Chipotle Mexican Grill Class A Earnings Call Insights: Staffing Aspects and Share Repurchase
Sharon Zackfia – William Blair: I’m just curious, I think, Monty, you are talking some about throughputs and maybe as a launch throughput not quite as robust as the overall comps throughout the day. Can you talk about staffing and whether or not there is some sort of kind of logjam with the new governmental requirements, you’re kind of having to go through or how we think about labor and the stores and what there is a step up investment necessary to kind of push the volumes beyond the 2.1 million per box?
Montgomery F. Moran – Co-CEO: The answer is no that nothing that the government is doing and none of the regulations are preventing us from getting plenty of applicants and plenty of new hires for our restaurants. The reality though is that all of our teams in the field have a vision of creating these restaurateur cultures and the attributes of a restaurateur culture are to have a team of all top performers who are empowered to achieve very high standards and the top performer piece of that means that they are getting better and better being very, very selective and who they bring aboard on their teams. So, while we’re getting literally hundreds and hundreds of applications for every available crew position nationwide, especially in light of our new hiring software Taleo System. Still our teams in the field are very, very selective in who they bring on board and sometimes that can lead to them running with teams that are a little bit more lean than they would like to have, because they’d rather wait to hire someone who has all of the characteristics of a terrific performer. So, when we look at the staffing levels of our restaurants we’re always working to have them – always working to elevate the staffing, always working to make sure that we have full teams. When we do that, yes that tends to lead to us being much better implementing these four pillars of throughput, particularly in having the expediter position available and the linebacker function available in all our restaurants. So, we are constantly looking at staffing. We’re wanting to increase our staffing in our restaurants, but we don’t want to sacrifice having terrific people in the restaurants in order to do so. So it’s just a matter of all our restaurants having a vision of staying ahead of the game on staffing, particularly as we get in these sort of busier times of year like the second quarter that we’re in now. So when we do that we’re very optimistic that we’re going to continue to be able to move the throughput needle that we moved so well over the last seven quarters or — even though this quarter was I think a little disappointing in terms of our ability to move the lunch throughput.
Sharon Zackfia – William Blair: Can I ask a follow-up, what kind of ballpark figure percentage would you say is kind of ideally staffed in Chipotle system at this point?
Montgomery F. Moran – Co-CEO: When you talk about percentage. I don’t really know how to put in percentage terms in the sense that we have, you know, our restaurants have also different volumes. So, we’re talking about numbers of people per restaurants, so I don’t really understand how to put in percentage terms.
John R. Hartung – CFO: There is not. We don’t need to move our labor as a percentage of sales up to get throughput gains that Monty is talking about, often times, as we’ve got enough people, but somebody will call out on a day, and so don’t show up at the lunch shift or we’ve got new people and they’re not ready (to being an ace) in their place on the frontline. But in terms of labor as a percentage of sales, there is no need for that percentage to go up in order for us to get throughput gains that we know are possible.
Nicole Miller Regan – Piper Jaffray: Looking at the results trying to understand the share repurchase and how that would look for modeling purposes for the rest of the year. Can you talk to us about if in fact you are still share repurchaser, can we model it in what will be the magnitude because to your point, Jack, even though you have accelerated development and, well, you are still sitting on the 700 million on the balance sheet?
John R. Hartung – CFO: We’ve always been opportunistic since we are still a growth company and we still think that we’ve got significant opportunity over the long-term to invest in some high returning assets. We plan to grow seeds, which aren’t growth strategies today but we think will turn into growth strategies in the future. So, we know that the best way we can add shareholder value over time is to invest in these very high returning assets. The share repurchase has been more opportunistic thing for us. While we’ve got the cash in the balance sheet we’ve taken advantage of inflection points in our stock when the stock has pulled back like it did last year. We got very, very aggressive. The stock has run up recently and so we are less aggressive when the stock has run up. We don’t consider ourselves to be perfect at figuring out exactly what our stock should be worth at a particular point in time but because it moves up and down throughout the year we get very aggressive on the way down and we get less aggressive on way up. I would not extrapolate our purchases over the last quarter or two where we’ve been very, very aggressive maybe it has been a last three quarters now. I wouldn’t extrapolate that and say we’ll continue that, unless there is an inflection point in the stock based on the fact that now we’ve recovered – I think it is about $100 since the low point back in October. That should lead you to expect that. We would be less aggressive in the buyback. But every dips that we see throughout the year, we are going to in there buying aggressively.
A Closer Look: Chipotle Mexican Grill Earnings Cheat Sheet>>