Senior advisor, Chipotle Mexican Grill, Inc
Chipotle Interim CEO Scott Boatwright and President Jack Hartung sit down with Jim Cramer
Chipotle Interim CEO Scott Boatwright and President Jack Hartung join 'Mad Money' host Jim Cramer to talk Chipotle's new chapter following former CEO Brian Niccol's departure.
About John Hartung
John Hartung, president and chief strategy officer of Chipotle Mexican Grill, appeared on CNBC's "Mad Money" on October 2, 2024, alongside interim CEO Scott Boatwright. Hartung discussed the company's transition following former CEO Brian Niccol's departure, stating that the leadership change was "one of the smoothest and easiest" and attributed the company's resilience to its focus on premium ingredients, affordable prices, and attractive markets. He noted that Chipotle has grown from roughly 80,000 to over 120,000 employees and is pursuing a path to 7,000 restaurants in North America, with international expansion including new locations in Kuwait and Dubai. Hartung also addressed consumer spending, saying the company watches consumer response closely and will not give up on affordability because "we don't just want some people to enjoy Chipotle, we want everybody." In previous appearances, Hartung discussed the company's investment in employees. In an April 2021 interview on CNBC's "Closing Bell," he described an expansion of Chipotle's debt-free degree program to ten universities, calling it "just the next step" in a company that "will always invest in our people." He characterized the cost of such programs as an "asset and an investment" that pays off over time. In a December 2020 interview with Jim Cramer, Hartung and then-CEO Brian Niccol discussed the company's turnaround from food safety scandals, with Hartung noting that the company was working with other countries like Peru and Colombia to manage avocado supply volatility while maintaining freshness.
Transcript (21 segments)
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Interviewer0:16
When Starbucks poached the CEO of AAA, its stock shot up on the news, but AAA's stock stumbled that same day. But a great executive, but Chipotle is not a one-man show, a fantastic company with a deep bench. We checked in with Scott Right, the chief strategy officer. Take a look. Let me ask you a serious question, how long will the brisket be available?
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Scott Right0:54
That is a fantastic question. We will have brisket through the end of the year.
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Interviewer1:16
There is no real difficult transition year, one of the smoothest and easiest. The stock dropped 6.5% when it happens, and it comes right back. Jack, is that the secret of Chipotle, the kind of horizontal fabulous nature that you all have, and there is just no egos that we don't see?
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John Hartung1:32
True. Chipotle is a purpose to cultivate a better world, and the folks in this organization, I'm talking about from the top, through me to our leadership team, all the way down to the group, we spend a lot of time in the restaurants. Before we came here, everyone believes in this purpose. When the whole organization believes in that, you can create something special.
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Interviewer2:10
You were a part of this seamless transition, and we want to get to know you.
J
John Hartung2:13
I will love that and welcome the opportunity, thank you. So I have been with the organization, leading operations for over seven years now, and we have grown the brand from 2300 restaurants to 3500 restaurants today. We have a world-class people organization that has really been driving and executing against our strategies for the past several years, and it has served us exceptionally well. What I am most excited about, Jim, is the future and where we are going. We are in the early innings of what this brand is going to be, on our path to 7000 restaurants in North America and through international expansion.
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Interviewer2:41
Let's talk about that today. In Dubai, it sounds terrific. The first restaurant is opening, the second in the area, but it is a franchise. A partnership, that is something that I didn't expect from you. I have said this to you for a long time, if it works in the United States all over, it is a natural overseas, but you guys have always been very considered and a little bit slow, I think. But tell me about the worldwide expansion plans.
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John Hartung3:26
So we have a big opportunity worldwide. We have been very protective of our brand. It took us a long time. We have had incoming requests for franchise opportunities for at least a decade. We got to know the group for the last three or four years and finally came to the conclusion that this is a world-class group and they are doing a great job. In Europe, we opened about 10 years ago or so, we didn't quite get the food dialed in, we did get the supply chain dialed in. Canada, now overseas in Europe, they did a fantastic change in the last 12 to 18 months, and I do predict that Europe is going to be a growth vehicle for us.
