Good day, and welcome to the Chipotle Mexican Grill, Inc. Fourth Quarter and Full Year 2025 Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Cindy Olsen, Head of Investor Relations. Please go ahead.

Hello, everyone, and welcome to our fourth quarter and full fiscal year 2025 Earnings Call. By now, you should have access to our earnings press release. If not, it may be found on our Investor Relations website at ir.tpole.com. Additionally, supplemental investor information is available on our site as a reference for today's call. I will begin by reminding you that certain statements and projections made in this presentation about our future business and financial results constitute forward-looking statements. These statements are based on management's current business and market expectations, and our actual results could differ materially from those projected in the forward-looking statements. Please see the risk factors contained in our annual report on Form 10-Ks and in our Forms 10-Qs for a discussion of risks that may cause our actual results to vary from these forward-looking statements. Our discussion today will include non-GAAP financial measures. A reconciliation to GAAP measures can be found via the link included on the presentation page within the Investor Relations section of our website. We will start today's call with prepared remarks from Scott Boatwright, Chief Executive Officer, and Adam Rymer, Chief Financial Officer, after which we will take your questions. Our entire executive leadership team is available during the Q&A session. And with that, I will turn the call over to Scott.

Good afternoon, and thank you for joining us. Today, I will spend a few minutes upfront discussing the highlights of our financial results, and Adam will cover the details. My remarks will cover a broader view into my vision for Chipotle Mexican Grill, Inc., and my deep confidence in our growth strategy, as well as opportunities we have to sharpen our competitiveness by harnessing the core values of our brand. The results we issued this afternoon were in line with expectations and guidance for the full year. 2025 should be seen as a year of progress and resilience for our brand. For the year, revenue grew 5.4% year over year, which included a 1.7% decline in comparable sales. Adjusted diluted earnings per share grew 4.5% year over year to $1.17. We opened a record 334 new company-owned restaurants and 11 international partner-operated restaurants. We also made progress in the strategic areas that matter most for our long-term success, including investing in operational excellence, marketing and menu innovation, deploying new back-of-house technology, and growing our footprint internationally. It's important to emphasize all of this was achieved against a dynamic consumer backdrop, with our guests placing heightened focus on value and quality and pulling back on overall restaurant spending. This makes our investments and progress even more significant and highlights Chipotle's commitment to succeed through consumer cycles. With that in mind, I want to commend the incredible efforts of our teams for their thoughtful response and dedication during the recent winter storm. We have not seen a multistate storm like this in many years, and our operational excellence and prioritization of speed and agility were instrumental in reopening restaurants as quickly and safely as possible to serve our guests. Turning to our path forward, serving as Chipotle CEO is an incredible honor.…

Thanks, Scott, and good afternoon, everyone. I'm pleased to report that we delivered sales results that were in line with our expectations with the accelerating trends throughout the quarter and into January. To support this performance, we made the strategic decision to elevate our marketing activity to ensure Chipotle remained top of mind with our guests. Now turning to our results. For the fourth quarter, sales grew 4.9% to reach $3 billion, with a comp decline of 2.5%. Sales benefited from a $27 million true-up following an annual gift card breakage analysis. This true-up did not impact comparable restaurant sales. Digital sales were 37.2% of total sales. Restaurant level margin was 23.4%, down 140 basis points year over year. Restaurant level margin also included a 70 basis point benefit from the gift card true-up. Adjusted diluted earnings per share was 25¢, consistent with last year. And we opened 132 new restaurants, including 97 Chipotlanes as well as seven additional partner-operated restaurants. As we move into 2026, we anticipate our full year comparable restaurant sales to be about flat. We are confident in our recipe for growth strategy, and we are encouraged by the meaningful improvement and underlying trends we've seen in January following the launch of our new protein menu and marketing campaign. However, we believe it's prudent to keep our full year guidance grounded in a conservative baseline given the evolving consumer dynamic. We will continue to take a disciplined and measured approach to pricing but do not expect it will fully offset inflation in the near term as we remain committed to delivering exceptional value for our guests. We anticipate the impact of pricing in the first quarter will be about 70 basis points compared to our expected inflation approaching the mid-single-digit range. We expect the gap between…

We will now begin the question and answer session. For the interest of time, please limit yourself to one question and one follow-up. To ask a question, you may press star then one on your touch-tone phone. If you were using a speakerphone, please pick up your handset before pressing the keys. Please press star then 2. At this time, we will pause momentarily to assemble our roster. First question comes from Brian Bittner with Piper Sandler. Please go ahead.

