Chipotle Mexican Grill, Inc. (CMG) Earnings Call Transcript & Summary

Hi. David Palmer, Evercore ISI's food and restaurant analyst. I'm extremely excited to have our friends at Chipotle with us here in this virtual fireside stage here. With me, Brian Niccol, CEO; Jack Hartung, CFO; and Ashish Kohli of IR. He's there but I see his mic is not going, so I don't know if he's going to chime in here, but he's here just to make sure something doesn't go through [indiscernible] with me. But I'm going to introduce the management, and we will get going here in a second. Brian joined Chipotle in March of 2018 as CEO from Yum! Brands where he was the CEO of the Taco Bell brand. He was at Yum! for 13 years and at P&G for 10 years before that. Jack has been with Chipotle since 2002 after spending 18 years at McDonald's. Thank you, guys, and thank you, Ashish, for making this happen.

Yes. Happy to be here. Thanks for having us, David.

Brian, it's been over 2 years since you've joined Chipotle. When you got there, there were some scars from the food safety issues. But you also had some strengths, some other opportunities to build on from an improvement standpoint and for a foundation for growth. Could you start with a brief comment on where Chipotle was then as a journey for the brand and the company in terms of capabilities and generally touch on how this COVID period is impacting that journey? And thank you for joining us.

Yes, sure, and happy to be here. And Jack, feel free to chime in. We'll do our best here remotely. But yes, look, it's been 2.5 years, and very proud of where Chipotle is as an organization as well as where we are as a business, frankly, on our growth journey. And if you kind of rewind the tapes, when I first got here, one thing that was clear to me is it was a powerful brand with a strong point of difference on its approach to food. And we needed to get back to some restaurant basics, which was around consistent, great culinary, great teams that were accountable to performance. And then obviously, one of the things that was a hallmark at Chipotle was speed/throughput. And I'm happy to say Scott and the operators have done a phenomenal job over the last 2-plus years of really getting early in at the basics again. And the reason why that's so important is, once we have that strong foundation, all of the other things I'm going to talk about are really additive to that strength in the business. So we've got the core business moving in a really positive direction again. We surrounded it with a digital system, which I saw as a tremendous opportunity. There was already some work going on with it. And I would say it just didn't have the focus and the support to be at the elevated phase it should be, which fortunately for us, is something that we, as a management team, agreed to go do and has played out really well for us during this COVID crisis. But specifically on the digital work that we did, it was all around taking advantage of that second make-line, really turning that into a digital kitchen and then surrounding it with a digital system to be inclusive of a rewards program. The other thing we set out to do is make the brand more visible and frankly make our marketing dollars be more effective. And I think Chris and the guys in the marketing organization have done a great job on that, and I'm happy to touch on that some more. And then the last piece of the puzzle frankly was, upgrading the organization, really zeroing in on the values associated with our culture and then using a stage-gate process to enable what I thought was a really creative organization that just needed some focus and discipline so that we could be accountable for our ideas so that they would result in outcomes as opposed to just ideas. So that kind of gives you a high-level view. I think we've put in terrific leaders into the organization who then, as a result, attract additional terrific talent. And as a result, I think we've got a world-class marketing group, a world-class finance group, world-class supply chain, development. I can go around the organization, marketing, and it's really a function of, I think, hiring the right leaders, which then built out the right organization for each of their respective functions. And I think you saw a lot of these strategies start to really come to life, come January, February. I mean, I think, Dave, when we talked about this last year, everybody was like, well, how do you comp the comp? And I'll tell you what, we're off to the gates of comping the comp in a big way. And then COVID hit and luckily, we -- I think we've made a lot of the right investments in our people, our organization, and then frankly, the company, both from a digital standpoint and having a really strong balance sheet, that positioned us nicely for these current challenges.

If I were to have imagined this period, I probably wouldn't have imagined it quite this way. When you think about the fact that pre-COVID, you were down -- you're somewhere in the high teens, that off-premise order and now essentially pre-COVID to now, you have essentially 80% of your orders were in the store before this period. And we've had this improvement in comps, let's say, somewhere near flat in spite of not having those 80% of in-store orders. The question is, like how have you done that? And then what does this mean to the medium and the long term of your business?

