Q4/FY 2025 EARNINGS I N V E S T O R I N F O R M A T I O N FORWARD -LOOKING STATEMENTS Certain statements in this presentation are forward -looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about our future financial results, including future AUV and margins, the number of company owned and partner - operated restaurants we will open, and the future success of our Recipe for Growth initiatives. We use words such as "anticipate," "believe," "estimate," ...

Chipotle - Chipotle's stock has fallen 51% from its high in 2024, with negative same-store sales reported [1] - The company opened about 200 new locations, but average unit volumes have dropped by approximately 3%, which is unusual for Chipotle [2] - Chipotle has a strong financial position, earning $1.5 billion in net income over the past year and holding $1.8 billion in cash with no debt other than lease liabilities [3] - The company is investing in menu innovation and has seen success with limited-time offerings, which encourage repeat visits [5] - Approximately 40% of Chipotle's sales come from households earning under $100,000, a demographic currently facing inflationary pressures [5] - Chipotle plans to open 350-370 new restaurants in 2026 and is focusing on international expansion [5] - The stock trades at a price-to-earnings (P/E) ratio of 30, down from 70 in mid-2024, indicating a significant valuation adjustment [6][7] Target - Target's stock is down 46% over the past five years, with inconsistent same-store sales performance [10] - The stock trades at a low forward P/E ratio of around 11, but the company maintains strong fundamentals, including an A credit rating and nearly $5 billion in cash [10] - Target is facing challenges related to consumer backlash and competition from rivals like Walmart, impacting its market share [10] - A new CEO, Michael Fidelki, is set to implement a multi-year plan to reinvigorate private label brands and key discretionary categories [11] - Target aims to drive over $15 billion in revenue growth over the next five years, but significant changes are needed for this to materialize [11] - The market is skeptical about Target's growth potential, reflected in its high dividend yield of about 5% [14] Crocs - Crocs' stock is down 23% over the past year, trading at just seven times forward earnings estimates [19] - The company faced challenges after acquiring Hey Dude, leading to bloated inventory and a goodwill impairment charge [19][21] - Despite domestic sales softness, Crocs is experiencing strong double-digit growth in international markets [25] - The brand maintains strong margins and is actively managing its capital structure, including share repurchases [21] - Crocs has successfully engaged in high-profile collaborations, which have helped revitalize its brand image [23]

Core Insights - Chipotle Mexican Grill, Inc. is adopting a new pricing strategy for 2026, moving from annual price increases to smaller, gradual adjustments over time to adapt to tightening household budgets and declining frequency among lower-income guests [1][4] - The company anticipates mid-single-digit inflation in 2026, primarily due to rising beef costs and tariffs, and does not plan to fully offset these costs, indicating potential pressure on profitability [2][9] - Chipotle's management will test pricing changes in smaller restaurant cohorts to gauge customer resistance before broader implementation, marking a shift from previous practices of uniform price increases [3][9] Pricing Strategy - The new pricing approach reflects Chipotle's commitment to discipline and flexibility, allowing for data-driven adjustments based on customer feedback [3] - The gradual pricing strategy aims to balance value preservation with margin recovery, especially as same-store sales are expected to decline in the low to mid-single-digit range in the fourth quarter [4] Comparisons with Peers - McDonald's Corporation is also focusing on affordability and traffic stabilization, responding to similar pressures among lower-income guests with value offerings and promotions [5] - BJ's Restaurants, Inc. is taking a more modest approach to pricing, with a year-over-year increase of just over 2%, while enhancing perceived value through specific meal deals [6] Stock Performance and Valuation - Chipotle's stock has decreased by 47.9% over the past year, compared to a 16.1% decline in the industry [7] - The company trades at a forward price-to-sales multiple of 3.42, slightly above the industry average of 3.30 [11] - The Zacks Consensus Estimate for Chipotle's 2026 earnings suggests a year-over-year increase of 4.9%, although earnings per share estimates have declined in the past 60 days [12]