Hey, thank you. Just a question on the guidance for about flat same-store sales. I guess, one, can you just help us understand the components embedded in there? For transactions and menu price and mix, that would be helpful to understand. And then just to anything you can offer on the cadence you'd expect. And I'm asking because you mentioned being encouraged by January. It would seem like there's some easy compares ahead, so just anything you could offer there would be helpful.

Yeah. Definitely. Thanks, Brian. So for the full year, like we said in our prepared comments, we're excited about the momentum that we've seen in our underlying trends in January after the launch of the protein menu and that whole campaign. We're confident in our recipe for growth strategies and that they'll continue to drive transactions up throughout the year, including with chicken al pastor launching next week. But with that said, we think that it's still very early in the year, and consumer trends have been really tough to predict. So we wanted to be conservative in our full year guide to account for this. And our full year guide only includes, I would say, really a modest impact from the initiatives that we have this year. And then when you're thinking about how this works out throughout the rest of the year, we expect comps to improve throughout the year as our initiatives drive transactions. And as our compares get a little bit easier throughout the year.

Okay. Thank you. And then just on the high-efficiency package, in the prepared remarks, you're referencing some increased throughput, maybe a lift to comp sales at those 250 restaurants. Just wondering at those restaurants, any quantification you could provide on what you're seeing at those stores and that's something you might I think you said 2,000 at the end of the year, but would you look to accelerate that over the next couple of years?

Hi, Brian. Excuse me. It's Scott. Thanks for the question. We're really excited and encouraged by the results we're seeing with the heat package. We're seeing better engagements, consumer engagement scores, we're seeing better scores around food quality and taste of food. And like we said in the prepared remarks, we're seeing hundreds of basis points of improvement in comp sales in those restaurants alone. That gives us confidence that we are approaching the strategy the right way, and it's having a meaningful impact for our team members and for our guests. We have already accelerated the program. We should be at 2,000 restaurants by the end of the year. And then you could see that there is a path to probably finish the rollout at some time in 2027. And we will go as absolutely fast as we possibly can.

Thank you.

Our next question comes from Sara Senatore with Bank of America. Please go ahead.

Thank you very much. I guess maybe two quick questions. One is if you could talk about the LTO. I know that that's something you're gonna do more frequently. You talked about chicken al pastor being, I guess, twice as requested as anything else. I think about the fourth quarter, I think carne asada was maybe it didn't act exactly how you expected, although you can correct me if I'm wrong. So I guess how are you thinking about the LTOs? Are you gonna market it differently, or maybe it's more accessible price point just in terms of, you know, ensuring that you get the biggest lift from the LTO that, you know, what you would normally expect. So and then I'll have a follow-up, please.

Hi, Sara. It's Scott. Thank you for the question. So carne asada did perform as it relates to incidents just as well as it did in 2023, and I'm confident it did move the needle on transactions. To what extent, I can't really parse out at present. Here's what I will tell you is what we know from what we learned in 2025, which is really a year of progress, as I said, and resilience, is that the LTO consumer, the consumer that chooses an LTO at Chipotle has a higher lifetime value, visits the brand more often, and spends more. We're gonna lean into that moment with our core consumer. We've done exhaustive work around who the Chipotle customer is this past year. What they're looking for from our brand, and menu innovation and new news really at the top of the list. As it relates to how we'll market those components, we've increased the spend this year to account for fully supporting four stand-alone LTOs. I think the marketing message you'll see will begin to evolve. Hopefully, you've already seen the high protein wash that just happened, the Choices ad that just ran a couple of weeks ago. We're approaching the messaging differently, and we're gonna celebrate what is unique and different about Chipotle in a more meaningful way in the upcoming year. And you'll see that evolve as we continue to as the year unfolds within the marketing strategy.

Okay. Thank you. Very helpful clarification. And then just a follow-up as related. You mentioned doing a national search for Chief Marketing Officer. Just curious, since you are, as you noted, spending more, you know, the percentage of revenues and, you know, multiple LTOs. Does that the fact that you, you know, perhaps are doing a search, is there any, I don't know, just risk of disruption or that, you know, the plan changes? Just trying to understand kind of the cadence.