Yes. Look, I think this is, frankly, a function of, one, an organization committed to creating digital access. And look, I think I vividly remember, I think it was late March, early April, we had an executive team meeting and we made the commitment that we were going to digitize all those second make-lines and we're going to put pickup shelves into the restaurant. And we're going to test this idea called a Chipotlane, which was basically curbside or drive-through pickup, based on an order ahead via the app or web. And I think in December of '19, so fast-forward from April of '18 to December of '19, we pull out the last fax line and we installed the last digital make-line and we installed the last mobile pickup shelf. And the good news is, during that whole process of rollout, we were tweaking and learning on how to be more effective with the app, with delivery, with order ahead, with smart pickup times, with our rewards program and all those things. I mean, it's crazy to think about it, David, but our rewards program is only a year old as of March. And it's already got 12 million, 13 million people in it. And a lot of that got accelerated because of COVID. And to your point, one of the things I think we did smartly as a team, and this is, I think, a testament to frankly owning all the restaurants and having a balance sheet where we had no real liquidity concerns. So we were able to say, okay, we can weather the storm, keep investing in our people, keep investing in digital and get to the other side of this thing with a much more powerful digital business, and we know we can reclaim the business that Chipotle was doing. And I think we made some quick decisions, right? Like we -- it sounds really small, but a lot of organizations probably couldn't move this fast. Just making all of our digital occasions have that seal, so that it was tamper-proof. Another sign of, okay, this is a safe way to experience Chipotle, it's a safe way to get food. And it was just an add-on to a digital system that was already really, frankly, working really well. So when all of a sudden, you triple your transactions going through your digital system like overnight, you're like, okay, we can handle this. It's a testament to Curt and the team for the system they put in place. And I'm really proud of where we are. I do believe it's going to be sticky in the long run. And I think as we've talked about in the past, when I first got into this job, everybody was like, hey, do you really think you can grow again? And they switched to, do you think you can get back to 2, 5? No, really, can you? And I'm like, look, I'm very bullish on the idea of getting back to 2, 5 with our economics in place. I think Jack has talked about this, 2, 5, 25% margins. But I really think it's more of an emotional target because I think we're going to get there and then we're going to go beyond it because of this digital system, combined with, I think, call it operational excellence and this real commitment to food with integrity.

I want to just deviate to one sidebar and that is how you're operationalizing the digital. During this period, I would imagine you're not having all those digital orders go through the second make-line. You probably are sharing that, or I don't know? But --

Yes, no, this is one of the things that's been really awesome about the digital make-line. We're proving how much capacity we have to have on that digital make-line. And as we've started to reopen dining rooms, we have, what is it, Jack? About 30% of our restaurants with the dining room kind of reopened now?

It's actually, Brian, that was -- that's a 10-day-old number. We're now past that. So kind of every day, Scott and the team are getting more restaurants open and it's kind of accelerating, because they started very slow. And as it was going well, we kind of hit the program, it's really going fast now.

Yes. So now we're probably closing in on 40%. But it is one of these things where we have gotten -- like I was actually visiting some restaurants just yesterday. And the thing I love about it is when I go visit the restaurants, the guys right away want to talk to me about how the team is doing, their stability of the team, but then they quickly dive into how's my digital accuracy, how is my overall satisfaction on digital. And then they're also talking about what's my throughput look like on the front line and what is the hospitality I'm providing in the restaurant. So we've pivoted to this place where these guys are like, wow, a lot of my business goes through this line, and there's a lot of business coming through this line, and I've got 1 kitchen that services both of them. And this COVID thing has probably accelerated our adoption of understanding how to staff and run the DML, digital make-line, while I staff and run the frontline. Because I think prior to this, we're batting a little bit of a behavior like, well, I'll staff the frontline and if I have to cut, I'll cut from our DML. And now this has really gotten to a place where it's like, okay, I really got to balance how I staff both of these lines. And it's great to see because it's just a totally new mindset of, okay, I've got 2 businesses coming out of 1 kitchen.

And just in numbers, you were doing something like $400,000 of business through a typical second make-line before this. I remember you had some stores doing $1 million on the second make-line. We were like, ooh. Are you doing more than that now in some of these stores? Is that your point, that you're blowing through your past?

Yes, yes.

And I guess, well, let's circle back to the digital front. And as you open up these markets, you said 30% or 40%, how are you retaining those digital sales? Is that turning out -- how much of that is sticky, do you think?