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Interviewer4:21
That is sensational because I don't think you were about to run out in the United States, but I love Chipotle. Everybody has watched with AAA and it seems to be a natural everywhere.
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John Hartung4:32
It is doing really well. I will tell you, the business is on fire. We love what is happening up in Canada. We will grow Canada somewhere in the neighborhood of 5% this year, and that is going to continue to grow in that market in the coming years. What we are really excited about is the opportunity, and we think under the leadership we are starting to move the needle. We saw the economic challenge there, and we have a model that we like. We think we can grow that aggressively over the next few years.
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Interviewer5:10
Back into a new position, will you continue with premium ingredients and affordable prices and attractive markets?
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John Hartung5:18
I hope so. I have been talking about those three things for the last 20-something years, and frankly the fact that you remember it, and more important than that, our team remembers it. We had our whole management team, our managers across all restaurants back in March, and we talked about how special it is to have those three things: affordable food. And so we keep reinvesting in the business, and as long as we take care of those three things with running great restaurants, and do a fantastic job, the future is very bright for us.
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Interviewer5:45
Another thing that I love about Chipotle is when I meet with people who work at Chipotle, they are treated with dignity. They have people looking you in the eye, people who are often owning stock. You have quietly talked about money and I respect that in business.
J
John Hartung6:10
We have gone from around 80,000 total employees to just over 120,000 today, and our team members are the absolute backbone of this great organization. Without them, we would not enjoy the success that we have today. We continue to lean into what we believe to be the best culture in the business, industry-leading benefits, and development opportunities.
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Interviewer6:29
Now I would be remiss not to mention, because we had such a great relationship, he got me to read this book that he talked about, and suggested that I read it. And this was to me, the most AI book I have ever read. And this is just learning how to integrate AI. You have done tremendous work, I'm not just talking about machines that are drawbacks, but they work throughout. But you have to have the eye contact and we will serve you along the lines, so you can get exactly what you want as a customer. But there are things behind the scenes, likely before a restaurant was open, better time-consuming tasks. And if we can make those simpler, they will have a better experience, they will be happier by the time we open up the doors and customers come in. And customers will have great experiences as well. A lot of this technology doesn't exist, it is not off-the-shelf, but that is okay. We are taking the long game here. We will work with outside partners and custom develop some of this innovation, so that the entire experience for our crew will be better. It includes things like a device that will cut and core avocados. That device doesn't exist, but we are creating it. The bowl will be made automatically, so that there are places that fail because it is bad. You guys just seem like you are not content with just being a great restaurant. You are a great restaurant that gets people through and happy. That is also Chipotle.
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John Hartung8:26
I think the value proposition of Chipotle is grounded in high-quality ingredients served at abundance, at a speed which you can't get anywhere else, at an affordable price point. When you bottle all of those things together, you can really create this guest experience that drives customers back into the restaurant. Speed is important to our business. Our customers are very busy people on the go, with families or jobs or what have you, Jim. So it has always been our imperative to move forward.
I
Interviewer9:15
Excellent. On that last call, you did talk about how you may have hit a point of resistance in California. You can't just keep raising the price. How do you feel about the consumer right now and how much they can absorb? And let's throw in the fact that I don't know about you guys, and it is just too big. I feel like it is a bargain, but I also have a sense that there are a lot of people around the country.
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John Hartung9:36
So we watch it very close throughout the country, and we continue to have very strong value scores with high scores for the amount of food for the money and the quality of food for the money. Frankly, our read on California is less about resistance to the price increase and more of a macro impact. We look at the restaurant industry, and much across the board, there was a pullback from the consumer. There is more of a macro resistance to inflation in general in California. But we watch that very closely because it is one of the three things: affordable. We are not going to give up on affordable because we don't just want some people to enjoy Chipotle, we want everybody.
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Interviewer10:26
I want to thank both of you. It is an honor to have you. This is a great chance to be able to talk. I am so thrilled. I think you might have wanted to do some other things.
J
John Hartung10:36
We need this guy here.
I
Interviewer10:38
We all do. All of your customers need it. Chipotle's interim CEO, president and chief strategy officer, it is nothing but pure joy to have you on Mad Money.