Yeah. I would think of this, Sara, more as a chapter change. And here's what I would tell you. As we have both great internal candidates for the position as well as a lot of interest externally, and what we want to do is ensure that we stay on brand. We're gonna stay core to who we are. And we're just gonna lean into celebrating what, again, our points of differentiation. And our uniqueness in a more compelling way. So think of it as a chapter change for the brand. Chris Brandt did a tremendous job making us a purpose-driven lifestyle brand. That doesn't change, and that doesn't go away. They give us the next evolution of the marketing strategy. That really pushes us into the next phase of growth for Chipotle.

Thank you.

Our next question comes from Lauren Silberman with Deutsche Bank. Please go ahead.

Thank you very much. I have a question on comp and then one on the value side. Just on the comp in January, I know there's a lot of noise. Can you just help level set what you're seeing quarter to date, perhaps pre-storm, if that's the best you know, thought on what's going on there. And then are you assuming underlying trends from January continue throughout the year? Or just help contextualize what's embedded there.

Yeah. You know, I've said in the prepared remarks, we saw a lot of momentum coming into January. Recall that the protein menu launched kinda late December. And we really saw an acceleration in the trends. All the way up until the storm hit, you know, a multistate impact with massive restaurant closures. So it's a lot of noise in the underlying trend at present. But I'll pass it to Adam. Adam, do you have anything you want to add to that?

Yeah. And I would just say, you know, for Q1, this gets us to an underlying trend somewhere in that minus 1% to minus 2% range, and that's what's embedded in our expense line guidance and our prepared comments. But you have to keep in mind that that comp range includes about 100 basis points impact from the restaurant closures from the large winter storm that Scott mentioned. And that's 100 points of impact on the quarter. On the quarter. Correct. Yeah.

Okay. Very helpful. On the value proposition side, you guys have you're talking about opportunities to strengthen that. You've been promoting protein. With a single taco, the cup of protein for under $4. Is there more opportunity for entry-level pricing or how you're thinking about smaller portions overall and just how you're thinking about balancing that with not cannibalizing the core business?

Thank you. Yeah. What's great about the offering in the protein menu is we're not discounting the product. We're just celebrating something that's on the menu that may have little awareness today. I think having a taco at $3.50 and a protein cup around $3.80 across the country is really an approachable price point that really gives the consumer a meaningful way into the brand, but also solves for, you know, those people that are looking for a different choice whether they're GLP one users, or looking for other dietary restrictions, more high protein, or high fiber. We will test and learn on a couple of new ideas that may be price-pointed throughout the year. And see if they make their way through Stage Gate and actually make a national calendar. But we feel really comfortably situated where we are today. Given the pace of LTOs that will all unfold starting with chicken al pastor on February 10, we have some new news. We have a, you know, a couple of tried favorites. True favorites that have performed well historically. I think the marketing calendar I don't think the marketing calendar this year is more robust and it'll be better supported. With targeted media than we've seen historically in the brand. Thank you.

Our next question comes from David Tarantino with Baird. Please go ahead.

Hi. Good afternoon. I have a question on the margin outlook. And Adam, I was wondering if you could comment on where you think the full year restaurant margin would shake out on a comp that's about flat. I, yeah, I think you have some pricing coming in. You said you're gonna narrow the gap versus inflation. But just any comment on where the full year might shake out given the guidance on the comp?

Yeah. Yeah. Definitely, David. So margins in 2026 will be under pressure, and it's mostly due to our investment of taking less price compared to the inflation that we're experiencing. But again, I would emphasize that's temporary. And we'll balance it out towards the end of the year. And like I said in my prepared comments, that gap will be the widest in the first quarter. So to put some numbers into it, we expect pricing to be about 70 basis points of impact in the first quarter. While inflation is closer to about 4%. So just then and there, that's about a 250 basis point margin headwind. We'll chip away at throughout the year. When you think about it on a full year basis, I would anticipate pricing to be in that 1% to 2% range. While inflation will be closer to that 3% to 4% range. So just that dislocation alone will be about a 150 basis points. On a year-over-year decline. And then there's a little a couple other adjustments in there, like ad promo is gonna go up maybe 10 or 20 basis points. You have the gift card benefit in 2025, which is another 20 basis points or so. Then, of course, you've gotta make the adjustment for transactions on a flat guide. There'll be a slight degradation in the margin from there. But the good news is that dislocation is temporary. We'll get that back by the end of the year. And all the initiatives that we have in place to drive transactions will resonate with our guests this year, and we're confident that we can drive up above that full year guide with some upside potential from us. So that's a good way to think about it, though, thinking from '25 to '26.

