Good day, everyone, and welcome to the Chipotle Mexican Grill Fourth Quarter and Year End 2015 Earnings Conference Call. All participants are now in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. As a reminder, today's call is being recorded. I would now like to introduce Investor Relations Manager for Chipotle Mexican Grill, Mr. Mark Alexee. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to our call today. By now, you should have access to earnings announcement released this afternoon for the fourth quarter and full year 2015. It may also be found on our website at chipotle.com in the Investor Relations section. Before we begin our presentation, I remind everyone that parts of our presentation today will include forward-looking statements as defined in the Securities laws. These forward-looking statements will include statements about our plans to enhance our food safety program and the cost and effectiveness of those enhancements; projections of the number of restaurants we intend to open; statements about our potential to recover lost sales; planned marketing programs and future restaurant margins; projections regarding food, labor, marketing, occupancy and G&A costs; statements about stock repurchases and future profitability and growth; as well as other statements of our expectations and plans. These statements are based on information available to us today and we're 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 statement. We refer you to the risk factors in our annual reports on Form 10-K, as updated in our subsequent Form 10-Q for 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 first quarter of 2016, it will begin March 1 and continue through our first quarter earnings release planned for April 26, 2016. We'll start today's call with some prepared remarks and we'll take approximately 20 minutes of questions. On the call with us today…

Thanks Mark. For those of you that have been following our company over the last 10 years, 2016 will be a very different year for Chipotle as we emerge from last year's events. We believe that we've outlined a thoughtful and effective strategy to restore confidence in our brand and we will be laser-focused on two things: first, implementing industry-leading food safety protocols, and second, working relentlessly to welcome our customers back to Chipotle. There will be costs to our new food safety program; so we expect to see lower operating margin this year until our sales trends begin to recover. But we're confident that we can win our customers back and as they return to our restaurants over time, our margins can return to industry-leading levels. Sales during the fourth quarter were extremely volatile. Although comps for the quarter decreased 14.6% overall, the adverse impact became more severe throughout the quarter as awareness remained high. After posting a low single-digit positive comp in October, we had a negative 16% comp in November and a negative 30% comp in December. While December comps started out at a similar level as in November, the comp worsened significantly following the national attention surrounding the Boston norovirus incident around December 7. Excluding that first week of sales, December comps averaged down about 34%. For the month of January, sales comps were down about 36%, worse than the December run rate due to tougher January comparisons, weather in the Northeast, and continued negative publicity. Comparisons become easier in February, but more importantly, we're anxious to begin the process of welcoming our customers back, which will begin in February with the marketing and PR that Mark talked about. Our teams are excited, staffed, and ready to provide a terrific experience to our customers when they…

And we will hear first from Brian Bittner with Oppenheimer. Brian J. Bittner - Oppenheimer & Co., Inc. (Broker): Thank you. Thank you very much. As we think about the ability for you guys to get back to the average unit volumes that you were at before the incident, I think it'd just be helpful for all of us to know how you think about your customer base. Meaning, what percentage of your sales volumes before the incident did you see from very heavy customers that you think are going to be much easier to reel back in, versus what percentage of your sales volumes were from much less frequent customers that that you may see as much more difficult to get back? Mark Crumpacker - Chief Creative & Development Officer: Yeah, that's a good question. We break our customers into five frequency bands. We call them new or lapsed customers, light, medium, heavy and what we call our top loyal customers. Our top loyal customers are the ones that come 25 times or more a year. When we look at the research, we actually saw a falloff in both the top loyal and the new customers, which isn't unexpected with regard to the new customers, they're not as familiar with the brand. We saw a small drop off in that top loyal, so it is definitely one of the targets that we're going after with our proactive communications. They tend to be people that we can communicate with relatively easily via social media, and many of them are part of our mobile and email marketing databases. So we're definitely going to be targeting them. That group of people can represent up to 20% of our sales, so it's a very important part of our group. And so what I'll say is we're going after them. We also expect, though, as part of our overall advertising program, that we're going to get new customers. There are still plenty of people who have never been to Chipotle in the United States, and we're going to invite them in, too. So we're going after both that very loyal group and brand-new customers as well. Brian J. Bittner - Oppenheimer & Co., Inc. (Broker): And, Jack, just to clarify what you said. So if you get back to your AUVs pre-incident, are you saying we should expect kind of a mid-20%ish type restaurant margin? (31:42)

Yeah, I think we would get back to our full – our high 20% margins – 27%, 28%, something like that except for the cost of our ongoing food safety program. And that would be a couple hundred basis points. Brian J. Bittner - Oppenheimer & Co., Inc. (Broker): Makes sense. Okay, thank you.

