W. Baird

Nicole Miller – Piper Jaffray

Joe Buckley – Bank of America-Merrill Lynch

Tonya [ph] – William Blair

Matthew DiFrisco – Oppenheimer

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Greg Ruedy – Stephens

Jason West – Deutsche Bank

Paul Westra – Cowen & Company

Bryan Elliott – Raymond James



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Good afternoon, everyone, welcome to the Chipotle first quarter 2010 earnings conference call. All participants are now in a listen-only mode. After the speakers remarks there will be a question and answer session. (Operator instructions) As a reminder, this conference is being recorded. Thank you.

And I would now like to introduce Chipotle’s Investor Relations Director, Kate Giha. Please go ahead.

Kate Giha

Thanks so much.

Hello everyone, and welcome to our call today. By now you should have access to our earnings announcement released this afternoon for our first quarter 2010. It may also be found on our Web site at in the Investor Relations section.

Before we begin our presentation, I will remind everyone that parts of our discussion today will include forward-looking statements within the meaning of the Securities laws. These forward-looking statements will include discussion of our international expansion plan and A Model restaurant strategy as well as projections of comparable restaurants sales trends, the number of restaurants we intend to open; expected trends and various costs in our business and other statement of our expectations and plans. These forward-looking statements are based on information available to us today, and we are not assuming any obligation to update them.

Forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We refer you to the risk factors in our annual report on Form 10-K for 2009, as updated in our subsequent 10-Q for a discussion of these risks.

I want to remind everyone that we have adopted a self-imposed quiet period, restricting communications with investors during sensitive periods. This quiet period begins on the first day of the last month of each fiscal quarter and continues until the next earnings conference call. For the second quarter, it will begin June 1 and continue until our second quarter release in July.

On the call with us today are Monty Moran, Co-Chief Executive Officer, and Jack Hartung, Chief Financial Officer. Steve Ells, our Founder, Chairman and Co-Chief Executive Officer is traveling out of the country and couldn’t be with us today. So I’ll turn the call right to Monty.



Thanks, Kate. Steve asked me to pass along a few things in investments so I will start with that. Our performance during the first quarter is something that all of us at Chipotle should be proud of. More importantly, we are proud that during the toughest economic times our entire company remains focus on serving the best foods made from the finest ingredients we can find and providing extraordinary service to each customer visits Chipotle.

And now as the economy appears to be improving those efforts are beginning to pay off with more customers visiting Chipotle more often. And because our restaurant managers and crews are the strongest as they have ever been we are confident each additional visit will be a terrific experience for our customers.

Steve has focused a lot of attention on our first European restaurant which is on track to open in London next month. He personally selected the first restaurant tours who have moved to London and introduced the Chipotle brand there. He also has been active in seeking and finding great local ingredients and is likely to report the food he cooked with these ingredients is delicious.

Steve has used London as an opportunity to take a fresh look at many other things we do in our restaurants including design. We are opening in London with a great site and compelling new design. And we have already started the process of hiring and training a team of top performers. So Steve is excited and optimistic about the opening. And we are confident that this is just the first step in what will eventually become a successful European growth opportunity for Chipotle.

Steve is reporting with Mark Crumpacker, our Chief Marketing Officer on a new ad campaign called Straight Talk, which was launched this month. The new campaign speaks more directly about our food and our commitment to finding more sustainable sources for all of the ingredients we use. But it does in a way that isn’t too serious preachy. It is true to our brand and our personality while addressing a subject that we believe in. And we think our customers are becoming more curious about.

(inaudible) print, outdoor, radio and online. We think this new campaign is the start of deeper, more compelling message to our customers about what we do at Chipotle to serve the best eight things most responsible food we can. We continue to believe that the more our customers know about where the food we serve comes from the more appreciative and loyalty will be to Chipotle.

Shifting gears a bit those of you who have listened to us a lot probably picked up on the fact that we work hard to focus on the few things that we think are the most important to our business. One of these major areas of focus is on building a team and culture of top performers. It’s for that reason that you heard me talk and nearly every night call about this high performing people culture we are building.

Of course, it’s far more difficult to measure and articulate the progress we have made with our culture each quarter that it is for example, to report our comps, our margins or our earnings growth. But it’s clear that this culture and our top performing restaurant teams are a major factor in driving sales growth, strong margins and earnings growth.

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