David, I would add to that. You know, we still have confidence in the long-term algorithm. Of getting to $4 million AUVs and approaching 30% margins. Although this year will be challenged for a couple of reasons, we have no reason to think that the long-term algorithm doesn't hold.

Great. I was just gonna ask about that, Scott. So thanks for preempting my question. But I guess, what is the path then from this baseline to get to, I guess, margins approaching 30%? I guess, is as simple as getting the volumes up, you know, a million dollars or so a unit? Or, I guess, is there something else, you know, or levers that you have to pull to strengthen, you know, productivity or, I guess, what is your framework for getting to that higher margin?

Yeah. I'll start and then Scott definitely jump in. And so in the short term, it's definitely that dislocation that I talked about earlier, but we'll solve that by the end of the year. From there, it's all about driving transactions north and getting the flow through on those additional transactions. That will allow us to get not only back to the historical margins that we're a year or two ago at the volumes slightly above where we're at now, but to continue to increase those margins into the 27-28 range and beyond as we approach $4 million in AUVs.

Great. Yeah. And I'll tell you, David, the pricing approach we're taking this year at 1% to 2% compared to where the industry is closer to 4% will continue to strengthen our value proposition and give us pricing power in years to come. And so that combined with other initiatives that we have identified, whether it's in supply chain, or in labor, as we make this reinvestment in the business around heat, could still be opportunity down the road to capture some margin savings there as well.

Great. Thanks very much.

Our next question comes from David Palmer with Evercore ISI. Please go ahead.

Thanks. Just a couple of follow-ups on that topic of pricing power and, you know, efforts you could make to lean into boosting your value perception. I, you know, first, you know, there's been some pricing rolled out so far. Is there any learnings you have from that pricing? You know, what does price elasticity look like as you've rolled those out selectively?

Yeah. Yeah. So as you know, we started the approach probably about, what, October, November, so last year. And it's going really well, and it's pretty much as anticipated. And so we expect to continue down this path of this really disciplined and measured approach to raising prices throughout the year. As I mentioned earlier, I expect the full year impact to be about 1% to 2%. But the beauty of this approach is it allows us to adjust throughout the year depending on what we're seeing, get much better data points, as well as get better reads throughout the year on inflation. But so far, so good with this approach.

And I wonder, you know, you're gonna be existing among these giant fast food players that are rolling out value menus. And you know, you've done some things along the way. You've you have an entry price point cup with the new protein menu. You said you have some price-pointed things. Looks like you have a new style of advertising where you've pointed out, you know, pretty clearly there's a difference in the way Chipotle makes food versus what you'd see at a traditional fast food place. I just wonder if is there any, you know, do you feel like the offense might be working with these price-pointed things and the messaging and I'm just wondering if there's anything you can do to really shorten this cycle, this, you know, reinvestment in cycle rather than just wait for your price to underprice inflation for a while? And thank you.

Yeah. Thanks, David. You know, I'll tell you, you know, with what the momentum we saw in early January, the January gives us confidence that the strategy is exactly what our consumer is looking for. I talked earlier about doing this deep dive on the core Chipotle consumer to truly to really parse out who that consumer is and what they want. What we've learned is the guest skews younger, a little more higher income, is typically a digital native. And that their grounded purpose aligns with our North Star as a brand around clean food, clean ingredients, high protein, and we are the way they wanna eat. We're gonna lean into that in the most meaningful way. I'll tell you, after looking at the data last week, we learned that 60% of our core users are over $100,000 a year in income. In average household income. That gives us confidence that we can lean into that group in a more meaningful way, whether it's the solo occasion and or group occasions to really drive meaningful transaction performance in the year.

Our next question comes from John Ivankoe with JPMorgan. Please go ahead.

Hi. Thank you. Okay. I'm gonna follow-up on the income question, and then I'll have a question on development. You know, first on the income side, 60% of customer is over $100,000. You know, there's a lot of puts and takes, you know, with tax refunds and just overall changes in tax rate and student loans, what have you. Do you think the core consumer that Chipotle has will actually benefit in '26 from all the different puts and takes that are just, you know, kinda happening out of DC in terms of affecting the customer's wallet and spending ability?