Yes. I mean, look, it's early days on all this, but the good news is, we're seeing 70%, 80% of all the digital gains stay. So -- which would be a home run for us, David, just an absolute home run. So -- and as we recover the dine-in business, we're watching this really closely because this has been our belief all along. We thought it was going to take a couple more years before we would get to these levels of digital. But consumer feedback is, they love digital for those occasions where it makes sense to do digital. But I'll give you a perfect example. I was talking to some folks that were in our dining room, and you might have heard me say this. I think I mentioned this to somebody else in one of these kind of calls. And I just asked them, I said, hey, why are you in the restaurant? And the guy was like, I'm just tired of eating in my car. I appreciate sitting down and having a quick bite to eat. So there still is that dine-in occasion that exists, which is not proving to be cannibalistic to a digital occasion. And what we've seen with the digital occasions is it skews a little bit more heavily to dinner, larger groups and a little bit towards the weekends, which is a nice complement to the traditional Chipotle business.

And we -- obviously, digital is going to be a monster potential legacy of this COVID period for Chipotle. What are some of the other ones? If you think past the virus have -- God forbid, this lasts much longer than early 2021. But beyond that period, what do you think this will do to reshape your learnings and trajectory?

Yes. Look, I think one of the things that will be a lasting piece of the puzzle here is just our approach to our people and our commitment to our purpose. When you get under pressure, you can find out really, are these just words on a wall or are these things that you really do believe in? And I think we've demonstrated to our people and, frankly, others that maybe aren't a part of Chipotle, that food with integrity is something we're really serious about. Cultivating a better world is something we're really serious about. And we're going to do it by investing in our people so that we can provide people with a great culinary experience and invest in our suppliers even during tough times so that we can end up with a great experience. And as I mentioned, I was with some folks in our restaurants just yesterday. They told me, over and over again, how grateful they are to be at Chipotle. The gentleman I met, he just became a restaurateur. He joined our company 2 years ago and he used to be a chef somewhere else. And now he's running a Chipotle, it's a big Chipotle. He's doing close to $3.5 million out of this restaurant. And the thing he wanted to talk to me most about though is, he's like, man, the fact that you guys were willing to pay bonuses on Q1, the fact that you went ahead and honored all our benefits, you didn't cut 401(k), you didn't -- as a matter of fact, most recently, we just gave people shares as part of their Q2 bonus and restricted stock units. So all these things resonate with him where it's like, the employee value proposition and then the strength of the company, is going to be a lasting thing. I don't think most of these people ever heard the term fortressed balance sheet until now. They don't use that term but they're like, God, I'm very thankful I'm at a company that can handle something like a pandemic and do it in a way where we can treat people fairly and still give them hope about where the future is going to be. And so I think that's going to be a lasting legacy for us, just a great place to be, both in good times and in tough times.

And one of the things, Jack, I'm excited about this topic about sort of that incremental margin topic. You have your -- that rumor that you've talked about that [ 2 million ] equals 20% and [ 2.5 million ] might be 25%. But there does seem to be a lot of things that would be going your way to maybe make that even better from a margin perspective at those sales levels, when you think about the perhaps lower labor inflation ahead and labor efficiency from this digital ordering. I remember on one of these calls, you talked about $400,000 of sales and the second make-line being fully stacked. So I think about leverage there and lease costs. And so is it possible that, that could become a more margin-rich relationship at those levels of sales in the future?

I think, Dave, you hit on all the possible leverage points that we have, especially with business shifting to the digital make-line. The one thing that goes the other way is delivery. Because if we end this with -- we expect we're going to end this or leave COVID and have a higher overall digital sales. Remains to be seen what percentage of that is going to be delivery. That comes with a higher fee. So for example, if we just get back to [ 2.5 million ] and the delivery percentage is much higher than we anticipated, that's going to be extra fees. Now the things you mentioned, the second make-line, the digital make-line, we've talked about it being more efficient. And during this time, we're seeing that it is more efficient. But we've actually -- this is a bit of a surprise. We thought that the food on the digital make-line might be more efficient as well because the portion control and the cooking to needs because you know the orders are coming, that is actually shown as a potential leverage point as well. So I think when we push it all together and look at it, do we have the ability to get to [ 2.5 million ] and 25%? Absolutely. Do we have the ability to get beyond it? There are certainly possibilities. I wouldn't want to promise that. I don't want the rubric to be 26% on [ 2.5 million ]. But certainly, we're as confident, if not more confident that we'll be able to deliver those kind of arguments at those kind of volumes.

