Bloomberg Audio Studios, podcasts, radio news. When we talk about tariff risk, I mean, we've spoken so much about how much it's going to cost US to import goods from overseas because of potential retaliatory tariffs, but you kind of forget we export a lot too. And I thought Bloomberg had an interesting article today that talked about all of these unfulfilled contracts for agriculture exports that could be in
jeopardy if Mexico wants to stick it to US. They buy six billion dollars of corn from US, China buys obviously a lot of soybean and a week from US, and there are some concerns here that they might decide to cancel or at least pair back some of those contracts.
Yeah, more than eleven million metric tons of grains have been sold but not yet shipped to our top three trading partners, China, Mexico, and Canada.
Let's see how it all shakes out.
Of course, President Trump has put on hold his plans to tariff Mexican goods and services that are covered under the USMC until April second, and then maybe new negotiations begin.
We're not sure how it's all going to play out, just yell.
I just want to know, Scarlett, if I can get my alvacada?
Are not?
Yeah? Well are you big avocado fans? I am all right? So am I. So let's talk a little bit more about avocado ocada.
Let's bring in right now someone who knows firsthand how the price of avocados can change things up, and that is Scott vote right.
He is CEO of Chipotle. Scott, welcome to the close. Thank you so much for joining us today.
Thank you, Scarlet, Happy to be here with you this afternoon.
Let's start with tariffs, because we can't avoid the elephant in the rooms here, the single biggest way that tariffs are making your life actual pole more difficult.
Of course, tariff's impact everyone here in the US says we think about. I know avocado supply is on the top of mind for a lot of US consumers. It is for us, as you can imagine, we've gone through what we believe to be a very sound vendor diversification program as it relates to buying avocados. We buy everything that we can possibly pick up here in the US as during the growing season that's.
Here in California.
But we've also moved out of Mexico, which was about eighty percent of our supply, the other cuntry trees like Peru, Dominican Republic and even Columbia, and reduce the reliance to about fifty percent with further diversification efforts underway.
So the diversification effort and the sourcing inside the US, how has that affected the cost? Has it increased costs for you?
Now?
Actually, we've been able to maintain costs by bringing in other countries of origin, which has helped support our margin. Tariff impacts will be felt. As you can imagine, I sit on our.
Last earnings call that if all tariffs go in into place with.
Mexico, Canada, and China, it will impact our margin by about sixty basis points in total.
Not immateial, but not the end of the world either.
You also said on that call, Scott, that you as a company were willing to eat that, meaning not necessarily pass that directly on to the consumer. You still stand by that.
I do stand by that, Romaine.
And here's why the consumer today, we recognize fully is under pressure. Specifically, the low income consumer is finding this economy tough to navigate and we want to continue to deliver extraordinary values value to our consumer, primarily because we don't know which of vin tariffs will be transitory or which will be permanent. That all remains to be seen,
So we're going to remain patient. We're going to continue to deliver great value for the consumer and ensure that the Chipotle customer feels that benefit when they come into our business.
And of course a lot of your customers come to Chipotle specifically for that, they also come to it, as you know, Scott, for what's on the menu, and prior to you taking over, there was some tinckering with the menu. Obviously, now that you've permanently been installed in CEO since November, you've had a chance to now guide this going forward.
When we talk about new product introduction to more importantly not just what the uptake is going to be by the consumer, but how you bring these products to the market at a cost that's going to be favorable to your own bottom line.
That's right Roumaine.
We continue to lean into product innovation and Black believe to be the most meaningful, best in last version of what we can put forward to our consumer.
We just launched a fully honey Chicken. It's in restaurants today.
You'll start to see that show up in national TV ads later in the week.
It's a promising LTO.
We feel a limited time offering which tested off the charts. As it relates to consumer testing back this summer when we ran it.
It's a super exciting product.
It comes in kind of sweet on the front end with a little back end eat. And what we do with LTO specifically is try to give the consumer something new and drive incremental transactions as well as you get our current consumers to come in more frequently.
I look at your stock today, Scott, and it's down one tenth of one percent, basically unchanged. You could even say it's up in a market that is down about two and a half percent, in part because analysts have cited things like your enviable balance sheet, talking up your ability to have optionality when it comes to investing in stores or spending as you mentioned on technology.
And new development.
What is your single biggest priority when it comes to spending on development. Is it to continue to expand our menu? Is it something more internal back of the house.
Yeah, it's a great question.
So we think about every dollar that we have in the business today, and you are correct. We have an extraordinary balance sheet, a fortress balance sheet, if you will, very little debt, and probably one and a half to two billion in cash, and we believe that that preservation of cash is important to weather tough times just like this. So we'll continue to lean into new restaurant development. We said publicly we'll build three hundred and fifteen to three
hundred forty five new restaurants this year alone. We'll continue our stock buyback programs and deliver more value to the shareholder, but we'll also lean into what I'm calling back up the house modernization, where we're going to bring forward equipment innovation that has been in our stage getting paid now for over two years to help drive more efficient efficiency
in the back of house. Else create a better team member experience, which we know will always lot better to a better consumer experience.
What does that mean for hiring as you continue to expand that investment in the back of house operations, Because there's a lot of concern now that the labor market's going to get tighter if we see the pool of labor workers in the labor market shrink.
You know, as we.
Stand here today, and we head into what we call our Brito season, which is really springtime. We are better staffed today at Chipotle than we've been in my eight years with the brand, perhaps in the brand's history, and I really think that's attributable to our investing class wages and our industry leading benefits, and what I believe to be a world class culture that we've created around people, people,
development and growth in the organization. We'll continue to invest in our most important asset, which is the one hundred and thirty thousand team members out in our restaurants, which I've said before I'll say again are really the backbone of our great organization.
Do you plan to expand the footprint of Chipotle more stores this year?
We absolutely do.
Romaine, We're gonna build three hundred and fifteen to three hundred and forty five new restaurants here in North America. We'll have additional growth in Canada this year. We're looking at expanding our footprint in Western Europe. Our partnership with Alshai in the Middle East will produce additional Chipotle restaurants in that region. We're also looking at additional partnerships around
the globe. As I stand here, today really in this idea of really moving Chipotle into a global iconic brand.
All right, Scott, I really appreciate you taking time for us. Scott Boat right here is the CEO of Chippotlan.