Brian Niccol
Chairman and Chief Executive Officer at Chipotle Mexican Grill
Thanks, Cindy, and good afternoon, everyone. The momentum in the business continued in the first quarter as we delivered 7% comp sales growth, driven by over 5% transaction growth. Our strong sales trends were fueled by our focus on improving throughput in our restaurants, as well as successful marketing campaigns, including spotlighting Barbacoa and the return of Chicken Al Pastor as a limited-time offer.
For the quarter, sales grew 14% to reach $2.7 billion, driven by a 7% comp. In-store sales grew by 19% over last year as throughput reached the highest levels in four years. Digital sales represented 37% of sales. Restaurant-level margin was 27.5%, an increase of 190 basis points year-over-year. Adjusted diluted EPS was $13.37, representing 27% growth over last year. And we opened 47 new restaurants, including 43 Chipotlanes. The strength in our business has continued into April. And as a result, we are increasing our annual comp guidance and now estimate comps in the mid-to-high single-digit range for the full year.
Now, let me shift to an update on our five key strategies that help us to win today, while we grow our future. These strategies include: sustaining world-class people leadership by developing and retaining diverse talent at every level; running successful restaurants with a people accountable culture that provides great food with integrity, while delivering exceptional in-restaurant and digital experiences; making the brand visible, relevant and loved to improve overall guest engagement; amplifying technology and innovation to drive growth and productivity at our restaurants, support centers and in our supply chain; and finally, expanding access and convenience by accelerating new restaurant openings in North America and internationally.
I'll begin with our world-class people leadership. Last month, we held our All Managers Conference, where we brought together 4,500 of our restaurant and support center leaders to celebrate their success, as well as amplify our focus on exceptional people, exceptional food and exceptional throughput. The conference included over 3,200 general managers, 100 apprentices, 450 field leaders, 60 team directors and 11 Regional Vice Presidents. For the first time, we also included crew members, who have worked with us for over 20 years to celebrate their commitment and dedication to Chipotle. In fact, one of our General Managers in attendance from Denver, Colorado, has been with Chipotle for 23 years, and she also had four crew members from her restaurant, who have each been with the company for over 20 years. Collectively, that is over 100 years of Chipotle experience, all at one restaurant, which is just incredible. And it's no surprise this restaurant has fantastic operations with throughput that is outperforming the overall Company.
At our conference, we highlighted the growth opportunity at Chipotle. To reach our long-term target of over 7,000 restaurants in North America, we showed our teams that we will need to double the number of field leadership positions we have. And as we target over 90% internal promotions, the majority of these future leaders will come from the GMs and apprentices at this conference. This was a powerful and motivating message and one that is unique to Chipotle, given our scale, growth and Company-owned model. And in connection with our 50-to-1 stock split, we also announced that all of our GMs, as well as crew members who have been with Chipotle for over 20 years, will receive stock grants once the split is effective. This will allow them to participate in the financial success of the Company.
Bottom line, Chipotle is changing lives for the better. In fact, one of our restaurateurs and certified training managers spoke at the conference and shared that her experience at Chipotle helped her to overcome financial hardship and that she was even on the verge of homelessness before she joined Chipotle. She started as a crew member over 10 years ago and has thrived, making her way to the highest-level GM and is now on her way to becoming a field leader. She was able to leverage our education benefits to earn a college degree, the first in her family. And utilizing the stock she received as a restaurateur, she was able to purchase her first home. She was also one of our team members in our Behind the Foil commercials as she really is a great example of the exceptional people that make Chipotle, Chipotle.
In addition to our world-class people, exceptional food and exceptional throughput are key areas of focus and are both critical to running our successful restaurants. We spent time at our All Managers Conference reminding our teams about Chipotle's culture of Food with Integrity and how there's a direct connection between how food is raised and prepared and how it tastes. We showcased Chipotle's Food with Integrity journey and our strong partnerships with our farmers and suppliers who take special care in assuring they are growing our food with the highest standards. We also emphasized the importance of teaching [Phonetic] and tasting Chipotle, which means that our restaurant teams taste the food they prepare multiple times a day to assure it is delicious and meets our high standards. You see, Chipotle was founded on this idea of real food and real culinary. It's not a marketing slogan or a short-term initiative. It's in our heritage. It's in our DNA. Our restaurant teams take pride in our food, and our healthy, high-quality eating experience adds value for our guests.
In addition to our delicious food, exceptional throughput or the speed of service in our restaurant also adds to the extraordinary value proposition we offer. I am thrilled to share that the momentum and throughput continued to build in the first quarter as we improved by nearly two entrees in our peak 15 minutes compared to last year, with each month showing an acceleration. At our All Managers Conference, we also focused on coaching the nuances of great throughput or executing what we call the four pillars. This includes: expo or the crew member between salsa and cash to help expedite the bagging and payment process; linebacker, typically the manager on duty who supplies both lines with freshly prepared food, so that the crew on our line can continue to serve our guests without interruption; mise en place, or another way of saying that everything that is needed for a lunch or dinner peak is ready and in its place; and aces in their places or having the best-trained crew deployed in each position for lunch and dinner peaks.