Yes. Let me go -- I'll swing the other way in terms of the mood on this question. Looking back at 2019, the incremental margins on sales were in the 30%, 35% range, which is probably below what would be the norm. And it's fed perhaps a view that you do things like free delivery or the carne asada, you lean in and yet, these guys are having to buy the sales momentum. And so in other words, you get your sales but you don't get your margin as much too. You were talking about some of that reversing this year. Could you talk about what you were thinking and how you're thinking about the profitability of sales going forward?

Yes. A lot of that, David is, there's a difference between acquiring company -- customers, and then having an ongoing relationship, transactional relationship with them. Our experience with free delivery, because we kind of had it off and on and it's been more off than on. When we've done free delivery, we see a surge in people trying delivery for the very first time, but then they stick. So you're on a trajectory where delivery is on a slight increasing line. But then also when you do free delivery, it takes it up to another level. And while it drops off a little bit, the line continues at an upward level, at a higher level than when you went into it. So this acquisition of customers, we'll constantly be looking at ways to bring people into our digital system, into our delivery system as well. And as long as it's sticky, we'll make that investment. We're already experimenting right now with, okay, how do we wean ourselves off of as COVID kind of moves on to the next phase and we eventually see it in the rearview mirror? We're experimenting with the different ways to pay for delivery. And so there's the delivery charge, of course, there's a service fee and there's menu prices as well. In fact, we just found out recently that we're one of only a few restaurants literally that have the exact same menu prices in restaurant as you do for delivery. And most customers don't realize that, but if you go through and do a side-by-side comparison, some of the folks -- some of the restaurants are out there are charging 20%, 25%, 30% higher menu prices, including some of the other fees. So there's a lot of levers that we can pull. And we're confident that we can pull a few levers to make sure we can offset some of these acquisition costs and still have the attractive margins that we talked about. So everything we've seen, David, before COVID, during COVID, and as we look after COVID, every way we look at it, we're still confident our margin structure is as strong as it's been and we'll have the ability to get those margins. And last year's pass-through was temporary. I would call it cyclical rather than anything that was permanent.

Some of the things you're talking about there remind me of perhaps a customer relationship management opportunity because if you got a high incremental margin, let's say, over 50% margin on that mobile order, why shouldn't you lean in on that? Why shouldn't you push people towards that? How are you thinking about -- what, where are you on the CRM opportunity as a company and from a marketing standpoint? Where do you -- it feels like you maybe are behind the Domino's of the world there so far on where you've been able to go, and what's in your future there?

Yes. Look, this is one of the things that is really exciting for us is, we've been experimenting and learning a lot with, call it, the database. And now the fact that these cohorts have gotten even bigger and more representative, we have started the process of like the -- what we're calling journeys. So we have always-on journeys with all these various cohorts. And then we've also experimented with what are the supplemental things we should do, to your point, of like invest in this cohort differently than how you invest in that cohort, because we know what type of behavior we can incentivize and then the effects of that incentive. So the good news is now we've got scale where putting these journeys in place with these supplemental journeys, we know it's impacting their frequency. And now we have the scale on this, both our own database combined with other databases like the Microsoft Azure database, where we can get the scale so that it can have a meaningful impact on the total business. So we -- Domino's, I think, has been one of the best at it. Hopefully, in a year or 2, you'll be asking people to compare themselves to us. But we're early days on it, and we're getting the scale that we want. And the good news is the learnings we have demonstrated, we have the ability to use this data to drive purchase behavior.

With regard to marketing, I think you've generally been talking about 3% of sales as a spending range. Is this a number that you think will stay at that level and you'll get more leverage from it? Or do you think that this is an efficiency opportunity because of your digital connectivity?

Yes. Look, it's a great question and we've been talking about it. If Chris were here, he would share with you all the great learnings we have on the return that we're getting for every marketing dollar invested by each of these mediums. We definitely have not hit diminishing returns in any of these areas yet. But I think, there presents an opportunity where does it need to be 3% forever? I don't think so, because I do think we're going to start picking up some efficiencies in some areas. But for now, we like the absolute dollars that we have associated with that 3% spend. And it's going to grow a little bit here in the near term and then we'll just keep reevaluating. But the thing I love about Chris and the marketing guys is they're very aware that we want to understand the return we're getting for every dollar invested. And where we can put more fuel to the fire, we will, where we say, you know what, that's not panning out the way we want it. We're not afraid to take those dollars away from there.