Yeah. Hey. I would tell you that we believe it's gonna be a nice tailwind to spend and aligns nicely with our ramp-up and menu innovation. As it is a larger percentage of overall guests. And I think initially for the under $100,000, there'll be a nice bump after tax season and spending in general. And I think we have an opportunity to really garner more than our fair share in that window as well.

Okay. Thank you. Helpful. And the second question is on development, specifically North America company development. Have we, you know, don't know if, you know, exactly the number 330, 340, 350, you know, something, you know, between 25 and 26. So just correct me on that exact number. Are we kind of hitting a natural level of, hey, we should be thinking about nominal growth rates of units in this core important market as opposed to expecting. What has been historically some, you know, pretty decent leg ups. You know, in development. In other words, now I'll ask the question more succinctly. Are we at the kind of development level in company North America that should just be the absolute level going forward, or do you think you actually have an ability to ramp it? Maybe that's a better way to ask it.

You know, we built 334 restaurants in 2025. And we did it successfully. And we had the right teams ready, prepared, at the right development level to take on new growth. And not affect or impact negatively the core business. This year, we'll build 350. So think one new Chipotle restaurant almost every day. And we think that's the right growth rate for our brand. And gives us a lot of confidence that we'll continue to build them and have returns in the 60% range. And so we still can neck up to the 9, 10% new unit growth if we add in partner-operated restaurants into the mix as well. But we feel really comfortable at that growth rate out to 7,000 restaurants in North America.

And the final one, you know, just give confidence outside of Central London and Frankfurt. Those are obviously two very specific type markets. Are you feeling, you know, good elsewhere in UK, good elsewhere in Germany? And I'll conclude there.

Yeah. France is a tough one, I'll be honest with you, because of wage inflation, because of occupancy costs. It's not to say we don't like France as an opportunity. We're just not seeing we're seeing some recovery there, but not at the same pace. But so we just need a little more time in France, I believe. As it relates to London proper or UK proper, Central London is our biggest opportunity. We've made some strategic bets a couple of years back outside of Central London. That didn't perform at the level we wanted them to perform at. So we think about the strategy for London more lot more similar to New York or Downtown Chicago, where there's so much opportunity to build within Central London and have, you know, very successful return on investment. That that's where we're gonna lean into. But then we'll look to expand to other adjacent markets, whether that's Benelux, the Nordics, Poland, or Spain.

Our next question comes from Danilo Gargiulo with Bernstein. Please go ahead.

Great. Thank you. Scott, in the past, you mentioned that you may have identified 100 to maybe 150 basis points of margin upside opportunities that over time, you should be able to unlock. Was wondering if you can give more color on the timing of those opportunities and what levers you can pull today without impacting demand? Thank you.

Yeah. So we are in the throes. Great question. Thank you for that, Danilo. We're in the throes of going through a very comprehensive supply chain review and there are strategic savings that are there that don't affect the ingredient quality that we bring in the back of our restaurants. So we have a lot of confidence we'll be able to pull margin there. But, also, the equipment high equipment high equipment package has margin savings that we are reinvesting at present. That over time could have a meaningful impact to margin as well.

Great. And I would like to follow-up also on the snacking occasions. Specifically, handheld seem to be another area where you could be leaning more into. I was wondering how does this fit into your marketing strategy, and more importantly, how are you gonna be enhancing your value orientation while ensuring that you're not cannibalizing your own sales and using consumers to trade down. Thank you.

You know, that was, you know, consumer trade down concern was one of the concerns we had around the high protein menu. And, frankly, we just didn't see it. Extra protein incidence is up 35% during the menu launch. Which gives us confidence that the core consumer is not like necessarily looking for a smaller, lower price-pointed component to the menu. What they are looking for is excellent culinary, excellent in-restaurant and digital experiences, and then product that is on brand and on trend. And so that gives us confidence in the strategy. We will test ideas like, dare I say, a happier hour to see what that looks like for our brand. I don't know if it'll be a meaningful unlock for Chipotle, but we're gonna test the idea. And stage gate it and give it the appropriate resources necessary.

Our next question is Dennis Geiger with UBS. Please go ahead.

