Thank you for standing by, everyone. Welcome to the Chipotle Mexican Grill Second Quarter 2010 Conference Call. [Operator Instructions] Now at this time, I'd like to introduce Chipotle's Director of Investor Relations, Ms. Kate Giha. Please go ahead, ma'am.

Thanks, Micah. Hello, everyone, and welcome to our call today. By now, you should have access to our earnings announcement release this afternoon for our second quarter 2010. It may also be found on our website at www.chipotle.com 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 within the meaning of the Securities laws. These forward-looking statements will include discussion of our A Model restaurant strategy as well as projections of comparable restaurant sales and trends, the number of restaurants we intend to open, expected trends in various costs in our business, statements about our stock repurchase program and other statements of expectations and plans. These forward-looking 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 risks 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 in our subsequent 10-Qs for discussion of these risks. I want to remind everyone that we have adopted a self-imposed quiet period restricting communications with investors during sensitive periods. This 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 September 1 and continue until our third quarter release in October. On the call with us today are Steve Ells, Founder, Chairman and Co-Chief Executive Officer; Monty Moran, Co-Chief Executive Officer; and Jack Hartung, Chief Financial Officer. With that, I'll now turn the call over to Steve.

Thank you, Kate. I’m joining you today from France, where we plan to open our first restaurant sometime in the middle of next year. Like London, we believe the prospects are excellent for Chipotle in France, given the exceptional food culture and the abundance of great quality, sustainably raised ingredients here. We're also excited about the potential for Chipotle in such a remarkable international food culture. During the second quarter, Chipotle reached a couple of milestones that we're all very proud of. First, we opened our 1,000th restaurant in June. With more than 1,000 restaurants now, Chipotle is having more of an impact on the way people eat than I ever would have imagined when I started the first restaurant 17 years ago. Our commitment to building a unique food culture based on making better food for more sustainably raised ingredients available and affordable for everybody, and our commitment to a unique people culture that empowers and rewards our best performers and allows us to provide better customer service in all of our restaurants, is resonating with all of our customers. And as we continue to grow, our impact will only be greater. The other major milestone was opening our first restaurant in Europe. That restaurant has the same philosophy as our U.S. restaurants, and we are using premium-quality ingredients from local sources, including chicken that is grown to a higher welfare of standard, pork that comes from pigs raised on farms that offer large one-acre paddocks where pigs can roam freely and display natural behaviors, and beef from farm-assured British farms, where cattle are raised in a humane and compassionate condition. We’re also using vegetables and herbs from local farms as well. Before arriving in France this week, I spent a full week working in our London restaurant with…

Thanks, Steve. We're all very proud to have reached the 1,000-restaurant milestone, but we're even more proud of the way we got there. By focusing our efforts on building a unique food culture with great-tasting food from more sustainable sources and a people culture that appeals to and rewards high performers, we're changing the way people think about and eat fast food. As we look ahead to our future, we continue to be incredibly focused on the two things that we believe will allow us to grow in the most sustainable way possible. The first is developing people who can both provide exceptional customer service and who can develop into our future leaders. The second is finding great real estate. The cornerstone of our effort to develop people is our restauranteur program and our culture of high performers. Chipotle's employees are the driving force behind our growth to 1,000 restaurants, and as we develop even stronger and more effective leaders from our store-level employees, they will be an even stronger force in the future. This culture is touching the lives of tens of thousands of Chipotle employees, but it's also improving customer service in our restaurants. Today, more than 90% of all the restaurant managers are promoted from crew, creating excellent opportunities for our people. And our 167 restauranteurs continue to set the example of how to best empower these top-performing crew to become leaders. But because many restauranteurs oversee more than one restaurant, this group is now directly overseeing 1/3 of our restaurants and setting an example to all of our 25,000 employees. This culture of high performance is essential in providing a great restaurant experience for our customers, and we are seeing the results in better customer service. On our website, we now receive more comments about great…