Thanks.

Next we'll hear from Nicole Miller with Piper Jaffray. Nicole M. Miller Regan - Piper Jaffray & Co (Broker): Thank you. Good afternoon. Can you talk about how the employees are feeling? I know you're going to talk to them next week, but is there any increased turnover as they're concerned about what they're experiencing in the store? Montgomery F. Moran - Co-Chief Executive Officer, Secretary & Director: Yeah, Nicole. Just reviewed those numbers recently, and there's not increased turnover in any significant way. So in fact most of our turnover numbers, especially for our hourly managers and salaried managers, have been declining over the last few months and they seem to continue to. And just having spent a lot of time in the restaurants with our teams and having spoken with our executive team directors and restaurant support officers, all of us are seeing the same thing, which is that our employees are really, really enthusiastic, they're excited to be implementing these new food safety procedures, they're proud of what they're doing, they understand that these things make sense and they're doing a fantastic job. And they're keeping their heads very, very high. They're also excited now that the CDC has called this thing over and that they can begin to look forward to building the restaurants back to where they had been before and to really delighting these customers as they come in. So we're seeing that our employees are super-enthusiastic, very understanding of what we're asking them to do and very, very competent in getting it done, even though we've made quite a few changes in a pretty short period of time. So we're very, very proud of our restaurant teams. And I've received loads of emails from managers and hourly managers and crew out in the field who are just offering, hey, what else can we do, and offering words of encouragement and thanking us for the culture we've built. And so it's just, it's surprisingly and I guess sort of wonderfully optimistic, and so we're very proud of that, and we think that that's going to be a great base upon which to continue to rebuild to where we know we can be. Nicole M. Miller Regan - Piper Jaffray & Co (Broker): That's very helpful. Thank you. And then just a final question. Is there any comment you would make about February and March prior-year same-store sales compares relative to January, and would you be willing to call it the weather impact in January? Thank you.

Yeah, Nicole, not in terms of specific numbers, but I will tell you of the three months last year, January was the toughest comparison, so it's nice to have that behind us. It's nice to have the CDC call their investigation over. It's nice that we're on the cusp of having a lot of marketing and PR, and this company meeting, which we think will result in a really excited and motivated group. So we've got things now on our side. It's been a tough couple of months. And so with all of that, including the weather comparisons, we're optimistic about what the next few months hold. But in terms of specific numbers, what we'll do is we'll probably continue to update on a mid-quarter basis just because things have been so volatile, and so expect some updates throughout the quarter as things unfold. Nicole M. Miller Regan - Piper Jaffray & Co (Broker): Thanks. Appreciate it. Montgomery F. Moran - Co-Chief Executive Officer, Secretary & Director: Thanks, Nicole.

Thanks, Nicole.

Our next question comes from David Palmer with RBC Capital Markets.

Thanks. Good evening. Could you comment a little bit about that investigation? What is the nature of that, and just what are they looking for? And then separately, with regard to the direct marketing campaign, could you talk about perhaps what messages will be in there? I would assume some messages about safety, and then I would also imagine value being part of that. Thanks. Montgomery F. Moran - Co-Chief Executive Officer, Secretary & Director: Yeah, David, there's not much to say at this point about the investigation because we just don't know tremendously much about it, but basically, there is a statute in California dealing with essentially selling adulterated food or selling food that can be harmful. And because of that statute, the United States Attorney for the Central District of California has opted to undertake an investigation. And obviously, we're cooperating with that investigation and providing all the documents that they'd like to look at and I think they're just wanting to make sure that everything we did was on the up-and-up. And I think that obviously we're confident that at the close of such an investigation, that's what they found. And I'm sorry, it's a federal statute under which that investigation is taking place. Mark Crumpacker - Chief Creative & Development Officer: And with regard to the direct mail – or the direct marketing campaign, there are a variety of different messages. None of them actually include messages about food safety. The messages on both the printed version of direct mail as well as the mobile direct marketing are really about taste and quality. And the messages with regard to food safety are things that we drive out through PR communications and on our owned channels like our website and the new food safety website that I said that we were launching earlier in my prepared statements. So, the direct marketing is very much about delicious and wonderful food. It's very similar to what we've done in the past in that regard. And it's proven to be very effective for us at driving traffic in the past. Now we don't know of course exactly how these incidents will impact redemption on these things, but given how successful they've been in the past, we're confident that they're going to drive substantial traffic.