Great. Thank you. Wondering if you guys could talk a little bit more about how you're sizing up those key sales drivers in '26, many of which I know you commented on. But I believe you mentioned only embedding a modest impact from the initiatives this year. So I'm just curious if you could sort of unpack is that sort of consistent with your methodology on often not embedding LTOs in the comp guide or is it much more of a let's be conservative in thinking about a lot of these impactful initiatives, just given the environment that we're in. Just curious if you could unpack that for us, guys. Thank you.

Yeah. I'll let Adam jump in on his reference as it relates to embedding in guide. LTOs, or other strategies. Here's what I'll tell you. We have sized up the opportunities whether that's, you know, relaunching or reimagining rewards. Or group occasions, or what the heat equipment package will do for our brand. Of course, we're still early days on many of those things, so we dare say, you know, what that will look like. We have a pretty broad range on each of those items. But I think they're more multiyear than a 2026 initiative.

Yeah. And then in terms of, you know, looking at the guide, if you look at more of our short-term guides, what I mentioned example for Q1 of a minus one to a minus -two percent, that does not include any further initiatives the quarter. So think of Chicken Al Pastor, or that momentum that we're getting from the protein menu and campaign that can provide upside to it. But then when we're thinking about full-year guides, we usually include a modest impact from the initiatives throughout the year. And this year, we definitely took into account there, like I said earlier, just what's going on in the consumer environment. We just wanted to be a little bit more conservative on that full year just because of that.

Thanks, guys. I appreciate it.

Our next question is Chris O'Cull with Stifel. Please go ahead. Chris, your line may be muted. We're unable to hear you.

Sorry about that. Can you hear me now?

We have you, Chris. Go ahead.

Okay. Great. Scott, I had a follow-up question regarding the CMO search. I'm just wondering what specific next-level expertise are you looking for in a leader to help drive Chipotle into this next phase of growth?

Yeah. We're just looking to evolve our key messaging, really talk about our points of differentiation in a new way that's compelling. Continue to drive strong menu innovation for our brand that is on brand, and that drives really consumer demand. And then support and help as it relates to digital to help support our new chief digital officer as we think about digital commerce differently in the years to come, whether that's reimagining the loyalty program which you talked about, or better partnership with our third-party aggregators and really figure out meaningful ways to drive transaction through those channels. Because we know those channels to be different whether you're talking about Uber or DoorDash. One is heavily focused on price differentials for in-restaurant versus delivery. Other one's more promotionally driven. And so figuring out the right approach to that. And then also, really making our white label experience more approachable to really accelerate the transactions we're seeing in that channel as well. So holistically, I know I said a lot there, Chris. Looking for I guess, a unicorn. Good news is, I talked about this earlier, we have great internal talent. We have great external excitement for the job. So I think we'll have someone in the chair in the coming months that is world-class, and that'll deliver on the expectation. And deliver on our recipe for growth strategy.

Okay. And then just my second one. How are you thinking about communicating to light or lapsed users who probably represent a big opportunity but are likely not going to see the first-party loyalty offers?

Yeah. So I think we've talked about personalization in the past, Chris, and we're starting to really accelerate the personalization journey. I'll give you an example. We're leveraging the AI model to really identify those lapsed users and create journeys that get them reengaged with our brand. More importantly is we're able to parse out deals or offers for based on how often they frequent our brand in the past. And what we anticipate their lifetime value to be. Which is really a meaningful step change in how we really drive demand in the channel and targeting lapsed and at-risk consumers.

Okay. Great. Thanks, guys.

Our next question is with Andrew Charles from TD Cowen. Please go ahead.

Great. Thank you. Scott, you reiterated the 2026 development guidance, and I'm curious what you would need to see to slow development to intensify the focus on improving traffic. Is it overly simplistic to think if 2026 comps were to be negative instead of flat, then this would make you reconsider development plans?

Yeah. I think it's a couple of things. I think number one, is if we started to see cannibalization that exceeds our historical levels, which we haven't seen any deterioration there to date, or in the last couple of years. And or if we stop seeing the performance of new restaurants at 80% or better of the existing asset base, or we see margins or return on investment start to be marginalized, that would cause us to slow down. Fortunately, we're not seeing any of that to date, which gives us confidence we're on the right track.

Very clear. Okay. Thank you. Then my follow-up question is just for the four new LTOs this year, should we think about them being roughly evenly spaced around three months each? Or Al Pastore obviously has been a hero for you guys in 'twenty three and 'twenty four. Might that one run a little bit longer than the, you know, implied three months each?

