By coinnews 
00:00 Brooke DiPalma
Chipotle meets expectations in its first quarter results as the chain navigated lower consumer confidence and President Trump’s trade war. Joining me now is Chipotle CEO Scott Boatwright. Scott, thanks so much for coming on.
00:18 Scott Boatwright
Hi Brooke, and thanks for having us on today.
00:22 Brooke DiPalma
Scott, let’s just set the scene here. The Conference Board’s Consumer Confidence Index showed that consumers’ expectations about the economy hit a 12-year low. The IMF lowered its expectations for US growth and all major indices are down roughly 2% this month, if not more. Is all this noise what led to a major slowdown in same-store sales growth for Chipotle?
00:46 Scott Boatwright
We certainly think so, Brooke, in large part. We saw the the underlying kind of trend step down around the February timeframe. That continued into March for us. Uh as we looked at our consumer visitation study, and we talked to consumers broadly about what is causing them to sit to be on the sideline in this economy. It’s really trying to save money, um uncertainty around what’s going on with the global economy, um certainly you know, concerns around you know, eating out more or eating at home more often versus eating out. Um as we dig into specifically what’s going on with the Chipotle consumer, uh we’re not seeing a loss of customers. What we are seeing is a convenience challenge, meaning we need to build more restaurants as quickly as we can to get to our 7,000 restaurants in North America.
01:41 Brooke DiPalma
Now, Goldman Sachs wrote in a note this week that as tariffs go into effect and consumers start to see prices rise on everyday goods that it now expects growth to slow down from there. A bowl with guacamole, my go-to order, half premium, it costs about $15 here in New York. How does Chipotle compete in this sort of environment as more consumers are turning to fast food?
02:17 Scott Boatwright
You know, at Chipotle today, the average cost of a chicken burrito or a chicken bowl is still under $10 nationally, Brooke, which we think is still an extraordinary value compared to our peer group. We are a 10 to 20% discount to QSR today, and oftentimes a 10 to 20% discount to our fast casual um peer group. So we think about value differently and we think about value is really high-quality ingredients delivered with great culinary, classic culinary techniques in abundance, and at affordability and a price point that is unmatched.
03:07 Brooke DiPalma
But Scott, we did see foot traffic drop 2.3%. That was the first decline since 2022. Is that enough to get consumers back in the door here?
03:22 Scott Boatwright
We believe so, Brooke, and so we’re going against some really tough compares this quarter as as as you probably well know. Weather has been a challenge for us in the first quarter. The shift of Easter moving three weeks later in the year is a challenge for us. Typically we see the boon or the boost of burrito season happens right after the Easter holiday, which we did see a nice pop in our business on Monday following uh the Easter holiday. So it gives us a lot of confidence that our strategy is working. We’re meeting the consumer where we are. Given um we took a look at our brand tracker, which measures how we compare against our peer group in 20 to 25 different percep perceptual drivers. I’m happy to report we hit a record 15 top three categories this year, which shows us that we’re improving in a lot of brand metrics. Two that I’m most excited about is cares a lot about the customer and great customer service. We showed up in the top three of those categories for the first time.
04:39 Brooke DiPalma
Scott, are consumers pulling back on ordering sides?
04:46 Scott Boatwright
No, we’re not seeing side attachment per se drop, but we are seeing is the frequency drop. Uh so consumers are still spending, they’re still getting their favorite sides, their add-ons, whether that’s guac or our delicious queso, uh or chips. You know, our chips are made hand handmade every day in the restaurant. They’re still an incredible value as we see them. So we’re not seeing attachments slip. We’re just seeing frequency of our customer again. We don’t have a customer issue. We have a frequency challenge.
05:22 Brooke DiPalma
I do want to talk about that guacamole. We did see food costs increase during this quarter for Chipotle due to inflation. We know that about 50% of Chipotle’s avocados are sourced from Mexico. Of course, exempt right now with the USMCA agreement, but there’s so much uncertainty day-to-day. Will consumers see higher prices for guacamole?
05:52 Scott Boatwright
Not anytime in the near future, Brooke. Our position today as it stands, I said this earlier in the year, is that we are not going to take price in this in this environment given where the consumer is, until we understand what’s actually happening with tariffs. We need to understand which components of the tariff today or tariffs today will be transitory, which will be permanent. And we’ll take a pricing action when it’s right and appropriate, um Brooke, but it is not in our purview today and not on our radar anytime in the near future.
