Brian Niccol: Yes. I don’t know how to think about our frequency relative to some competitive opportunities out there. What I can tell you is the folks that are in our rewards program, we see — with their high engagement, we see higher spend and more frequency. And then also what we are seeing in the business, which I think is really nice to see as a result, I think the efforts both in better operational execution and I think our advertising around just the base business, this idea of real ingredients, real culinary, fast customization. We’re just seeing the base business grow. So obviously, we love what Chicken Al Pastor does for us, as far as menu variety. Obviously, we love the fact that we’re able to re-hit barbacoa, which is within our existing business.
But I think it’s been nice about the cadence of marketing and news combined with, I think great operational execution. We are just seeing the base business grow. So we’re getting more new users, we’re getting existing users to come more often. And it’s a great recipe to grow your core business in all the various ways we’ve talked about right from marketing to digital to operations.
Jon Tower: Great. Maybe just pivoting a little bit on you. Can you talk about the Canadian market and specifically about the potential you think for that over the long term? And then expanding, I think you had mentioned earlier the idea that Europe looks a lot like Canada five years ago. But do you feel like you can, given everything you’ve learned in Canada, implement a lot of what you’ve taken there and apply it to Europe such that the time-line around getting growth in Europe will be a lot faster versus what you saw in Canada?
Brian Niccol: Look, I mean, we’re delighted with what’s happened or what’s occurred in Canada five years, six years ago. We were struggling to make the unit economics look very compelling. Now they are very compelling. It’s right there with the US. And as a result, that business is closing in on 50 restaurants. And pretty soon, we’ll have 100 restaurants up there. And then I think, we’ll be talking about having hundreds of restaurants in Canada, which is really exciting. To answer your question on Europe, yes, look I think our belief is we’ve learned a lot on what we’ve had to do in Canada to get that business to perform. We are taking that leadership there, giving her the opportunity to oversee our Europe business, take those lessons learned and apply it.
And then at the same token, we are taking — what we think are some of our best operators in the US, given them the opportunity to grow by working in our European business. So the time-line, I don’t know what the time-line is going to be, but I am feeling optimistic that we’ve got the right operators, the right leadership. And then look, the proposition is compelling, right? Clean food, great culinary, done fast with high levels of customization that resonates. So I’m optimistic about where we go from here for all the reasons I just mentioned.
Jon Tower: Got it. I appreciate you guys for taking the questions.
Operator: The next question comes from Dennis Geiger with UBS. Please go ahead.
Dennis Geiger: Great. Thank you. Brian, I wanted to follow up on your comment there that the incremental traffic or visits are coming both from existing customers coming more, as well as from new customers. I don’t know, if you have this granular level of detail, but I’m curious if you have a sense maybe from where — maybe it’s everywhere, but if it’s QSR, if it’s other fast casual. Any sense — are you picking it up more at lunch, the incremental visits and customers more at dinner? Is there any other level of granularity to kind of help explain some of the success and maybe where it’s coming from as it shifts to you folks?
Brian Niccol: No, not really. I mean the good news for us is it’s pretty broad-based, right? It’s coming across all income cohorts, it’s coming across lunch and dinner in the afternoon. So it’s not like there’s one thing that I would identify as like this change in consumer behavior. I think the one big change for us is we are performing a lot better in giving people the experience that they actually want from Chipotle. I think you’ve heard us talk about this time and time again, exceptional food, exceptional people, exceptional throughput. And I think we’re just getting better at each of those things. And the good news for us is we have an opportunity to be even better than we are today. And then you layer in, what I talked about earlier as it relates to marketing, both talking about the brand itself and then some of this menu news, it’s just — it’s one of those things that builds on itself, right?
Great digital programs, great marketing programs become much more effective when we are executing operations at a higher level. And I think that’s — what’s happening.
Dennis Geiger: That’s great. And then just one — just on the menu innovation follow-up. Just given the success you’ve seen as you bring back past favorites, as it relates to the go-forward, given the success that you’ve seen in recent years from that strategy, has that shifted at all how you think about menu innovation going forward, as it relates to bringing back past favorites versus some newer items? Any shift there for you and for the team? Thank you.
Brian Niccol: No, no real shift. I mean, I think we like this cadence of one or two items a year. The good news is we’ve got now — a great proven group of menu news that we can provide. And the good news is we’ve got a really talented culinary team and a talented marketing team that continues to help us find, I think new flavors that make sense that can be executed correctly at Chipotle. So you’re going to see us continue to hopefully mix in things that we know have worked in the past and things that will be new but have gone through our stage-gate process so that we have a high level of success or belief in success going forward. So we like the cadence we’re in. We can operate really well with it, and it seems to be resonating with our customers. So we want to keep doing what’s working.
Dennis Geiger: Thank you and congratulations.
Brian Niccol: Thank you.
Operator: The next question comes from John Ivankoe with JPMorgan. Please go ahead.
John Ivankoe: Hi, thank you very much. I wanted to get an update on some of the near-term operational initiatives that you’ve talked about before, the clamshell, Autocado, Hyphen just kind of where we are in the stage-gate process. And if you can put that in the context of kind of an updated, I guess, funding of the Cultivate Fund, what types of opportunities that you’re looking for, for the next phase of opportunities to overall accelerate the Chipotle brand. Thanks.
