CMG
#I will take a shot at part of this, and then I think <UNK> will want to add something in.
<UNK>, we have done a very thorough analysis of the traditional loyalty programs.
And the problem is Chipotle already has so many loyal customers that the fixed costs of implementing a ---+ an ongoing loyalty program are so extraordinary that you had to get a pretty big incremental comp just to cover those costs, and then you had to get a comp on top of that and then maintain it for it to be profitable at all.
What we found is we have been able to build loyalty through more organic methods by encouraging people to learn more about Chipotle, by piquing their interest about how food is raised, by having them come into Chipotle and be treated to an extraordinary dining experience.
So we've seen our loyalty go up over the years.
And we think that's a better way to do it than putting in a structural framework that we didn't think was going to be profitable at all and ---+ or maybe would be a break-even, or you have to make an extraordinary comp to make it pay out.
Now having said that, the customer data is valuable.
I don't know <UNK>, if you wanted to make a comment about that.
We definitely treasure that information.
Yes.
They are very small numbers, <UNK>.
The comp was 4.3%, menu pricing was 4%.
Of the 0.3%, it was a very slight negative traffic.
0.3% negative traffic, and that was offset by 60 or 70 basis points of mix.
And the mix improvement was generated a little bit by catering, a little bit by sides, and a little bit by kids' meals.
We reformatted the kids' meals, and we are now serving a few more of them, and the pricing structure happens to be a little bit higher, especially the ones that our customers are choosing.
They are choosing to build your own more frequently, and that's a little bit more expensive.
So those are pieces, but they are all very, very small numbers.
Well, <UNK>, I think the answer is that we do want to buy our stock back, but we don't want to just buy it back at any price at any time.
We are much happier, and we think it's a better boost to shareholder value to be patient.
Our stock has always been volatile.
It's always had run-ups; it's always had corrections.
And we think the best thing to do is [buying] the corrections, and I think the example that we just shared where over the last three months when the stock had corrected for a period of time, we bought $100 million worth.
So it's many multiple times what we bought in the first quarter.
Now, had we just decided to buy $100 million in the first quarter, it would have just not gone as far.
And so we think it's a better way to do it.
We will get more aggressive as the price does drop.
We do have more cash than we need.
We know that the best way to add to shareholder value is to ready these proceeds to be promoted to growth strategies just like Canada was.
We know that as we open up more Chipotles, we're opening the Chipotles at extraordinary returns and a cash-on-cash return in the 70% to 80% range.
We know that's the best way to capture shareholder value.
With the cash that we have, we will buy back, but I think we will continue to buy opportunistically, and we think that's a better way to build shareholder value over time.
Well, if you're looking at ---+ the trends that I would encourage you to look at are a three-year trend.
And I talked about this on the last call, so I won't go into it again.
But this current trend that we are in is the third year of a three-year trend that started in 2013.
If you look at the three-year trends, the three-year stack for the second quarter is more than 200 basis points better than the three-year stack for the first quarter.
I think that that's more weather-driven.
So I would say right now we're not necessarily seeing an acceleration other than in respect to the worst weather in the first quarter.
We still think we are being hampered by not having carnitas, and we think that could be as much as a couple hundred basis points.
And so we look at it as more the year is unfolding the way we thought it was.
We thought that we would do 4% in the quarter; our guidance was exactly that.
We were predicting internally about 4% during the second quarter, and that's what it's doing.
We had also predicted that in the third quarter, while it's early, that we would be in the low single digits, that it wouldn't be negative, that it would be close.
And so things are, I would say, more playing out as we expect.
So Jeff, most of our focus ---+ and the vast majority of our attention is to have the best teams we can, developing the best leaders in the restaurants, hiring and developing top performers in every restaurant because we know that there's a dramatic difference between the experience, the quality of the food, taste of the food, just the throughput, the business controls, everything when we have great leaders, restaurateur leaders that have all top performers, whether it's a culture of empowerment.
And these teams can deliver high standards in every single way.
And so that's still and always will be the vast majority of where our attention goes.
We are testing chorizo in a market right now in Kansas City.
It will ---+ it's early; we've only had it in market for several weeks right now.
We just this week ---+ <UNK>, I think, started advertising.
If that's something that looks like it's either attracting new customers or it's encouraging the existing customers to visit more often, that might move up in the priority list.
If all chorizo does is take our existing customers and split them among additional menu items, that will be less appealing to us because that just means we have more menu items serving the same customers, and that makes it more complicated and more difficult to serve all this delicious food.
So I come back to it in terms of priority.
The difference between a great running restaurateur restaurant with an amazing team compared to one that has a lot of teams that ---+ <UNK> talked about the BBT, a restaurant that has a lot of themes and they have some low performers on the team and empowerment is not great.
The difference in the quality and taste of the food, the difference in how clean that restaurant is, just the difference in ---+ when you walk in, you feel like you're welcomed by a team of people that know you and are glad you are there ---+ the difference when you compare that experience to a restaurant that doesn't have all top performers, it doesn't have the culture of empowerment, is dramatic.
And we believe that that is the single biggest thing we can do to build our sales over time.
The other thing with marketing is we still believe that ---+ we still know that there's lots of people that have never been to Chipotle.
Something like 35% to 40% of people have never been to Chipotle.
We know that when we study our our existing customers, that there is like 55% of our customers only come a couple times a year.
And so they are ---+ the more we can educate and entertain and things like this BOGO where if we can entice customers that don't come very often, once or twice a year, to learn more about our ingredients versus competitors, traditional fast food, and get a BOGO to entice them to come in, and that causes them to say, oh my God, I haven't been here in six months, this food is delicious, and I didn't know all this information about the ingredients.
If we can convert that person into coming three times a year, four times year, we think that's a big opportunity as well.
So the vast majority of our attention goes on doing what we do but do it better than ever.
Other than comparisons, it's really hard to tell because it feels like we're still at a disadvantage by not having pork.
So it still feels like we are being held back a bit.
And so ---+ but I can't point to any specific reasons why we were slightly negative in the second quarter compared to so far in July.
We are happy with the results, but there's nothing specific I can point to.
In terms of incremental what.
The improvements we saw in this quarter were spotty throughout the country as certain teams responded really, really well to our throughput contests.
But Companywide and overall, like I said in my opening comments, basically I think we were glad to hang on to the significant gains we made during 2014 where we had the very significant increases in throughput.
But we didn't see an increase in overall throughput Companywide during the quarter, which it's always disappointing not to see that.
But I think we are ---+ like <UNK> said, we are doing slightly negative comps.
What happens I think with our teams is it's more difficult for them to break throughput records, and it becomes a little less top of mind for them as they start to focus on other aspects of the business waiting for that traffic to increase.
So it certainly is a lot more fun to go out and set throughput records when they are shattering them on a daily basis.
And when there is a slight falloff in traffic, even if it's the flattening of traffic even for a short time, I think that sometimes our eye is not on the ball to the degree it could be.
So we do see improvements in a lot of our four pillars of execution, which is great.
We see some really good 15-minute transaction numbers and records in areas.
But overall, I think that I would be eager to see our teams push harder on the throughput such as to deliver even incremental increases in the third quarter.
So we will keep working on that.
