Brian Niccol: Yes, well, obviously, we’re really delighted to see, over seven points of transaction growth in the fourth quarter. I think that’s a testament to operations teams in the field having a focus on getting great throughput. And we’ve talked about this quite a bit. Now, there’s the four pillars of great throughput. I’d say we’re kind of still in the early stages of this because we’re just getting people in position. So, I think you heard my comments about, hey, we now have four people on the front line, almost 50% of the time. That’s only one component of the four pillars. And I’ll, if you really think about it, right? It’s that’s part of our idea of nascent some class. Like we want to be prepared, people in position ready to go.
So we still have a lot of upsides on making sure that we have the expo, the linebacker in position and ready to go. So we’re — we still think we’re early, early days on this. There’s a lot of upsides to it. I am delighted to see the progress though. We’ve increased our Max 15 pretty much every month throughout 2023 and saw some of our best results in December and those trends continued into January. So lots of space to still grow into. But the thing I love is that the teams are laser focused on getting after it. I think we’ve now given them more tools that they have better visibility on how they’re performing real time. And, I get to visit restaurants is the first thing that’s on people’s minds. How are we doing on our throughput? How are we doing on our culinary?
And how are we doing with the people and culture? So it’s nice to see.
Lauren Silberman: Great. Thank you. And if I could ask on quick one on menu innovation, how you’re thinking about it. I know you mentioned one to two this year. I know you typically do an LTO on chicken and this spring and then beef later in the fall. Any change to how you’re thinking about cadence, especially as you consider sort of throughput and operations?
Brian Niccol: Yes. I mean, look, I think what we demonstrated this past year is that’s definitely a cadence that our operators can execute great throughput with. So, they delivered Pollo Asado with excellence. And then they did the same thing. I’m sorry, Chicken al Pastor with excellence. And then followed that up with Carne Asada. So, we feel really good about doing one or two a year. I think you’re also going to see us this year do a little bit more spotlighting, even on the core menu, which we’re doing right now with our lifestyle bowls. And then you’ll see us do that as well during the year. So we think we’ve got the right cadence, we think we’ve got the right innovation pipeline, and also the things that we’ve done in the past we’ve demonstrated, we can revisit those with success as most recently with Carne Asada.
Operator: The next question comes from Brian Harbour with Morgan Stanley.
Brian Harbour: Yes, thanks. Good afternoon. Brian, you mentioned just suggestive up self at checkout, and I was curious on that theme or maybe just a bar theme, what are some things that you think you could do to drive check, right? I think we’ve talked a lot about transactions, but what do you think could be check drivers as we think about this year and beyond?
Brian Harbour: Yes, look, I think one of the things that’s been really nice to see is the incidence of our sides has continued to go up, like queso and chips and salsa, we’re continuing to see people adding onto their entrees. And I think that has a lot to do with what we’re able to do digitally, both at the point of checking out as well as how we communicate with people through our rewards program, right? So, the suggestive sell example I’m talking about, we’ve now turned that into a smart suggestive sell. So I’ll give you the best example, or a really simple one. Historically, you get a Mexican Coke with your order. When you get to check out it, if you don’t have Mexican Coke in your basket, we will serve you a suggestive sell off, hey, you forgot your Mexican Coke.
Versus before, we might have just been saying, hey, maybe you should think about chips and queso. So what we’re seeing is that type of insight into the individual results in more commercialization or higher check as they check out, because we’re serving a lot of things that they historically have usually added to their ticket. So we’re seeing that make great progress. And then obviously I think our queso, chips, and guac are pretty darn special. So the more people learn and experience it, the more they want to add it to their check.
Brian Harbour: Okay, great, thank you. Jack, are you willing to comment just on kind of the levels of, I guess, 1Q, maybe it looks similar to the fourth quarter, but are you willing to comment on the level of pricing you’ll see just factoring in kind of California as we start to think about, perhaps the second quarter?
Jack Hartung: Yes, Q1 will be similar. Call it in that 2.5% to 3% range in Q1. We haven’t made a final decision, in terms of pricing with a FAST Act. We know we have to take something as a significant increase when you talk about a 20 percent-ish increase in wages. And I think we talked in the past that there’s one approach where you would cover the profitability. So you would breakeven from a profitability standpoint, but not protect margins. So another word, margins would go down, profitability would not, or you could take a higher price increase and you protect margins as well. We haven’t decided within that range. We’ll wait and see just what the landscape looks like, what the consumer sentiment is, what other companies are going to do.
So I would say in terms of the impact California represents about 15% of our restaurants. So depending on where we end up, there’d probably be an extra 80-ish, 90-ish basis point to maybe something over 100 base point in terms of additional menu price across all of our 3, 400 restaurants just to give you kind of an order of magnitude.
Operator: The next question comes from John Ivankoe with JPMorgan.
John Ivankoe: Hi, thank you. I was thinking about the amount of time, attention, labor hours that you spend in morning prep every day at the store level. And as the system grows, gains scale, potentially benefits from more equipment, more technology, more automation, maybe some more centralization. I was wondering for you to talk about opportunities to maybe reallocate some of this prep labor that you may have longer term, how big of a bucket is that? And obviously, Autocado is one identified solution. How much more is there and how much more could that mean to the overall business model of the future?
Brian Niccol: Yes. Look, thanks for the question. Obviously, prep in the morning is a critical piece of the puzzle. If we get our prep done correctly, we usually have a great lunch. Actually, we always have a great lunch when we get the prep done correctly. Usually what we run into problems is if we’re running behind on prep. So things like Autocado, other robotics to help us cut the onions and the jalapenos, these things would be huge enablers. That’s why you continue to see us look at all these robotic ideas to make prep even more efficient. One thing I know for sure is if we could get every restaurant 100% of the time to have their prep done on time and ready to roll, our throughput would go up. So we’re going to do everything we can to ensure we’re investing in prep both more efficiently and then also effectively to get it done.
How you reallocate that time, we’ll figure that out as we get closer to it. And that’s part of the reason why we’re using the stage cake process. As we put Autocado into stores, we will see how that plays out. But you mentioned centralizing kitchens on this. That’s something we’re not contemplating. We believe to keep the freshest food, the best culinary that needs to happen in the restaurant.
Operator: The next question comes from Sara Senatore with Bank of America.
Sara Senatore: Thank you. A couple of follow-up questions. The first is, I wanted to go back to your comment about restaurants with for in the make line going from 30% to 50% is still a long way to go. I’m wondering if you can maybe quantify what the contributions to that seven, that increase of transaction growth, which is to say, presumably it’s not like, every 20 points of staffing improvement gets you seven points of transaction growth. But if you could just maybe rank order, is it staffing or are there other things that are also going into this? And, parallel that perhaps is what you saw in the last decade when you also saw a real focus on the four pillars and improvement and throughput.
Brian Niccol: Yes. So great question. Here’s what I’ll tell you is for sure you’ve got to be staffed. You’ve got to have stability in the teams, right? That’s how we get the reps so that we execute better every time. The other thing I’ll say is when we looked back and we were doing maybe our best throughput, these numbers can easily go from 50% to 60%, 70%, some odd percent in execution. So it’s not unrealistic for us to believe we can get better than where we are today. And I think the teams know that. The other thing that I think is also helping the teams is to have the visibility. So they know how they performed in their 15 minutes, allows them to course correct real time versus finding out what happened that day. And then they kind of missed out on being able to course correct for a later part of lunch or dinner time.