Brian Niccol: Yes. Sure. So obviously, all this stuff is really exciting. The dual-sided grill, we have expanded to a few more restaurants, specifically our high-volume restaurants. We think that’s not only a great unlock for consistency in the culinary of our proteins and meats, but it’s also a nice unlock for high-volume restaurants. Because you can cook the chicken faster, it allows the teams then to start prep closer to when we want to serve customers, which is really exciting. So we are continuing to test and learn on that front. We’ve also made some nice progress on the energy use associated with it, which was something that was a bit of a barrier. On Hyphen and Autocado, I’m happy to say, we’ve got both of those units back in our Cultivate Center for a couple of prototypes in.
And we are feeling really good about getting those into a restaurant probably in the back half of this year. And then there is a lot of other things happening, too both on like forecasting, deployment, tools to help our team members cut veggies more efficiently, more effectively. So there is a lot of good things happening behind the scenes. And I am optimistic about what some of these things can do for our team members to give them a better experience, which then I know translates into better culinary and then ultimately better experiences for our customers. On the Cultivate Next fund, this continues to be a real I think, highlight area for us because we’re continuing to see great ideas. And these great ideas are all the way from different ways to fertilize, to weeding in the fields, to different ways to actually deliver food or oils.
So the thing I know about this is — it’s perfectly in sync with our purpose of cultivating a better world. And we can use it to really move forward the entire system necessary to give people great culinary, great ingredients, great food, at affordable basis. So you’re seeing us invest up and down the supply chain all the way to the point of customer experience.
John Ivankoe: Thank you.
Operator: The next question comes from Sharon Zackfia with William Blair. Please go ahead.
Sharon Zackfia: All right. Great, thanks for taking the question. I guess on California, where you took the price increase, I know it’s pretty recent. But could you give us an idea of where average ticket now sits in California and whether you’ve been seeing any resistance within that market as wages have ticked up and you’ve had to take that price increase?
Jack Hartung: Yes, Sharon. So the average ticket in California is similar to the rest of the country. Until this increase, our menu prices in California were very similar to the averages throughout the country, even though the cost of doing business out in California tends to be higher. After the increase, we still have burritos that are going to be reasonably priced. The chicken burrito is going to be around $10. It’s very early, as you mentioned. It’s too early to tell. We’re not seeing any kind of change in consumer behavior yet, but it’s only been a matter of a few weeks so far. So we will keep a close eye on it. We still think in California compared to competitors, we are still a terrific value, if you look at what others are charging.
Because if you look at others in California before this increase and compare them to average menu prices throughout the country, they tend to be higher. They are passing on a higher cost of doing business. We’ve tried to keep our pricing very, very affordable in California. So we still think we offer a great value here. So we think, we’ll fare quite well. As a consumer absorbs and figures out how do they want to balance our budget, we think Chipotle will stay in the budget.
Sharon Zackfia: Okay. Great. I wanted to ask another question too as it relates to Chipotlanes, which obviously have been great. But as you look at kind of the automation and the initiatives you’re working on, do you think there is anything that you are looking at or that could come down the pike that would open up kind of the opportunity for a non-digital drive-through, just a regular drive-up and order drive-through? Or is there not something from a robotic assembly standpoint that could answer that for you?
Brian Niccol: Yes. We don’t envision that occurring. The thing that makes Chipotle pretty special is all the customization, and we would hate to screw up that experience. And that’s why — you might remember this. I remember when we first did this, everybody was like, oh — were you going to be confused, how are they going know how to order, so on and so forth. And it’s turned out to be a really pleasant experience for both our team members and our customers because literally all they have to do is pick up their food. Everything is paid for. The order is accurate. It’s on time and on you go. So we think there’s other places for us to be more productive, where we’re hunting on kind of using robotics and AI and finding other ways to do productivity. But you’re not going to see that coming down the pike.
Sharon Zackfia : That’s great. Thank you.
Operator: The next question comes from Brian Harbour with Morgan Stanley. Please go ahead.
Brian Harbour: Yeah, thank you. Good afternoon. I had a question just on your comments about rewards program. Obviously, you continue to add people to that. But the effort to kind of drive engagement on a same-user basis, I know you’ve worked on personalization of offers and such. Have you seen that kind of showing — have you seen pretty nice improvements in frequency or anything you can say just about what you’ve observed kind of from the same-user base of Rewards members?
Brian Niccol: Yes. I think one of the things that’s pretty interesting that over the last, I’d say couple of months has really worked well for us is kind of between machine learning and AI. I’m not sure what the right label is here. But we figured out how to identify somebody that might go less frequent so that we can keep them in the mix. And that’s proving to be pretty powerful. Still a very small cohort that we’re learning on. But the good news is we are seeing nice progress with that cohort that I’m optimistic kind of in our stage-gate process. We’ll take that learning and figure out how to apply it on a much bigger scale so that then you can feel it across the digital business. But it’s those types of things where I think the team is doing a nice job of commercializing the data in a very effective way that ultimately for the customer, it feels like more personalization, more relevance.