06:32 Brooke DiPalma
Your CFO did tell investors last quarter that if there was a permanent hit to the business this year in the form of inflation that you guys would consider pricing. It sounds like potential pricing is still on the table if these tariffs stay into effect stay in effect. Is this a permanent hit on the business? And do you raise prices from there?
07:03 Scott Boatwright
You know, we would have to evaluate where we sit when that actually happens and we understand the tariff impact. Once we have that understanding, we’ll take a hard look at where the consumer sits today. We have pricing power at Chipotle that I believe is unparalleled, and we view that pricing power as an asset, and we can choose to spend that asset when we want to, given the strength of our balance sheet and the strength of our economic model that gives us the opportunity to be patient, do what’s right for the consumer, do what’s right for the brand, and make those decisions at that moment.
07:52 Brooke DiPalma
So Scott, to be clear, even though you did see same-store sales decline, you did see foot traffic decline, you still think that Chipotle has pricing power here?
08:05 Scott Boatwright
I absolutely do, especially given the value as it relates to our competitors within the space and how we think about pricing in total. I know many of the brands that are competitors within our within our space have franchise communities that take action on pricing um at will. We uh being wholly owned and company owned both here and in Western Europe, control our pricing strategy. We control how we how we create value for the consumer, uh and we don’t take that uh we don’t take that lightly and we’ll lean into the right decision and the right action for the consumer at the right time.
08:52 Brooke DiPalma
I do want to quickly hit on tomato tomato salsa is also in my go-to order here. Mexican tomatoes are expected to see a roughly 21% tariff starting mid-July. How much of a headwind is that for your business?
09:09 Scott Boatwright
Uh it’s small numbers in base as it relates to basis points impact to margin. And again, something we can absorb if those tariffs go into place, uh and something we could price against later down the road when the consumer is in a better place. We expect this year to to have somewhere in the kind of low single digit uh commodity inflation as well as labor inflation. We have said historically our pricing actions have often been only to offset inflation that we’re seeing in the business, uh not for margin capture. And so we’ll look for other offsets within the P&L to offset some of those margin impacts first before we lean into pricing as a lever.
10:05 Brooke DiPalma
Looking out, you do expect same-store sales growth to now come in in the low single digit range. That was lower than your previously set expectation. Why are you doing that, Scott?
10:25 Scott Boatwright
Just given what we experienced in Q1, the tough compares we’re seeing in Q2 today. We do have uh based on our forecast, we will return to positive transactions in the second half of the year. We also have several um uh activities that as it relates to what I call the consumer flywheel. So think operations, digital, and marketing. We’re going to lean into the consumer in a more meaningful way this summer as it relates to marketing and digital ad spend. Uh typically it’s a month where we don’t spend as much as we do in the other parts of the year to sort of think spring and fall. And we’re going to try to target our consumer to remain relevant throughout the summer months. And the summer seasonality has been a step down in the business for us for the last couple of years. So we’re going to lean into streaming channels, social media channels. We’re going to lean into this idea of using our most um influential uh Chipotle users and how they Chipotle on a new campaign we’re bringing forward. We’re lean into innovation as it relates to the menu as well. So you could see a new sides or a new dip this summer, as we think about how do we stay relevant, visible, and loved by the consumer throughout the summertime frame. A lot I have a lot of confidence in the back half of the year as it relates to the LTO that we’ll bring into the fall. Um so I have I have confidence we can get back to positive transaction and positive momentum in the second half.
12:10 Brooke DiPalma
New LTO, new dips. These are all things we’re excited for here, Scott. I do quickly want to hit on the stock price. Investors are weighing the potential risks like that exposure to avocados, the intense competition, and then this overall economic environment that we’re seeing. Shares are down roughly 19% year-to-date. What is your message to investors here?
12:37 Scott Boatwright
You know, I would tell you that the strength of the brand has never been better, Brooke. I’ve been here eight years now. We are absolutely on our front foot as it relates to operational um as you think operational ability. If you think about culinary, we’re delivering world-class culinary across across the system today. This the throughput numbers continue to improve. Our customer um experience numbers, all metrics we look at continue to improve. We’re delivering better in-restaurant experiences. Um the marketing calendar slated for the back half of the year and into 2026 has never been stronger. We continue to innovate uh in in our digital properties as we think about customer journeys, individual personalization, and how we bring that experience in a frictionless way to the digital consumer. So I have a lot of confidence in our strategy, how we move forward as a brand, and I think there’s never been a better time to be a part of the Chipotle family.
13:52 Brooke DiPalma
Scott Boatwright, Chipotle CEO. Thanks so much for taking the time today. I appreciate it.