Thank you.

Our next question will come from Jeff Farmer with Wells Fargo.

Thanks. Jack, you called out that 36% same-store sales decline in January, but can you provide detail on how the quarter progressed?

Well, the month, Jeff, of January, I wouldn't say there's anything meaningful within the various weeks. There were some highs that were in the high 30%s, there were some lows in the lower mid-30%s. A lot of that was driven – like the one that was in the high 30%s or even 40% was driven – well, it was during a time when the weather was really bad in the Northeast and so I'd say that was weather-driven. So there's nothing during the quarter that would say there was a progression. I would say that we kind of held in that kind of mid-30% negative range throughout most of the month if you were able to exclude the weather because we were in the press a lot. There was a high awareness a lot, and that's why we're so anxious for the CDC to call this over so we can put it behind us and we can start talking about what we've done in a productive way so we can invite customers in and put it all behind us. So there is no progression either up or down other than weather that I would point out enter January.

Okay. And then just one more. In mid-November, you reopened the 43 restaurants across Oregon and Washington State. And more from a case study perspective, I'm just curious from the early marketing strategies you guys chose to pursue in those really early days, actually, so what were they and did they get customers back in the restaurants, and what lessons, if any, did you learn that you can bring with you as you move into sort of this next phase of getting these customers back in the restaurants? Mark Crumpacker - Chief Creative & Development Officer: Well, there wasn't a whole lot of marketing per se that we did with regard to the initial closures. The primary effort there were letters from Steve to our customers published in newspapers across the country. We actually did that twice during the course of this. And we saw, actually, after the initial reopening of those restaurants that you mentioned and the subsequent publishing of that letter a nice recovery of our customers. Unfortunately, the nature of the E. coli outbreak was different than we expected and we saw additional cases creep in over the following weeks and subsequent eight additional announcements by the CDC of additional cases here and there. And so, that combined with the norovirus outbreak in Boston, was sufficient to cause people to have general sort of lingering doubt. And that's really where we stand now and we're seeing that subside a little bit, but a lot of our customers took a wait-and-see approach, and so to the extent we learnt anything from those is that being transparent and honest with our customers works. What we need to do, though, is make sure that they are completely confident that it's safe to eat at Chipotle, which it is, and so that's the primary effort that we're making with regard to communications right now is just for those customers who don't yet know it's safe, we're trying to make sure that they do.

Thank you.

And from Morgan Stanley, we'll hear next from John Glass. John Glass - Morgan Stanley & Co. LLC: Thank you. Jack, I wanted just two cost questions. One is on the G&A for 2016. I'm sorry if I missed it. Where are you pointing us toward if G&A was $250 million I think for 2015? Did you say it was $60 million higher net of anything or what is the right number, as you look at it?

$65 million higher. Yes, John, it's going to be in dollar terms $65 million higher. And in my prepared comments, which hopefully you picked up on those, there are number of discrete things that are happening that are causing the majority of that, and when you look at the underlying non-discrete growth, the growth is relatively modest. But overall when you take into account kind of the fact that we had some pretty extraordinary performance-based adjustments in 2015, we'll have the All Managers Conference. Overall we expect to see G&A go up by $65 million. John Glass - Morgan Stanley & Co. LLC: Okay. That's helpful. And then what is nonrecurring in the first quarter? That's a fairly significant decline. I appreciate there's a lot of things going on. How much of what you would say in the first quarter is nonrecurring in nature, consulting or whatever else?

