Good afternoon, and welcome to the Chipotle Mexican Grill Fourth Quarter 2013 Earnings Conference Call. All participants are now in listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded. I would now like to introduce Chipotle’s Director of Investor Relations, Mr. Alex Spong. You may begin sir.

Thanks John. Hello everyone and welcome to our call today. By now you should have access to our earnings announcement released this afternoon for the fourth quarter and full year 2013. It may also be found on our website at 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 as defined in the securities laws. These forward-looking statements will include projections of restaurant openings, comp restaurant sales increases and growth in catering sales, throughput, food cost trends, effective tax rates, investment costs and capital expenditures as well as statements regarding potential menu price increases and other statements of our expectations and plans. These 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 forward-looking statements. We refer you to the Risk Factors in our Annual Report on Form 10-K as updated in our subsequent Form 10-Qs for a discussion of these risks. Our discussion today will also include non-GAAP financial measures, a reconciliation of which will be found on the presentation page of the Investor Relations section of our website. I would like to remind everyone that we have 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, it will begin March 1 and continue through our first quarter release in April. On the call with us today are Steve Ells, our Chairman and Co-Chief Executive Officer; Monty Moran, Co-Chief Executive Officer; and Jack Hartung, Chief Financial Officer. With that, I will now turn the call over to Steve.

Thanks Alex. I am very pleased with our performance for the fourth quarter as well as for the full year and we delivered revenues of $844.1 million for the quarter, an increase of 20.7% and $3.21 billion for the full year, an increase of 17.7%. The revenue growth came from a 185 new restaurant openings and from comparable restaurant sales increases of 9.3% for the quarter and 5.6% for the full year. All of this led to diluted earnings per share of $2.53 for the quarter an increase of 29.7% and $10.47 for the full year an increase of 19.7%. Of course we’re particularly pleased that Chipotle’s strength continues to be rooted in our focus on the key drivers of our business. Our unique food culture and our unique people culture and a strong economic model that allows us to do things in ways that are unusual within the industry. Throughout the year and during the quarter we continue to make significant progress in each of these critical areas. We continue to strengthen our food culture through our quest for better ingredients from more sustainable sources and our commitment to preparing the food that we serve using classic cooking techniques. One example of this is our work to remove all GMO ingredients from our food; another is the addition of Sofritas the all new vegan menu item we’re offering in 40% of our restaurants. We continue to make progress in our efforts to shift our ingredient sourcing to non-GMO options and we will remain focused on this throughout the coming months. As of now all of our cooking oils used in North America are made from ingredients that are not genetically modified and there are only a few key steps left before all of our food is made without genetically…

Thanks Steve. I am super proud of our results this quarter, but I am even more proud of how we achieved them. We have an amazing people culture here at Chipotle and the foundation of that culture is a group of terrific people who are all striving to make the people around them better. Our people are passionate about our mission of changing the way people think about need fast food and they know that the way to accomplish that is to have teams of all top performers empowered to achieve high standards. That is exactly the kind of culture we have been building in our restaurants and throughout Chipotle. I am so proud to have seen the strength of our people culture become as a finding characteristic of Chipotle and to have witnessed its contribution to our success. Our special culture is responsible for a better unit economic model at nearly every level and this continues to contribute to the strength of our business quarter after quarter and year-after-year. The top performers that we’re developing in our culture are becoming the leaders that we will need to support our growth well into the future. Throughout the quarter we continued to promote new restaurateurs, the elite managers who embody what our people culture is all about. We finished 2013 with over 400 restaurant tourist over seeing nearly 40% of restaurants including the home restaurants and others that they mentor. We include the field leaders who have come up through the Restaurateur Program those who have been promoted restaurateur to apprentice team lead, team leader, team director. We have nearly 500 restaurateurs leading more than 2/3rds of the entire company of all of our restaurants. Well the restaurateur position remains a very prestigious one at Chipotle; the program is ultimately about…