Thanks, Monty. Now celebrating milestones such as the opening of our 1,000th restaurant and opening our first restaurant in London certainly makes us all proud of what we've accomplished so far. But the celebrations, while satisfying, are short because we know we have so much more to accomplish. These milestones are behind us already, and we're looking ahead to an even brighter future as we continue to advance our strong and unique food and people cultures and as we continue to strengthen our business model. Customers visited Chipotle in greater numbers during the second quarter as the hard work of our restaurant managers and crew over the past few years to ensure every visit is a special dining experience continued to pay off. Our comps held up well throughout the quarter and into July so far. But we do remain concerned about recent reports of softening consumer confidence and the outlook for the economy. While we feel good about the strong customer loyalty our managers and crew have built over the years, we saw over the past two years that economic concerns will affect how often our customers will visit Chipotle. Sales for the second quarter increased 20.1% to $466.8 million, which is driven by opening new restaurants along with a comp increase of 8.7%. The comp was driven by increased traffic as only about 1/10 of 1% of the comp was attributed to a small price increase related to additional rollouts of naturally raised barbacoa and steak. Sales for the first six months increased 17.9% to $876.5 million, which is driven by new restaurants along with a comp increase of 6.6%, and the comp was driven by increased traffic. Based on the comp trends so far this year, we’re increasing our comp guidance from a mid-single-digit comp to an…

[Operator Instructions] And we'll take the first question from John Glass of Morgan Stanley.

Two questions. First is just on the labor ratios check that you're running this quarter. Do you think this is enough labor to put back in the store to maximize that throughput, or is this still a fluid event where you might come back in a quarter or two and say you can reinvest even more and delever labor in the process as you work through this? Or do you feel like this is where you need to be in terms of staffing right now?

John, we don't see that we need more staffing right now. And in fact, we think we're actually a little bit inefficient right now. We think we ought to be able to advance throughput -- not only hold onto the throughput that we've been able to advance so far this year. We think we ought to be able to continue to increase throughput with actually a little bit less labor. The key point is we're going to be very patient on the labor. We're not really going to be aggressively going after -- taking labor out of the model -- because right now, throughput is the most important. We've got lots of restaurants, especially restauranteur restaurants that are operating with less overall labor. So they're more efficient, and they're driving even better throughput than we’re seeing on average. And they're continuing to just run an overall great restaurant, provide great customer service and develop great people in the restaurants. So we know the possibility is there to become more efficient. So I think we will probably see our labor hold at this kind of level for a while, continue to advance throughput. And then hopefully sometime in the future, we'll get some of those efficiencies back.

And then, just on the store openings, I know you said back-end weighted. But I think, year-to-date, you are behind where you had been the last couple years in terms of absolute number of store openings -- not by a lot, but by enough, I guess. How comfortable do you feel about getting -- why is that? And then how comfortable do you feel about hitting your targets based on that?

Let me answer that second question first. We feel good about the 120 to 130. There's always timing risk, John. We've got the deals to open in that range for sure. When we're back-loaded, where 2/3 of the remaining openings are going to be in the fourth quarter, there is some timing risk. So there is the possibility that some may slip, and we may threaten the low end of that range. But right now, the 120 to 130 feels good. And in terms of why are they back-loaded, frankly, we're more still going into mostly somebody else's space, either a new development or we're going into an existing space, where we're waiting for the existing tenant to leave or we're waiting for permitting, et cetera. And it's just -- the timelines have just happened this year and last year to push our openings to the back half of the year. Certainly, to the extent that we have the ability to get the sites earlier, and so we can spread these out evenly throughout the year. We certainly try to do that, but it hasn't really worked out in the last, well, this year and last year so far.

We'll move next to Matthew DiFrisco of Oppenheimer. Matthew DiFrisco - Oppenheimer & Co. Inc.: That last comment, Jack, I think you made regarding the stock compensation, incrementally up $7 million for the full year, $22 million total. Have you been accruing that evenly in the first couple of quarters, or is that going to hit a little bit more in the back half, given the better-than-expected or the improving trend in your guidance?