One of the opportunities for your business, it would seem from the work we did, families, suburbia, certain trade areas outside of maybe some of those urban areas were an opportunity. And then in terms of menu, there are certain types of items that those families would like. Obviously, we just went through an accelerant of a lot of that stuff, because we're all -- fled to the suburbs lately. I wanted to dig into that, maybe first menu, like how great is the opportunity there for you? Or -- and how immediate is that going to be for you as an opportunity?

Yes. Look, the -- I think 2 things: one, delivery with our digital system. So the combination of those 2 things were the Chipotlane access point for our digital system is proving to be highly effective in the suburban areas. The other thing, too, that's proving to be highly effective is the idea of order ahead and have your pickup time set up so that the family knows, okay, I need a meal at 5:30. They plug-in 5:30, they show up at Chipotle, it's ready for them to go. And it's like seconds for them to run in, grab their food and go. But specifically to the menu, the things we've done have been really to knock down what we've understood is our ability to extend the reach of our menu and to eliminate any dissatisfiers in our menu. So carne asada addressed people's thoughts on, hey, we think your steak could be better. Love your chicken. Why isn't the steak as good as the chicken? And carne asada did that. Salads, basically, were like, hey, the romaine lettuce is great, but that's not a salad. Like, give me more. And so that's why we have the Supergreens mix now. We're working on a new dressing. And then fixing the queso with our Queso Blanco has been a huge win for us. We haven't talked about it that much because it got overshadowed by the pandemic. But people love it, the crew loves it. It's holding up. And then also, we're adding beverages, which is another thing people came back to is like, how come you don't have the same food with integrity ethos on your beverages? And so you're going to see us start moving into the juices and the teas that will -- now you can have a drink that matches your food with integrity approach. And then we've got some things down the road that we know are big menu reachers. So a quesadilla is one that will be a fan favorite, especially in these families. And one of the things that's a benefit of all the scale we've gotten in digital is it gives us more confidence to do digital-only products. And so what we're experimenting with right now is making quesadilla a digital-only product, so that it's not on the front line. It's just only done through the digital make-line. And so we've got that test going in Cleveland and Indianapolis. And I had the opportunity go out there and visit, and it looks really promising. Well, it will take some education to inform people that quesadillas aren't on the frontline, but consumers aren't fighting the idea of having to order in the app or on the web in order to get a quesadilla. So look, we've got, I think, a really nice flow of menu and what I would call the right type of access points to win those occasions that traditionally, we probably haven't been the best solution for.

Chipotlanes are a big part of your new builds. I think they're over half of the new builds. Could you talk to the returns of those out of the gate versus a typical unit? And can we assume that those are comping better or trending better than the average one out there, given the megatrend of COVID?

Yes. Look, I'll hand it over to Jack. What I can tell you is the thing that's been great about the Chipotlane is the biggest gains come from our order ahead business. So the incremental growth comes via our most margin-attractive transaction. And so that's a reason why I'd love to have a lot more of them a lot faster. And Jack has already pivoted the team to do that. But I'll let Jack talk to this. He's really got the guys dialed in on this.

Yes, David. So we're closing in on -- within the next month or so, we'll have 100 Chipotlanes. Only 10 of them are comp, so it gives you an idea of how fast we've gone from kind of 0 to 110 miles an hour. And that's because the early returns look good, and then the more we build, they look even better. And so there's a couple of things. Because of COVID, we're finding even more opportunities. So we talked about at the beginning of the year, that more than half of our openings this year are going to have a Chipotlane. I'd expect that number to go up, okay? It should be more than 60% and might even be quite a bit more than that. In terms of -- the comp is higher. Now there's only 10 of them and the comp includes pre-COVID and COVID, and so it's a little bit messy, but the comp is definitely bigger. It's roughly, call it, in the neighborhood of double what the comp is. But again, that's kind of a pre -- it's a mix of pre- and during COVID. But maybe a better metric is to look at -- if you look the sales of our Chipotlanes, all of which are new, and our newer stores have opened up in the kind of the same cohort, the sales pattern overall is about 20% higher. Now that's made up of, again, pre-COVID and post-COVID. Now we think of that in terms of, it was roughly 10% before COVID, and it's closer to 30% after COVID. So it was a winner going into COVID. And with people experimenting or experiencing our digital system and then combine that with a Chipotlane, they really love that experience of order ahead, no delivery fee, go to the restaurant. We tell you what time, don't need to get out of your car. And there's also not a queue of cars to line up either, because you're not waiting behind cars that are going to order, pay and pick up their order. Everyone knows what time to get there. They get there on time, they take their food and there's no line for you. So the Chipotlane is showing up in a big way during this global pandemic. And you're going to see a lot more Chipotlanes in the future, for sure.