I don't have a great number on that, John. I'll be able to do a better job of telling you that as the quarter unfolds. I think the best thing to take into account is when I gave the various what we think the margins will be, I tried to take into account some sloppiness, either inefficiencies or some kind of one-time costs, even though it's hard to pinpoint exactly what those one-time costs are now. The biggest single impact that we're going to have on our margins is going to be sales recovery. And so if we recover say 20%, for example, we can have margins in the high-teens. In terms of the single biggest thing that's going to hit the first quarter is going to be promotion and marketing. That's going to be 6%. So 6% of sales. And that will be a lot, lot, lot higher than we spent in the past by four times in terms of percentage of sales and 3.5 times in terms of dollars that we spent last year. That's going to be the single biggest non-recurring. Other than that, there's going to be little nonrecurring things here and there that it's hard to get a handle on right now, but I'll be able to tell you guys as we close the quarter about what some of those non-recurrings are in our first quarter release. John Glass - Morgan Stanley & Co. LLC: Okay. Thank you.

And our next question comes from Sharon Zackfia with William Blair. Sharon M. Zackfia - William Blair & Co. LLC: Hi. Good afternoon. Question on the marketing...

Hi, Sharon. Sharon M. Zackfia - William Blair & Co. LLC: I know historically you've talked about marketing as a percent of sales, which you did today. But it's a little hard on our end – probably on your end, too – because you don't really know how the cadence of sales will progress throughout the year. So I was hoping maybe you would talk about the marketing plans in dollar terms for the first quarter and the full year? And then I'm just curious as to – I think you've said in your research the Northeast and the West Coast have been hit harder in terms of consumer response. I was wondering if you were going to disproportionately target some of the areas where you've seen more of that pushback from consumers?

Yes, Sharon, during the first quarter and during January as well, we did see the Northeast and the West Coast hit the hardest. And to give you an example, for the fourth quarter, the overall comp for the company was a negative 15%. And the Northeast and including mid-Atlantic those comps were down in the high-teens, and the rest of the country – so you're talking about the middle of the – and the West Coast as well – was down in the high-teens. The rest of the country was down more in the low-double digits. So there wasn't anybody that was down like double company average and somebody was down half. It was a relatively tight range, but there was definitely – throughout the quarter and into January – more of an impact on the West Coast and in the Northeast. In terms of Q1, just to give you a rough idea on dollar terms, Sharon, we'll spend probably around $50 million in combined marketing and promo. Now that's an estimate on the promo side, because we're guessing as to what the redemptions will be. So that number will vary depending on how many people come in and want to redeem their offer. I hope to be able to come back and tell you that that cost is a lot higher because a lot more people redeemed their offer, because that means they're willing to come back to Chipotle, they trust Chipotle, and we have a confidence level, if people will come in for the offer, that they'll come back afterwards knowing that it is safe to visit Chipotle. Sharon M. Zackfia - William Blair & Co. LLC: Okay, great. Thank you.

Thanks, Sharon.

And moving on, we'll take a question from Jeff Bernstein with Barclays.

Great. Thank you very much. Two questions, just one on the sales recovery. I can appreciate when you mention it's hard to predict and you gave us good sensitivity in terms of where the margins would fall out. But how would you directionally define a successful or reasonable recovery? How do you see that playing out? Is it just time is going to heal all this and you'd expect trends to just sequentially improve every quarter through the year? Or how would you look back and say, you know what, that's what we kind of expected in terms of pace of recovery?

You know, Jeff, it's really hard to predict. When we looked at other events, other companies that have gone through something like this, the recovery typically takes four or five quarters or so. We know that there are things that are different than what happened in previous cases. For one, we've had a couple instances here, so that kept us in the news a lot longer. Secondly, the news travels faster. There's a lot more chatter on social media, and so the word really traveled fast. Sometimes accurately, sometimes inaccurately. And so we know that there are differences that might make this a little tougher. Our main objective was to – once we had an event that signaled that this was over, and we now have that in hand – to be very aggressive to invite customers in. And we're doing that. Mark talked about that. We're spending a lot more money on marketing and promotion than we've ever had before in dollar terms and in percentage of sales terms than we ever have before. We're telling our teams to staff their restaurants as if the steep recovery is coming for sure, so that when the recovery comes, if it comes a little slower, we'll still be ready. And so our main objective is to be aggressive with bringing customers in, being ready for when they come in and we're hoping that that will accelerate the recovery. If it took four or five quarters, as it has in other instances like this, I think that would be a fair way to think about it. But we won't know until the recovery starts and then we'll share with you the cadence as it happens.