We are in the early innings of consistently executing the four pillars, but when we do, it creates a flywheel effect in our restaurants. The restaurants run more smoothly as our teams are properly trained and deployed, which allows them to keep up with demand without stress. This leads to more stability and therefore more experienced teams that execute better every day, and this can be seen in our latest turnover data, which is at historically low levels. And for our guests, faster throughput results in shorter, faster-moving lines and hotter, fresher food, strengthening our value proposition and driving incremental transactions. Our restaurant in the Financial District in Boston is a great example, where a year ago, they were doing mid-20 entrees in their peak 15 minutes, and today, they are doing over 40 entrees in their peak 15 minutes with days that can reach as high as 80, which is among the highest in the Company. The restaurant has low turnover and outsized transaction growth, which clearly demonstrates they are creating a better overall experience in the restaurant.
Now turning to marketing, our marketing team has started the year off strong with outstanding brand advertising and menu innovation. We've continued our successful Behind the Foil brand campaign, showing our real teams prepping our delicious fresh food by hand every day, reinforcing a key differentiator for Chipotle. This ran across all media channels, including high-profile placements in television such as college football and the NFL playoffs. We also began to promote our delicious Barbacoa as we leveraged our consumer insights that told us that many of our guests did not know that Barbacoa was braised beef. So we renamed it Braised Beef Barbacoa and emphasized the culinary recipe which is slow-cooked, responsibly-raised beef, seasoned with garlic and cumin and hand shredded. It was Chipotle's best-kept secret and is now growing in popularity. The campaign was a success, driving incremental transactions and spend, and it was simple for our operations team to execute since it was an existing menu item. This is a perfect example of how our marketing team continues to make Chipotle more visible, more relevant and more loved.
During the quarter, we also brought back one of our most requested new menu items, Chicken Al Pastor. Our guests loved our spin on the Al Pastor using our adobo chicken, morita peppers with a splash of pineapple, fresh lime and hand-chopped cilantro. Similar to Carne Asada, when we bring back a past favorite, we are able to improve the entire experience as we leverage our know-how across culinary, supply chain, marketing and operations to make it more delicious with seamless execution. Chicken Al Pastor is off to a great start once again, driving incremental transactions into our restaurants.
Moving on to technology and innovation, our marketing and digital teams continue to grow and evolve our rewards program, which recently celebrated its fifth anniversary. It is exciting that we now have a digital reach of about 40 million rewards members that we can leverage to increase engagement. Through our marketing initiatives, we continue to find successful ways to drive enrollments, and we are leveraging our digital team to create a seamless app experience and deliver more relevant journeys for our rewards members. The goal is to drive higher engagement in the program, which results in higher frequency and spend over time.
In our restaurants, we continue to explore technology tools that could drive higher productivity and improve the overall experience for our teams. This includes things like forecasting and deploying labor, recruiting new crew members, preparing our fresh food, and automating the preparation of digital orders. In fact, at our All Managers Conference, we showed our teams the latest version of our automated digital makeline and Autocado, which cuts, cores and peels avocados. And as we discussed last quarter, we are excited to get both into our restaurant later this year as part of the stage gate process.
Our final strategic priority is expanding access and convenience by accelerating new restaurant openings in North America and internationally. We remain on track to open 285 to 315 new restaurants this year, mostly in North America. We continue to see strength in openings across geographies and location types, including urban, suburban and small towns. Additionally, our development team is making progress to smooth the cadence of openings throughout the year with the number of restaurants under construction up meaningfully to last year.
Outside of North America, I am delighted to share that we opened our first restaurant in Kuwait with the Alshaya Group, which marks the first time we've entered a new country in over 10 years. This was a highly collaborative effort between the Alshaya Group and our Chipotle teams across culinary, food safety, development, operations and supply chain to successfully launch Chipotle in a brand-new market with the same food quality standards and customer experience that we have in North America. Although it is very early, the opening was strong, and we look forward to continued success in many restaurants across the region with the Alshaya Group.
Moving to Europe, as you may recall, we brought over one of our top operators about a year ago, who helped to identify areas of opportunity, including better aligning our training tools, systems and culinary with our North American operations where it makes sense and is feasible. We have made nice progress aligning the culinary and are beginning to better align the operations, including a recent change in leadership structure as we expand the role of our Canadian leader to oversee both Canada and Europe. Over the last five years, Canada's economics have improved to be on par with the US. In fact, Canada is leading our company in many key operational KPIs, including throughput. The successful approach of aligning the local strategy with our overall operational vision and diligently overseeing the execution of Chipotle standards has set up Canada for rapid expansion. We see many similarities between the European operation today and the Canadian operation five years ago. The new leadership team in Europe, including two top operators from the US, will take a similar strategic approach to improve economics and unlock Europe's growth potential.
In closing, the strength in our business, including transaction-driven comps, is due to the collective hard work of our 120,000 employees, who are results-driven, passionate about our purpose of cultivating a better world and excited for our growth opportunities ahead. At our All Managers Conference, I highlighted the importance of people development as it represents one of our greatest strengths. Seeing our leaders all in one place was inspiring, and their personal growth stories are real and a key ingredient to Chipotle's success and future growth. This makes me more confident than ever that we have the right people and the right strategy to achieve our long-term goals of more than doubling our restaurants in North America and expanding internationally. As I've said in the past, I believe the next Chipotle is Chipotle.
And with that, I will turn it over to Jack.