Yes. I want to talk about competition. We probably have time for one, if maybe we can squeeze in another one, but we'll see. We often talk about casual dining. The full-service world is having a lot of restaurants out there that are probably going to close their stores, weaker competitors, independents. But fast casual had a lot of units out there that are probably not that profitable either. What is your thinking about the opportunity to gain share, perhaps benefit real estate market share-wise from the fact that a lot of restaurants your size and format might be closing? And how much do you think that there will be closing from what you're hearing out there?

Yes. Yes, I'll take that first, Brian, You're on mute, Brian. I don't know if you want to take it first?

Well, yes, look, here's what -- here's what we're seeing is, there's definitely an appetite from all the folks that are developing retail spaces. They want Chipotle to be a part of their developments. So we, as a company, know we've got a real opportunity here to get the right sites for those trade areas. And the good news is we've got more flexibility in what our sites can look like than we ever have. So we're going to be able to maximize the sales out of the trade area for Chipotle because they want us there, the economics are great. We have the people capability, and then we have the flexibility in the assets that we want to put in there to maximize the trade dollars. How that plays out for other competitors? I'm kind of reading and seeing exactly what you're reading and seeing. The thing I've just asked our team to stay focused on is, let's be aggressive and stay on our front foot on this because I think there is tremendous opportunity for Chipotle to really grow through all of this. So Jack, I know you're probably even closer to this than I am, but...

Yes, and well, and we're just already seeing -- we're not seeing much in the way of high-quality sites closing yet, David. Typically, the sites that are closed are the most mediocre or the poorest performers. We'll take a look at every one of them. We can do a virtual tour of every single site that comes up. But more importantly, we're seeing that sites that were being -- that were already in the deal phase but didn't get finalized yet, existing restaurants or current restaurants are walking away from those. So we're seeing more sites already that, they're not a closed restaurant, they were going to be a future restaurant and now they're going to be a future Chipotle. And then on top of that, they're going to be a future Chipotle with a Chipotlane, because when we get in a line that somebody else vacated and we tell the landlord, we'd like to be here but we need our Chipotlane. I know it's an end cap, we're going to have to change the way things flow around that restaurant. But if you can give us a Chipotlane, we'll do the deal. Actually now, we got a signed deal. So we're already seeing early signs of more sites and more Chipotlanes.

I'll just squeeze in one more and that's on the delivery side of things. Do you see -- you've broadened your use -- who you do delivery with. What's the future of this? And what does it mean to Chipotle? For example, I think there's some concern, there might be consolidation among the third-party delivery players and then the terms and even the availability of delivery would be going down. But on the other hand, you seem to be in a pretty good position from a negotiation standpoint, being the growth chain that you are. What's going to happen with the economics of delivery and availability?

Yes. Look, I do think consolidation's probably the right theory on this. What we believe is we want to be in the delivery occasion. We've decided we're not going to create our own delivery system. So we're going to partner with the Uber Eats, the DoorDashes. And what we have found is, look, for them to be effective aggregators, they need Chipotle and for us to have a delivery business, we need them. So the good news is, we need each other, and we need the economics to work for both of us. As Jack mentioned, we've got some additional levers that we're going to continue to test and learn, because I want to make sure we've got the right value proposition for Chipotle in the delivery occasion, just like we've got the best value proposition for walking into a restaurant or ordering in the app or web today. And what we're learning is that value is a little different in how you can price and structure in that delivery occasion. So we'll be smart about how we do that. But in the end, I think the good news is, we need each other. Those are the kind of relationships that usually you find a good equilibrium. So -- and we still have additional levers to pull as we learn the value proposition going forward.

Well, thank you, guys. We're running up against the end of our time. Great to chat with you. Happy you joined, and Ashish, thank you to you as well. Thanks, everybody.

Yes. Thank you, David.

Thanks, David.

Thanks, David.