Understood. And then just your comment on there's finally some closure with the CDC signal yesterday. It sounds like there's no longer any trace of it, but it's still a struggle in terms of the certainty on the cause. So I'm just wondering with that kind of as an open-ended item, like, how do you respond or how do you advise your existing suppliers who maybe are looking for guidance on proper food safety to avoid incidences similar to this in the future? I'm guessing you would've preferred if the CDC had totally identified what the cause was. Like with this ambiguity now, how do you think about that going forward as suppliers look to make sure of their food safety measures going forward? Steve Ells - Chairman & Co-Chief Executive Officer: Well, so because we don't identify the item that caused the E. coli, we have gone to all of our suppliers, especially the suppliers that have high-risk items, meats and produce, and have implemented high-resolution testing as laid out by Dr. Samadpour, who we brought on board right after the outbreak. He is very familiar with these types of cases and has put in an extraordinary testing procedure. So we test a lot of our high-risk items. Those items that can't be tested, like whole avocados, whole onions, things that we bring into our restaurant, we've put in place a blanching procedure which actually is boiling these items in water for a brief period of time, five seconds, which destroys any microbe that might be on the surface. So even though we haven't identified the specific item, all of our items now that are high risk go through either this testing or this blanching kill step. And we think now Chipotle is much safer than it's ever been, and this really puts us in a position to be industry leaders in terms of food safety.

Understood. Thank you.

Thank you, Jeff.

And we do have time for one additional question today, and that will come from David Tarantino with Robert W. Baird. David E. Tarantino - Robert W. Baird & Co., Inc. (Broker): Hi. Good afternoon. My question's on the unit growth outlook. And this year, no change in the outlook, I assume, because your pipeline was fully set. But I guess the big picture question is, why not slow down a little bit while you're getting your arms around some of the food safety issues, and perhaps defer some of the openings so that you can make sure the quality of the existing unit execution is good versus continuing to charge ahead on the unit openings? Steve Ells - Chairman & Co-Chief Executive Officer: Sure. Great question, David. I would say, first of all, though, that we have implemented this extraordinary food safety program. And that is up and running and the teams are executing it very, very well. We expect that we're going to bring our customers back. And we would not want to be in a position where we slow the pipeline for 2017 finding that our sales have recovered and then not have the opportunity to satisfy the demand as we have had in years past. So we feel it's prudent to stay on course with our existing plans of expansion. Montgomery F. Moran - Co-Chief Executive Officer, Secretary & Director: Also, David, right now we have the very best ratio of field leaders to restaurant managers and restaurants that we've had for quite some time. So we have the leadership. We have the managers to run these restaurants really, really, really, really well. And so our real estate people are out filling that pipeline, doing a great job finding real estate. We have the managers to run those restaurants. And if we thought that slowing down growth would help us to implement the food safety procedures that we have implemented, we would do so. But the reality is, we have a lot of confidence that that implementation has gone really well and will continue to go really well over the coming months.

Yes. Hey, David. This is Jack. Just to add something to that. What you're talking about here is execution risk. Are we taking additional execution risk by opening up stores while implementing these procedures? A lot of the procedures are not happening in the restaurant, meaning the testing is happening outside the restaurant. So a lot of this food safety program is designed to prevent anything unwanted from ever getting into the restaurant. We're doing that by testing or we're doing that by doing some of the washing and some of the prep in a central kitchen, so it's guaranteed that nothing will get into the restaurant. And then the procedures that are in the restaurant, they're not subtle in terms of whether they are done or not. What Steve talked about with blanching, if you blanche for just a matter of a couple seconds in boiling water, it's an instant kill step. So it's not like you're relying on some kind of complex procedure or new process in the restaurant. It's a very clear step that, when followed, it is going to make each ingredient absolutely safe. And so the execution risk in terms of opening up new restaurants is very, very low. If there was execution risk, we absolutely would do something to make sure we would reduce that execution risk. But we feel really good about the way the teams are handling all these procedures so far. David E. Tarantino - Robert W. Baird & Co., Inc. (Broker): Great. Very helpful. Thank you.

Thanks, David.

And that will conclude the Q&A session for today. I will turn it back over to our speakers for additional and closing remarks.

Thanks, everyone, for joining the call today. We will be participating in the Bank of America Consumer Tech Conference in mid-March in New York, and then we anticipate speaking with you next during our first quarter conference call on April 26. Thank you so much.