It's relatively evenly. It's not perfect because the stock-option expense for this year actually starts hitting in February. So we're a little light in the first quarter. We're probably a little heavy in the second quarter because we have some folks -- the expenses accelerate if they happen to qualify for retirement, and then it levels off a bit. But I don't think you'll see anything too noticeable. It'll dip a little bit in the third and fourth quarter but not a tremendous amount. Matthew DiFrisco - Oppenheimer & Co. Inc.: So just to look at it with half the year left or half the quarter still to be reported, roughly 3.5 of that incremental is going to fall into the second half. You balanced it out 2Q being more than 1Q, but we're entering with half left to do?

Yeah. That's going to get you close. Matthew DiFrisco - Oppenheimer & Co. Inc.: Just to be precise on that $3 million that you're talking about of the incremental for the conference expense, that all comes into 3Q? You didn't incur any of that into Q2?

No, that should all hit in the third quarter. And there's a few people that have booked their airline tickets in the second quarter, but most of it's going to hit in the third quarter. Matthew DiFrisco - Oppenheimer & Co. Inc.: And then also, I think you've spoken in the past about potentially taking some price in the back half of the year. Where do you stand as far as your philosophy towards that? Are you just going to hold pricing basically flat or no pricing and just ride the traffic here, or do you think there's an opportunity to take some price in the back half here?

We don't have any plans to increase our menu prices at all. It certainly, of course, depends on food inflation, which we think there's going to be some modest food inflation, but not enough to justify an increase. Frankly, we're delighted with the fact that our loyal customers are coming back to Chipotle more often. We'd hate to interrupt that trend with a price increase. Our margins are already very, very, very healthy, and so we're going to be patient. Right now, we don't have any plans to increase prices for the rest of this year.

We'll next take a question from Jeff Omohundro with Wells Fargo Securities.

We'll next take a question from Jeff Omohundro from Wells Fargo Securities.

Just a question on Europe. I wonder if you could talk through how you're thinking about the longer-term European growth strategy. In particular, the hurdles and timing of additional European unit growth and how you're thinking about your European real estate strategy?

Well, first of all, I think I'd like to start by saying our major opportunities are, of course, in the United States, especially considering the success of the Restaurateur program, Food With Integrity progress and our ability to expand real estate through the A Model. But it's time we think to seed Europe in a very thoughtful way that's going to set us up for great success. And so I think we've got a great restaurant in our first London store. And we're very close to signing a lease in Paris and we'll be opening there probably mid-next year. What we're really looking to do is establish great crews, great suppliers, great locations and a great trade drift [ph], a great architecture. And we're really focused on all of those things and I'm so impressed with the way we've opened the first restaurant. And so I think we've established a team that will be our future leaders, and I see great opportunity. But really, I would focus on the opportunity in the U.S. right now.

We'll move on to David Tarantino of Robert W. Baird. David Tarantino - Robert W. Baird & Co. Incorporated: Jack, you mentioned that July trends in your comps have held up well, but you also tied that with cautionary remarks about the consumer. Just wanted to ask if you've seen any sort of slow-down or any signs that the consumers starting to slow or if that was more of a forward-looking statement.

Yes, David. We’ve not seen the slow, so that’s why I wanted to make sure that while we're cautious, we're seeing a lot more of a macro comments. We see consumer confidence trends. There was a dip this summer. We're feeling fortunate that our customers -- they're loyal and so we have not seen a fallout so far in the July, so that's why we did increase our guidance. But we know that when the economy softened the first time, we held onto our comp trends for at least a few quarters after other restaurant companies and other retailers have seen a softness. So we do know that we are affected by the impact of the economy and soft consumer demand. So we’re wary of that. We wanted to point out that possible concern. But so far, trends are holding up really well through yesterday, so far. David Tarantino - Robert W. Baird & Co. Incorporated: And then just a question on the A Model sites. The initial commentary there has been very positive, and I'm wondering if you have an update on how the pipeline might be building for using that strategy, especially in new markets for next year?

Well, yes. We expect, as I mentioned during the last call, that A Model will be an expanding part of what we're able to do probably in 2011 because it allows us to bolster the portfolio sites that we’d otherwise have access to with the fewer new developments coming out of the ground than we used have. So it is a significant part of the way we're going to continue to build restaurants, not just throughout this year, but in coming years as well. You had a second part of your question, David, though, that I didn't -- there was a second part of your question, what was it? David Tarantino - Robert W. Baird & Co. Incorporated: Like new markets?

