Chipotle Mexican Grill Inc Class A CMG
Q2 2012 Earnings Call Transcript

Transcript Call Date 07/19/2012

Operator: Good afternoon and welcome to the Chipotle Mexican Grill's Second Quarter 2012 Earnings Call. All participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this call is being recorded.

I would now like to introduce Chipotle's Director of Investor Relations, Alex Spong. You may begin your conference.

Alex Spong - IR: Hello, everyone, and welcome to our call today. By now, you should have access to our earnings announcement released this afternoon for the second quarter 2012. It may be also found on our website at in the Investor Relations section.

Before we begin our presentation, I will remind everyone that parts of our discussion today will include forward-looking statements as defined in the securities laws. These forward-looking statements will include projections of the number of restaurants we intend to open, comp restaurant sales increases, the impact of menu price increases, trend in food cost and other expense items, effective tax rates, and our unit economics and shareholder returns, as well as other statements of our expectations and plans.

These statements are based on information available to us today and we are not assuming any obligation to update them. Forward-looking statements are subject to risk and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We refer you to the risk factors in our Annual Report on Form 10-K, as updated and our subsequent Form 10-Qs for a discussion of these risks.

I'd like to remind everyone that we've adopted a self imposed quiet period restricting communications with investors during that period. The quiet period begins on the first day of the last month of each fiscal quarter and continues until the next earnings conference call. For the third quarter, it will begin on September 1, and continue through our third quarter release in October.

On the call with us today are Steve Ells, our Chairman and Co-Chief Executive Officer; Monty Moran, Co-Chief Executive Officer; and Jack Hartung, Chief Financial Officer.

With that, I'll turn the call over to Steve.

Steve Ells - Chairman and Co-CEO: Thanks Alex. We're pleased with our results for the second quarter and the first half of 2012, particularly in light of the continued uncertainty about the overall strength of the U.S. economy.

During the quarter we posted comp sales of 8% on revenue of $690.9 million, an increase of 20.9% compared with the second quarter of 2011, adding up to a diluted earnings per share of $2.56 for the quarter.

But I am most pleased that Chipotle's success continues to be driven by our relentless pursuit of improving the strength of our food and people cultures. These unique attributes of our business continued to be the core drivers of our performance and our success.

During the quarter we reached another important milestone in our quest to serve Food with Integrity, with 100% of our sour cream now coming from milk from pasteurized dairy cattle. Under our protocol, these animals have daily access to pasture. They are never given antibiotics or added hormones, and are fed an all vegetarian diet. We have opted for this protocol for our dairy, because we believe it's better for the animals and environment and produces better tasting and more wholesome milk.

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