Thanks Monty. We are proud of the results that we achieved during the fourth quarter and for the entire year of 2013 as our empowered restaurant teams continue to provide a great dining experience to all of our guests. As a result, our comps accelerated during the year and reached a high of 9.3% in the fourth quarter. These comps help drive an overall sales increase of 20.7% in the quarter and 17.7% for the full year. And our sales totaled $3.21 billion for the year surpassing the $3 billion dollar and sales mark for the first time ever. The comp was driven primarily by increased customer visits, while our average check increased by about 1%. Average check increased as a result of our catering program which serves a minimum of 20 people per catering order along with an increase in add-ons such as chips and guacamole and extra meat. Catering has now been rolled out in all of our markets, except New York City, where we expect to add catering later this year. Looking ahead, we will gain one extra day in Q1 due to Easter falling in the second quarter this year. So that will shift about 100 basis points of comp from the second quarter to the first quarter. As a result of the strong comp momentum in the fourth quarter, we are increasing our sales guidance for the full year 2014 from low single-digits to a range of low to mid-single-digit comps. Our comp comparisons will be easiest early in the year and progressively become more difficult as we compare against the strong comps in the third and fourth quarters of 2013. This comp guidance is before consideration of any price increase we may take during the year. Our average sales volume for restaurants that have…

Thank you. (Operator Instructions) Our first question comes from Brian Bittner of Oppenheimer & Company.

Hi, thank you. This is (indiscernible) for Brian. Can you talk about the timing of becoming GMO free and how you expect to drive that awareness once you achieve that? And you think that the heightened awareness can drive an increasing demand for Chipotle? Thank you.

Thanks Brian. We expect to be GMO free by the end of this year. The exact timing is unclear right now, but we are making great progress. In terms of it driving the business, I guess I would answer that as the way I would answer the impact of our Food with Integrity mission overall. Certainly, historically customers come in, because they love the taste of Chipotle, they love the value, the convenience, the ability to customize their ingredients all these kinds of things. And that has always been sort of the top of mind reasons why people say they come in. Food with Integrity, our commitment to more sustainably raised ingredients, which we have been at now for a dozen years or so. And talking about it has become more and more important to customers over the years whether it drives people in or not is not always clear, but what I think is really important is that more and more of our customers are telling us that it's very important to them. They are interested in where their food comes from and how it was raised and that they want to be assured that they are feeding their families a helpful nutrition’s raw ingredients. They are concerned about the environment and a lot of the problems of the commodity kinds of ingredients out there and so going non-GMO I think fits into that food with integrity mission and I wouldn’t point to non-GMO as a single thing that’s going to drive sales but something that’s going to continue to strengthen our bond with customers and increase the trust level and get people excited about our larger mission change the way people think about any fast food and I think when you combine a mission like that with food that’s absolutely delicious but people crave that they want to eat often, then I think you have a winning formula and the two go hand in hand.

Can I sneak in one more? I’m just wondering if you can kind of talk about how you have been able to drive such strong traffic in the fourth quarter? Most consumer company saw the opposite happening for the third quarter and the fourth quarter and maybe if you have any comments on what you’re seeing in early 2014, what gives you the confidence to go from low single-digit to mid-single-digit top outlook? Thank you.

There is no one thing that we can point to say that that’s what drove our sales but I think if you look at all the things that we have done including continue to strengthen our people culture so that the experience our customers enjoy when they come in is the best experience that we can possibly provide. Our throughput is the fastest it's ever been including as Monty said seasonally this is not a time when our throughput to get us peak [ph] and yet it did outperform. Our throughput resulted in the summer so our throughput was a contributor to that. Marketing has been connecting with our customers really throughout the year not just are skillfully made marketing which connected with people and people recognized and appreciated that that we really do have raw ingredients and open kitchens and they appreciate that. The Scarecrow created a lot of discussion about Chipotle so there is some awareness about that as well but catering was a part of it. We know that we’re approaching 1% of sales of catering and we know the majority of that is incremental and I think those are the main, LSM we did a lot of LSM throughout the year and our teams actually did more fund raising as we approached the back half of the year which we think just created more awareness that people that haven't been at Chipotle in quite some time. And I mentioned earlier that our people culture just strengthening our teams is the biggest piece and so if you go through, if you’re going to prioritize all of those items you probably have to put the biggest piece on that even though that’s tough to measure but we just think that that every time our customers come in that these wonderful teams that are anxious to serve them, that’s probably the single biggest piece but to parse out how much of that 9% will be allocated to each of those pieces would be difficult to deal but we feel good about next year just because despite the fact that other restaurant companies and other retail companies have seen some softness in the fourth quarter. We seem to have been able to overcome that and so I think all things we’re doing to create the special experience is working and we’re cautiously optimistic that we will be able to continue to do that in 2014.