In new markets, that’s something that we, given the success so far of our 10 A Model restaurants, we are still bullish that the A Model strategy will be something that we can expand beyond proven markets and into a new and developing markets in the coming years. So we do expect that we’ll be layering in some A Model growth in new markets and see how they perform there as well, in next year and beyond. David Tarantino - Robert W. Baird & Co. Incorporated: It might be too early to be talking about, but do you think that would allow you to accelerate the pace of growth in 2011 or is it still too early to call?

Well, I mean, it’s possible that – I mean obviously this strategy is something that gives us the ability to look at a lot of real estate that we would’ve passed upon earlier. So the question becomes, David, is that some something whereby we're accelerating the amount of growth or is it something that's allowing us to supplement in place of that growth that would've happened had the economy still been rolling forward with a lot of new developments coming out of the ground. So it's kind of tricky to answer that. But again, it will be a very significant percentage of our growth in proven markets for sure and also being able to layer in, in new and developing markets in 2011 and beyond. So I think it will enable us to build more restaurants than we could have without it. It's still a little bit too early to tell you exactly what that's going to look like for next year, but we'll give you an update at the close of next quarter during our remarks about where we think that’ll fall out in our 2011 unit growth plans.

We'll next take a question from Stifel, Nicolaus, Steve West. Steve West - Stifel, Nicolaus & Co., Inc.: I was wondering if you could maybe give some commentary on very strong trend towards sales comps [ph] obviously. Have you seen any significant difference in some markets that were weaker before, maybe some of the markets are picking up, such as Florida or Southern California, something like that, any color you can give would be thankful.

Well, the comp trends have been, Steve, very broad, and so we're seeing improved comps throughout the entire country. Keep in mind, we never really saw those areas that other restaurant companies that were really suffering as the recession deepened. California, Arizona and Florida I think were the three that were most often named. And we had commented that we did see some softness in Arizona. We really didn't see the extreme softness in California and Florida that others had seen. Having said that, all of those markets are doing quite well now. There's really not an area of the country that's not doing well right now. I'd say if there’s one area that maybe is lagging, maybe a bit behind some of the others, is Texas. Texas entered the recession later than others, and so it seems like it's coming out of little bit later than others as well. But even in Texas, we’re having nice comp trends.

We'll take a question from Sharon Zackfia from William Blair. Sharon Zackfia - William Blair & Company L.L.C.: I may have missed this, Monty, but you were talking about the throughput initiatives that helped the quarter and, I guess I'm just curious specifically if you could detail what you're doing at the stores to help enhance throughput?

It’s really quite basic. Three or four years ago, or I guess four years ago now, when we really started to place an emphasis on this important aspect of our customer service, we identified a whole number of things that really enhanced throughput and the customer experience. One was making sure that all of our people had finished their prep work prior to the time of the lunch rush and the dinner rush, so that all hands could be on-deck to deal directly with customers during the rush periods. So that's one key factor. And as we traveled to restaurants recently, we’ve noticed over the last year or two that some of the emphasis had fallen off of that and we have people prepping food during a time when their help was needed on the line. And when we didn't have their help in the line, obviously, it slows us down, but it also decreases the quality of the customer service and there's just no need for that. If we staff correctly and if we deploy our labor correctly, which most of our managers are excellent at doing, what happens is the business model just works wonderfully, that we can do all the prep work in advance of the rush periods and the only prep work that's actually being done is cooking during the peak lunch and dinner hours. And all of the people who could be front-facing, looking at customers, helping customers are doing so during those peak hours. Other things are, there's someone called an expediter who's the person who basically assists the customer in deciding whether it's for here to-go and putting the food in a bag and getting them a drink and maybe getting them a side order or some chips and guac, that person, when…

Next we'll hear from Bryan Elliott of Raymond James. Bryan Elliott - Raymond James & Associates: Actually, a couple of clarifications, Jack. I missed a couple of things. One clarification on the food cost guidance you gave, you said I think expect to be up balance of the year, second half of the year. Just wondered if you meant up sequentially or up year-on-year with that comment?

