00:00Talk to us about this expansion, why you're bringing this specific model of drive-thru to the Middle East, and why now?
00:06Hi, Jennifer. Good morning, and thanks for having us on.
00:09You know, it's always been our endeavor since we started the brand back in 1993 to bring our way of food,
00:15our way of eating food with integrity to as many people around the world as possible.
00:20And so when we found our partner in Alshaya Group in the Middle East,
00:24we knew it would be a natural extension of our brand and a great partner who could bring Chipotle to the region with a lot of success.
00:33So then, Scott, talk about what you've seen already in some of the markets outside of the U.S.
00:39and whether or not you're taking some of the learnings in your home market to your expansion in the Middle East.
00:46Yeah, it's a great question, Jennifer.
00:48So we've had a lot of success in the U.S. and also in Canada.
00:52We've expanded into Western Europe over the last many years.
00:55We are currently in France, the U.K., and Germany.
00:59And we knew the Middle East would be a natural extension for us to bring wholesome, nutritious food to the region
01:04in a place where we knew there would be a lot of fanfare.
01:07And I'll tell you, Alshaya Group has been extraordinary partners in our expansion here,
01:11and we have been met with exceptional fandom and a great reception here in the Middle East
01:16with volumes that rival some of our best-performing restaurants in the U.S.
01:22Scott, when we talk about reception, it's been a bit of a bumpy ride for Chipotle,
01:27especially with some of the target consumers over the past few months.
01:32Can you definitively state what is going on with the U.S. consumer
01:35and even with the Chipotle consumer at this point in time?
01:38You know, I've said in the most recent earnings call how we feel like the lower-income consumer is under pressure.
01:46But I'll tell you, our brand is built well to withstand any economic uncertainty or fears around the economy in general.
01:54And so we'll continue to lean into high-quality innovation,
01:57deliver food experiences that are on trend with Chipotle that our consumers have come to love through the last many years.
02:04And so we know that our plan to win going forward is around delivering exceptional in-restaurant and digital experiences.
02:10And Chipotle has been through tough economic times in the past.
02:13We've weathered those storms successfully, and we'll weather this one as well.
02:18Does this one feel different, though, Scott?
02:20I know you've been CEO for just over a year, but I wonder if you think this one feels different.
02:25We heard from Paul Krugman, who said actually that he's sounding the alarm about the U.S. consumer.
02:31Surely this might feel like a different moment for the brand.
02:37You know, the pace of disruption in business today is probably faster than it has been in the last 10 years or so.
02:44And each economic stumble or downfall or hurdle, I should say, feels different.
02:51This one feels specifically challenging because the economy in general seems to be holding up just fine,
02:57but there's still uncertainty for that lower-income consumer about what's to come.
03:00And I think their angst has been sidelined at present, or spending on things like health care, insurance, financial services, or general merchandise,
03:09and pulling back on things that may be discretionary.
03:13How much does the expansion potentially offset some of these concerns in the U.S., Scott?
03:22You know, the U.S. is obviously our bread and butter.
03:25We're closing in on 4,000 restaurants in the United States today.
03:28The reception we're receiving outside of the U.S. is exciting to see.
03:33And some of the same fan experiences we saw when we first opened in the U.S., we're starting to see in the Middle East.
03:39I think we've already said publicly we're expanding to Latin America next year as well as Southeast Asia.
03:45We'll open in South Korea as well as Singapore.
03:49You know, as you think about partners around the world, we're looking to, again, expand our way of food,
03:55this idea of food with integrity around the globe and what we believe to be the best-in-class eating experiences.
04:00Do you have to potentially think about the impact, though, of tariffs on the brand?
04:07Do you look at increasing prices at a certain point in time?
04:10I know you're exploring some other options, but how do you think about that?
04:15You know, we're seeing some inflation in the business today.
04:17I think I said on the last earnings call that we'll see some modest inflation as it relates to tariff impact as well as commodities overall.
04:24I know stake in North America today is probably at an all-time high.
04:29We don't see that pulling back at any point.
04:31We don't think it's right in this environment to pass along those cost pressures to the consumer.
04:37So we'll absorb most of those with our partner suppliers and look for other mitigation opportunities
04:41to continue to hold margin constant without having to take price.
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