Thank you. Our next question comes from Joe Buckley of Bank of America.

If you can clarify the comments on pricing, for some of these I’m not sure if I heard you say (indiscernible) take would it slightly be for the fourth quarter but you said during the third quarter maybe just start with that one.

Yeah Joe I said during the third quarter. Right now we would like to get through this first quarter, we like to see how this current transaction momentum will continue. We just like to get through find out how this weather might affect our ingredients. Right now we don’t know if any of the weather that we have seen in the south has been an affect in some of our ingredients next year and so we would like to get through at least a quarter or so and see how things are falling out both on our ingredient inflation side as well as our transaction momentum. And so we think of that we will be in a position to them raise prices on time in the third quarter.

Okay. And then you just actually are – I got the impression you were backing away somewhat from the probability of a price increase, is that misinterpretation on my part or they didn’t change the last couple of weeks? And then just one more on the pricing, you historically have a history of sort of taking in single-digit price increases when you infrequently take them when you think you be in that historical mid-single-digit range again?

Yes. Joe, I don’t know that we are trying to signal either way at ICR. We have really had no intention on changing what we have said at the third quarter, which was we have not made a pricing decision. We will continue to monitor trend as I mentioned during my prepared comments. We actually take a look at our current food cost at 33.9%, continued inflation. It seems more likely. And so I would say that is the update I would say since October, which was I would say that’s the last time we took a stand and we weren’t continuing to change that at ICR. We weren’t very sure and we still haven’t made a decision, but I think right now, we are standing at 33.9% knowing that we have got pressure from stay, if we got pressure from avocados, it looks more likely. Now, things change just like last year or year ago, we were saying the same thing and things change. In fact, our food costs in the first quarter were lower last year than it was in the previous quarter. And so if that changes, we may back off, but right now, standing at 33.9% with continued pressure, it seems likely. And I think a mid-single-digit 3% to 5% Joe. Again, we haven’t made a decision that’s not an unreasonable assumption so maybe somewhere in that ballpark.

Thank you. That’s very clearly makes sense. Thank you.

Okay, thanks Joe.

Our next question comes from Sara Senatore of Sanford Bernstein.

I just wanted to ask about the sales drivers and it seems like you have a lot of these things on marketing and in particular, but also throughput, I know operational improvements, but you mentioned digital as a way that you have chosen to spend marketing dollars? And I think I heard you talk about mobile payments can you just talk about your kind of your approach to that, how you are thinking about that? When we would expect to see rolled out, I know in the past you said you don’t want to do a traditional loyalty program, but maybe something that targets marketing. So if you could just talk about that? And then I have a follow-up.

Yes, Sara. We still don’t have much of an appetite or any appetite for a traditional loyalty program at all, but we are experimenting with mobile payments and we have kind of a rough version right now that our employees are able to use right now. And we want to expand that. We know that that there is a lot of activity going on in mobile payments and we want to be part of that. Once we have mobile payments, we can have a different kind of connection in relationship with our customers, where you think we have the ability to. We don’t have this really mined out yet, the ability to communicate with them and maybe provide some kind of unique offerings, for example, the customer has not been to Chipotle in a while or they come to Chipotle often and they never buy chips and guacamole. There are things that we can do that are more unique to that customer. So I think that gives us a unique opportunity that I wouldn’t call a loyalty program, but it’s more of a bond that we can build, a communication that we can build with customers where we can personalize our communication and maybe some of the things we might offer to the person, but I wouldn’t expect to see a traditional loyalty program. In terms of digital, yes, I mean, we do have a number of things that we are doing. We do some advertising on a number of digital media, social media and we have a whole team of people that respond to e-mails. We have a Twitter account and we are active in the Twitter account. So we are active with a lot of the social media and the digital media, but that’s something we have been doing for – that’s not new, that’s something we have done during 2013 and in prior years as well.