Good question, Brian. I meant sequentially. So we were at 30.4% for the second quarter and we think there's going to be modest inflation, so we think we’ll be up sequentially. We know for example, we’re already paying a higher price for avocados in the third quarter because the domestic in-season has ended. So just the avocados alone will probably add about 20, 25 basis points or so in the third quarter. And then we think there's going to continue to be slight inflation, probably mostly with the [indiscernible]. So sequentially, we see pressure in the third and then probably a little bit in the fourth quarter as well. Bryan Elliott - Raymond James & Associates: When you talked about G&A, you talked about the $3 million incremental for the meeting and then you said something else and I was writing the $3 million, sorry.

It might have been about stock options. Okay. Our stock options expense is going to be $22 million for the year. I compared it to about $15 million last year, so it's up $7 million. And then the other question was how was it spread throughout the year. It was a little light in the first quarter. A little heavier in the second quarter. So far, year-to-date, we're just a little bit more than halfway through the $22 million. Halfway through it would be about $11 million; we’re at about $12 million year-to-date. So basically, the second half of the year will be roughly equal to the first half, though the first half was a little choppy, light in the first quarter, heavy in the second quarter. So I hope that helps in terms of the G&A or the stock options and how that spread. Bryan Elliott - Raymond James & Associates: I have a bigger picture question, I guess maybe for Steve, but I'll just throw it out. As you sort of think longer term about growth rate, you mentioned the people and the real estate are the real constraints. Are you looking at or initiating anything to try and work through those constraints? I'm thinking about materially higher than 120-ish kind of 130-ish store a year capacity for the organization looking out at longer term several years down the road?

Well, certainly in terms of number of units – I mean Model A certainly provides an opportunity to build more restaurants because we can go into areas where we wouldn't have previously considered. And of course, sort of mid-term to longer-term, we're planting the seeds for European expansion. And so I see a very, very, bright future there. But also in terms of people, we've made extraordinary progress in terms of building the team that's going to be able to manage these restaurants in a way that's really superior to the way they were managing these just a few years ago, which enables us to cook better food, to provide better quality experience and these restaurants with these top-performing people also have better P&L. So we see a very, very bright future indeed. Bryan Elliott - Raymond James & Associates: We can sort of see that clearly in the numbers at all, but just thinking about how do you sort of order of magnitude the growth capacity organization, I guess that’s really my question. You said your constrained. How we get through those constraints over a…

To be clear, we don't have a particular constraint from a corporate standpoint. In other words, our teams, our real estate teams, our brokerage teams, our design teams are not now considered with our numbers, and we can certainly achieve higher numbers. And in fact, in 2008, our number would've been quite a lot higher had the recession not hit that year, and in 2009, it would've been higher had the recession not hit. Because again, it affected dramatically the amount of new developments that were being built. And keep in mind that three years ago, 70% of our restaurants were going in to new developments. Now that number’s in the mid-high 30% range and that really hit us. Those were our bread and butter, those locations. The A Model strategy has allowed us to look at things differently and dramatically expand the number of sites that we can look at with a degree of confidence of achieving high returns, with still producing great restaurants with great Chipotle restaurant experiences. So we're very excited about that. As I mentioned earlier in response to David Tarantino's question, it becomes a question of, are we going to be able to expand the number of restaurants we otherwise could have built or are we simply going to supplement the ones that went missing when the real estate mix changed. I guess it's sort of a rhetorical difference and doesn't really matter. But the two big constraints that we see in building additional locations in 2011, 2012 and beyond, are people and real estate. And right now, our pipeline of very confident managers who are eager to open new restaurants is greater than it ever has ever been with the Restaurateur Program being where it is. So we feel very strongly, and in fact, there are markets where I would tell you we’re excited to open new stores just to give the opportunities to some of these very, very high-performing people who are really looking forward to having their own restaurant. So we feel great on the people side. I would say the limiting factor in our ability to grow in absolute unit terms is, right now, still in real estate. We think that we have given ourselves a significant advantage with A Model strategy. And I'm just like to hesitate to tell you numbers until we sit down together and sit with our Chief Development Officer and put things together for the third quarter. And at that time, we'll give you a good idea of where we think it can go specifically in 2011. But we do think that there is certainly upside in the future.