Yeah. So think about them between eight to twelve months in total. So there'll be different cadences, and we have the ability to extend or reduce that timeline based on how we see the market trending. But I think you're thinking about the right way.

Very helpful. Thanks, guys.

Our next question is from Sharon Zackfia with William Blair. Please go ahead.

Hey. Thanks for taking the question. There was a lot of talk over the summer about the younger consumers slowing down. And I'm curious as you've seen the comps accelerate, it sounds like through the fourth quarter and into January, have you seen that consumer as well kind of a comeback? Is there anything to call out from a demographic standpoint?

Yeah. So I'll tell you, Sharon, that I'll give you an anecdote, then I'll tell you the story. So we started down the path in the fourth quarter of really finding out how to reengage that younger consumer or lower-income consumer and get them reengaged with the brand. I'll tell you our digital team worked wonders as it relates to finding ways to gamify the experience and create rewards that were meaningful enough to drive that cohort back into our restaurants. One of those examples, I was in Florida just before the holidays, and we launched our free potlait campaign. I was in a restaurant, and I was like father time standing in the line that was out the door. The average age of the customer in the line that day had to be 20 maybe 21 years old. And so I'll tell you that worked tremendously getting those consumers back in our restaurants, and it will be used to inform the 2026 strategy as we engage that cohort more meaningfully.

Yeah. And I would just add to that as well. I mean, a lot of the initiatives that we've done since last summer, especially with Red Chimichurri, the new protein menu and campaign, as well as just LTOs in general, really have outsized performance with that group. So you're gonna see us continue to lean in on those well for that reason.

Thanks for that. And then as a follow-up, on the high protein launch, was that successful in bringing in new customers to Chipotle or was it really kind of a frequency or upsell kind of dynamic?

It did both actually, Sharon. So new customers to our brand, who really didn't know about the high-quality proteins that we have. And I shared this with the marketing team, and they share my enthusiasm around the topic. We have the best proteins in the world. Why wouldn't we celebrate those in the most meaningful way to really, again, drive our points of differentiation compared to our competitors who may also be promoting protein at the same time. And I think we had a meaningful impact on the trend change in the business. But more importantly, the adoption of the protein cup protein side being up 35% is evidence that the strategy works.

Thank you. Our final question will come from Christine Cho with Goldman Sachs. Please go ahead.

Hi, thank you for taking the question. So just a quick follow-up on the performance of the high protein cup. So are you seeing any specific consumer cohorts responding more favorably, such as the younger consumers? And did you also see any impact on the late afternoon traffic? And then also, incremental color on your plans to address the new kind of side and beverage occasions throughout the year would be appreciated. Thank you.

Yes. I'll start on the protein side. So absolutely. I think this protein trend that we're seeing across the nation right now is having an outsized impact on the younger cohort. Really is across the board. But we're definitely seeing an outsized impact there. And again, it's mostly coming through additions. There's a little bit coming in and just getting the cup or just getting the single taco, the vast majority are utilizing that as a checkout on. And then you had a second question about drinks.

Yes. Your plans for the sides and drinks. And occasions throughout the year.

Yeah. So we will, Christine, we will pepper in new sides and beverages. We'll do a beverage in the summer. And we will look at different sides that we're bringing, whether they're dips or other sides that we'll bring in that really tested really well through Stage Gate that we're really excited about. I wish I could tell you. I think if I did, my marketing team would throw me out of the building. But we're super excited about what we have to offer. Look forward to an incredible year. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Scott Boatwright for any closing remarks.

Thanks, everyone. Hey, I just want to close by thanking our team members for their hard work and dedication across our 4,000 restaurants and around the globe. They truly are the backbone of this great brand. I also want to reiterate my deep confidence in our growth strategy. We are doubling down on what uniquely differentiates our brand to position Chipotle for what I talked about earlier, our next phase of growth. We will win by investing in operational excellence, accelerating innovation into new offerings and occasions, relaunching our rewards program, deploying new back-of-house technology and equipment, and growing our global footprint. As I laid out, we're already seeing progress and validates that our focus on these strategic priorities is already resonating with our consumer. Our recipe for growth plan will position us for success in any environment and I am confident we'll drive transactions, allow us to move faster, and create long-term sustainable growth for the brand. And with that, I just want to say thank you, and have a great day, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.