Okay, thank you. And then just a follow-up not on my question, but an earlier one of that sort of the ShopHouse and the Pizzeria Locale, can you just remind us again how you are thinking about growth versus the rate that you saw with Chipotle early on, just with respect to we think that you have more sort of institutionalized competencies around real estate and supply chain and all of these things. So if you could just compare kind of whether you expect some of these new growth seeds to be faster than where Chipotle was at the same stage? Thanks.

So right now with ShopHouse and Pizzeria Locale. We’re very, very focused on perfecting the experience to introducing all the new people who come through to the uniqueness and specialness of both of these concepts. Both of these concepts are building nicely. We’re expecting to open a couple of few more ShopHouse’s this year. We’re expecting to open a couple of more Pizzeria Locale this year. If I compare the rate of growth so far with both of these concepts it's faster than Chipotle started out. But I think you hit on something, when we’re ready to expand at a faster rate we certainly have the infrastructure in place. You mentioned real estate, well we have so much information on 1600 specific sites now in the U.S. with Chipotle’s and so we know exactly what regions, what markets what intersections we would want to go to with these new concepts. We have teams who can advise on the best locations for that and I think most importantly we have an extraordinary team of top performers who are empowered to help us expand this quickly and if I think about the biggest hurdles over the last 20 years in growing Chipotle it was on the people side and so with our very, very strong team that continues to get stronger grooming the future leaders I think that’s going to be a competitive advantage that we have and that will help us grow these concepts but again we’re making sure that we’re growing these right at this point. It's not time to unleash them it's time to grow smartly and watch them and make sure that we’re cooking delicious food and serving in a way that excites customers and we’re doing that, we’re very happy with the results.

Thank you. Our next question comes from Alvin Concepcion from Citi. Alvin Concepcion – Citi: Comps were obviously very strong in this quarter which is impressive but it didn’t have being better if weather was an issue or customers did less online shopping during the holidays and I guess the question is did you see a noticeable impact from these items at all?

It's a great question Alvin because we have seen the same things you’ve seen and we’ve seen weather being brought up a lot. We have seen some comments that there has been so much online shopping that people weren’t out about and so they didn’t visit restaurants for example. I don’t think we saw that overall. Yes of course we saw that on individual days and we saw where when there was severe weather in a certain region we saw our sales soften during that time but we have had a history where when the weather gets bad and people doing visit Chipotle one day let’s say the restaurants are totally closed or they just can’t go for lunches and so our sales are way, way, way off. When the weather subsides we tend to kind of over perform we tend to see a greater than average comp and so we tend to have an offsetting effect there and so on a net-net I would say the weather didn’t really have much of a net effect or at least the best that we can tell when you look at the overall quarter. In terms of the online comments I mean that will be impossible for us to tell but certainly by in fact that we accelerated during the quarter, we accelerated in the fourth quarter compared to the third quarter. We certainly can’t point to any kind of online activity and say that that had a bad effect. And the other thing that we saw was that our sales were better in December than November and I think that once again (indiscernible) as well and I think that’s just a function of our customers enjoying all the experience based on what our wonderful teams and the restaurants are doing that despite the weather despite whether people were not out and about because they are doing online shopping they still decided that they wanted to dine at Chipotle during December and we were delighted to see that trend. Alvin Concepcion – Citi: And you mentioned things were better in December versus November. Did you see that momentum continue to generate?

Well okay that’s a little choppy now because we’re talking about some really extreme weather and so it feels like the underlying trend that we saw during the quarter overall average and so let’s call it the 9.3% I would say that the underlying traffic is probably in that same kind of ballpark in that 9.3% but it's very hard to tell. I mean you’ve one week where the comps are not pretty at all and you’ve another week where they look pretty attractive but we’re going to have to let the rest of quarter unfold and see what the underlying trend is but right now I would say that they are trying to do is likely similar to what we saw on the fourth quarter overall.