We'll next take a question from Bart Glenn of D.A. Davidson. Bart Glenn - D.A. Davidson & Co.: I was just wondering if you had anything to share on the potential that loyalty program might plan out?

We've been looking at what loyalty programs for years, mostly because our customers have been asking for them. And the last thing we really wanted to do was be like everybody else and have a typical sort of “buy 10, get one free” kind of thing. And so what we've been talking about for the past few quarters is something that's very, very different that will look different in the eyes of our customers. And so we are going to be starting this fall rolling out our invite-only program, where we'll be asking our managers to select our very best customers to come into the program. And these customers will have an opportunity to learn more about the company, Food With Integrity and the things that make us special, and we're hoping that they will become our evangelists. I mean, because ultimately, that's how Chipotle really started to get rolling in the early days, were a very select few customers who really appreciated Chipotle and they spread the word by bringing in customers. So we know that this evangelical, super-passionate regular customer is the one to go after. So the program is going to be based on that notion.

Joe Buckley of Bank of America Merrill Lynch has our next question.

Jack, want to go back to the comment about consumer confidence. And curious if during the quarter, when the consumer confidence numbers seemed to dip towards the end of the quarter or the stock market volatilities seem to pick up in May and again, at different points in June, if you would see any impact on the business? Or was the monthly pattern of comps still even through the quarter?

Yes, Joe. The comps, I mean, it's not perfectly even. It never is. But I would say it was largely even throughout the quarter, when we saw the impact on the stock market, when we saw consumer confidence reports come in. And of course, we watch this daily, weekly. We watch it across markets. And our sales held up and we're delighted by that. And so our comments about consumer confidence, we're more just cautionary that the economy seems to be still a bit fragile. It's not perfectly clear which direction it's going to take, and so that may affect us in the future. But so far, we're really pleased with the way our sales picked up at the end of the first quarter, continued through the second quarter and it have continued into July so far.

Monty, I think you made the comment about the 50% cash-on-cash return potential for the A Models. But I think that was contingent upon, I'm not sure how you phrased it, maybe a couple of years of same-store sales growth. Could you just kind of run through that again and maybe talk about how that compares with the cash-on-cash returns of your more typical units historically?

Well, I mean, when I talked about the strategy being capable of yielding consistent 50% cash-on-cash returns, I mean, yes, I talked about continued lower development costs, continued lower occupancy cost and a couple of years of comps. I mean, right now, keep in mind that the A Model strategy is focused on proven markets and we've been more than happily surprised by, or I should say pleasantly surprised, by the volumes that we've achieved in this A Model restaurants. Now so far, the A Model of restaurants, like I said, the sales have kept pace with our traditional openings. That means that despite the fact that these are sites that we would've anticipated would've yielded smaller unit openings, more in $1.1 million, $1.2 million range. Instead, they've opened that parity with our traditional locations. Obviously, with a lower investment costs, lower occupancy cost and lower operating costs, restaurants that are doing the sales that we’ve historically done are going to give us wonderful cash-on-cash returns. When we talk about the future and how we can continue to produce those kind of returns, we're talking about being able to continue to open those restaurants in new and developing markets, as well where perhaps the unit opening volumes might be sort of in that $1.1 million, $1.2 million range. But comping from there so that the sales volumes come back up to parity with our new openings.

We'll next question from Greg Ruedy of Stephens.

You mentioned that 1/3 of the units are sharing Restaurateur supervision. How should we expect those numbers to evolve? How much benefit-to-labor are you realizing from that in isolation? And at what point do you reach -- where do you reach an inflection point with that leverage?