Great. And just one more from me, I know there is some passion in raising prices, because it may impact traffic, but with accelerating traffic growth coupled with being priced at or below your competitors, does that change your view at all on the price elasticity of the consumer or are you been accelerating the timeline for your rollout of the price increase?

No. I mean, we still think it makes sense to watch what happens with inflation and watch what happens with the economy strength of the consumer and our transaction trends for at least the first quarter. And then once we see that and most importantly during that time we will learn about our ingredient cost, we will learn what affects whether that we are seeing might have in our ingredient cost. And we would rather have that information in hand before we pull the trigger on a price increase.

Alright, thank you very much.

Our next question comes from Michael Kelter of Goldman Sachs.

Yes, I think maybe a follow up on that last point, which is with your margins hovering around all-time highs and trends at reaccelerating, why you didn’t take price at all, because even the food costs are higher as a percentage of sales, your labor and rent and other things are lower and you are still making all this profit, why you didn’t take the risk with the brand at all?

Michael that possibility still exists. And so we have not made a decision. And you remember last year at this time we talked about the price increase being likely and then we pulled back on it. We are not in a hurry and we wouldn’t hesitate if conditions suggest that we shouldn’t take it that maybe will either defer it or take it off the table altogether in 2014. Now at some point we don’t want to be under-priced, okay, so there is a desire to not be so far under what others are charging in the industry that people are wondering, well see I won the Food Integrity thing, how can they claim if their ingredients are better when they are charging so much less than other restaurant companies out there. So we would not want to be in that kind of a situation, but it’s still possible that we may call the menu price off the table in 2014.

And then on a different topic, it’s been inching up little by little but your guidance suggested the third consecutive year of new unit opening being in the call it 175, 200 unit range, is there some sort of a soft ceiling that you kind of reached here, whether it’s because of real estate or people for you to be able to actually do it right, location by location, it really doesn’t make sense for you to open that much more than what you are opening now and we should kind of start to expect a lot of large numbers to kick in a little bit?

No. I mean, we don’t really feel like there is a ceiling or a soft ceiling by the same token we sort of make the decisions based on what fuels right when we look at the kind of real estate pipeline we have and when we look at the development of our people culture around the country and the number of field leaders who are being promoted from restaurateur positions. And so we talk to our real estate teams and we find out how it’s looking in terms of getting a pipeline and creating a real estate and really being very selective with the real estate, to find real estate that we believe where we can open restaurants with terrific volumes, but also reasonable cost. So we balance that and then we also look at how the people culture is developing. I would say, both are going very well, but we feel with this increased guidance of 180 to 195 restaurants that we are increasing and then kind of always sort of pushing to build more restaurants, but we also don’t want to – we don’t want to sort of overdo it, we want to be very careful and measured with that growth to be certain that we are opening restaurants that are of a really, really high quality with terrific customer experiences. And it all is part of our philosophy that it’s much better to allow demand to sort of exceed to be in front of supply so that we are fulfilling, we are fulfilling a demand that we have created in the marketplace. And as it exists – as demand increases, we will be working hard to make sure that the supply can also increase so that we can continue to have great results.

And one last one, can you Jack maybe give some figures around the constitution of your workforce and help us understand how you might potentially be affected as the minimum wage does rise to $10?

Yes. We don’t pay minimum wage. Our average wages are above $9 for hourly employees. So a move up to $9 would have minimal effect, a move to $10 would have an effect, but not too significant and I would say that the impact on us will be much less than others. And so you would see an impact on our margins, but it will be something that we could certainly absorb.

Very helpful. Thank you.

Thanks Michael.

Our next question comes from Karen Holthouse of Credit Suisse.

Hi. Congratulations on a fantastic quarter. Going back to your comment earlier about technology investments in stores that would help enable mobile payments and some other things. How should we think about that? Is that more of a back end investment or does that involve actually changing out POS equipment and does it involves the latter is there any concern that there will be a little bit of a short term throughput investment as workers are training on and getting used to the new system. Thanks.

On technology I mentioned in my comments we’re going to make about a $10 million investment in infrastructure. We have got to redo the networks in our restaurant we haven't done that in quite some time and that will be an enabler for any of the things that we want to do in the future including things like mobile pay. Once we have done that we at this point don’t think it's going to require new POS. There is a device but we will need to add that’s not very expensive, it's a matter of 100s of dollars per restaurant not 1000s or 10,000s.

Similarly like to a Starbucks?

Yeah it could be like a Starbucks, it would just be a reader. Those are pretty standard those are there is nothing too fancy about that but you got to make the big investment of several thousand per restaurant with the network, redo the network in order to accommodate that. Redoing the network will give us other advantages as well more secure, it will be more reliable and so it's time to do that but that’s an enabling investment that we do have to make. There is also always the possibility I mean we aren’t against taking look at a new POS solution and there is lots more that are out there, there is some cloud solutions that are at least possibilities to look at and so we’re open to that and we found something that would be a better business alternative but better would be better throughput, not worse. We would not make an investment including things like mobile pay that have the potential of slowing down throughput. So we just wouldn’t make that investment but we would make an investment that would speed up throughput, that would enhance the intuitive ability to train our employees if the technology gave us better information or just was better from an efficiency standpoint, better from a throughput standpoint those are the things that we would look at. We would not want to compromise the customer service that we provide our customers just to be chasing the latest technology gimmick.

Our next question comes from Jeffery Bernstein from Barclays. Jeffery Bernstein – Barclays: Two questions just first on the real estate discussion before, in terms of your cost percent [ph] I think you said your cost would be up 5% in ’14 just wondering is it more building cost or are you talking about more from competition for real estate whether it be I mean you may face causality or is there other driving prices higher just because so many people are growing so fast and is that’s the case? Are you increasing the mix of potentially your A sites? How does that play out within that growth for ’14?

Well most of the increase that we’re predicting in terms of the fact that we’re opening more restaurants in the North East part of the country where the construction cost are much higher as well as the fact that we’re going to open incrementally more free standards which cost more money to build. So we still feel very good about our ability to efficient and economically with building our new restaurants and don’t see it as just leaking upward there is a reason for it. Jeffery Bernstein – Barclays: And the A sites is that a bigger component this year than last year or?

With regard to A sites we opened last year in 2013, we opened about 25 A models and like I said in the last call we’re always looking for those because opportunistically we’re always looking for sites that have very low development cost and low occupancy cost and that we can run very, very efficiently. So I think that you will see those sort of the same and sort of numbers this year I think probably smaller as a percentage of growth because of the fact that we have gotten more of our restaurants coming from new construction. But again when we see them we will find them and we will continue to layer those into our portfolio whenever we can. Jeffery Bernstein – Barclays: And the follow-up with just more broadly on the category, well I’m just curious how you even categorize the category in which you compete and whether you look out as fast casual or more narrowly as fast casual Mexican but just wondering how you think about the category you compete and specifically in maybe the pace of the growth of that category or how you look at your share versus others whether you see your share I’m assuming you see your share growing versus declining but internally how do you think about the constituents of your category and the pace of growth for that category?

I would say that of all the people who play in this fast casual arena I think Chipotle is different in two very unique ways and that is our very unique people culture which is one that is cultivating a strong force of future leaders. It is a really, really powerful thing that ends up providing a really great customer experience but also our focus on food with integrity and our desire to make available to customers the kinds of foods that really were only available at very high end restaurants or expensive markets or farmers markets and things like this. We’ve always believed that these kinds of food should be available to everybody. No one else is really doing this sort of thing so I think because of that we are sort of in a special category of our own and when I think about the category it's not really about Mexican food of course it's about a model, a model that allows you to source great ingredients and cook those ingredients according to classic cooking techniques served in an interactive format and all delivered via this team of top performers and so that is a model which Chipotle and ShopHouse and Pizzeria Locale fit squarely into.

All right thanks everyone for joining us today. We appreciate it and we look forward to speaking with you next quarter. Goodbye.

Thanks everyone.

Thank you. That does conclude our conference today. We do appreciate your participation.