First of all, I would focus less on the leverage that we looked to gain on sort of the labor line, and I would say the much greater benefit is the leadership that we're going to gain over more restaurants by people who are simply excellent at building great cultures in the restaurants, identifying top-performing crew in the restaurants and developing those people to be our future leaders. So that's really where almost all the money is in this prospect, so to speak. If you look at how it's going to improve, how we're going to leverage that from a strictly financial basis, I mean it's true that as we’ve gained more restaurateurs and more what we call R-pluses, which is restaurateurs overseeing more than one restaurant, it’s allowed us to stretch our area manager ratios from the five that they used to be six, seven years ago to 13 ½ restaurants per area manager or team leader today. So there's been, of course, a significant G&A benefit from that. But again, that's not something we’re pushing for, that's not something we're asking for. That has instead been a manifestation of having much, much better leaders in place at the restaurant level and overseeing a few restaurants, which allows the mid-management folks to get a heck of a lot more done when they’re not chasing fires and chasing other trivial things that don’t happen when you have great people running your restaurants.

Question on Jack on the second quarter comp. How much benefit do you realize from the Father's Day, graduation gift card bounce back and an implementation of Burritos by the Box?

Tough to quantify. Certainly, both of those were successful. I think the gift card program for graduation was very successful, very well received. But we know how much of gift cards we’ve sold. Hard to tell how much of that is incremental, but certainly when we look at hour our comps held up through the quarter, those things certainly help contribute to the very high comp that we saw through the quarter. But too difficult and not something we’d want to publicly talk about specifically what those might have contributed.

We'll move next to Deutsche Bank's Jason West.

Jack, I believe you said sales were good through yesterday, but I was wondering how they’re looking today?

Well,, last hour, they were really up a lot, so I don't know if means anything.

Now seriously, just a question on margins. I was a little surprised that we didn't see a little more margin leverage in the quarter. I know you talked about marketing was up a bit and labor, you put some labor behind the throughput initiatives. But were there any other heavy expenses that hit this quarter that maybe we would cycle off in the back half or anything from a timing standpoint that maybe with this kind of comp in the back half we would see better margin leverage?

It was really mostly labor. If you look, for example, at what our margin was for the quarter and compare it, let's say, to the first quarter just sequentially. The first quarter was about a 26.1. We are like at 26.9 for this quarter. Seasonally, going from first to second quarter, you might expect about100-basis point improvement and then from the comping, you might expect overall about 100 basis points improvement. So that would put you in the 28% range or so. But then you’ve got to make a few adjustments because in marketing, we spent 2.1% in the second quarter. We only spent 1.5% in the first quarter. So that's a 60-basis point detriment Q2 versus Q1. Food cost is up 20 basis points as well. So now you're up to 80-basis point detriment. So now you're down to maybe 27.2% or so. And so we think we probably should've gotten may be 30, 40 basis points of leverage on labor, and we actually lost 10. And so that's kind of the difference between maybe a 28% margin if you roll it from first quarter to second quarter, and then 26.9. So really, the only thing, Jason, that we saw that we felt like we could have done better is on labor leverage. We know we've done better in the past. We're just not going to get too aggressive and risk losing the momentum that we are building on throughput to go after that labor leverage. It's out there. I'm confident we'll get it eventually. But we're going to be patient so that we have throughput first, then we'll get efficiency second.

Just on the rent side. Are you guys starting to see rent inflation moderate a bit where we would see some better leverage there as well, or is that still pretty inflationary?

Well, it's inflationary to the extent that we're adding new restaurants, because keep in mind, the straight- line rent accounting that we're required to do that. That means all the existing restaurants, their rents are pretty -- they're even once we open them up. So it's the new restaurants coming in the mix. Then we've got a couple of things offsetting each other. We're adding some more urban restaurants, restaurants in markets like Boston and like Philadelphia. We continue to open in markets like New York and the occupancy costs are quite high. And helping that a little bit offset that a little bit is the A Model. A Model occupancy costs are quite low. So we were frankly pretty pleased with the fact that we got 40 basis points of leverage on occupancy cost. But I would say that was more driven from a net standpoint by the comp. And then the two offsetting forces kind of held our occupancy cost at a reasonable level so that the comp would allow some leverage to happen. So I would expect if we can keep at this kind of comp level, you should see some leverage on that line. If we dip back in kind of low-single digits again, I think that's where we start to see de-leverage at the occupancy cost line.

That does conclude our question-and-answer session today and also does conclude the conference for today. We thank you all for joining us. Have a wonderful day.