Chipotle Mexican Grill (NYSE: CMG) Q1 2020 Earnings Call Transcript

Chipotle Mexican Grill Inc  (CMG) Q1 2020 earnings call dated Apr. 21, 2020

Corporate Participants:

Ashish Kohli — Global Head of Investor Relations

Brian Niccol — Chairman and Chief Executive Officer

John R. Hartung — Chief Financial Officer

Analysts:

David Palmer — Evercore ISI — Analyst

Sara Senatore — Bernstein Research — Analyst

Katherine Fogertey — Goldman Sachs — Analyst

David Tarantino — Robert W. Baird & Company, Inc. — Analyst

Andrew Charles — Cowen — Analyst

Nicole Miller Regan — Piper Sandler — Analyst

John Glass — Morgan Stanley — Analyst

Brian Bittner — Oppenheimer & Company — Analyst

Sharon Zackfia — William Blair & Company — Analyst

John Ivankoe — JP Morgan — Analyst

Jon Tower — Wells Fargo — Analyst

Jeffrey Bernstein — Barclays — Analyst

Presentation:

Operator

Good afternoon, and welcome to the Chipotle Mexican Grill First Quarter 2020 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Ashish Kohli, Head of Investor Relations. Please go ahead.

Ashish Kohli — Global Head of Investor Relations

Hello, everyone, and welcome to our first quarter 2020 earnings call. By now, you should have access to our earnings press release. If not, it may be found on our Investor Relations website at ir.chipotle.com.

I will begin by reminding you that certain statements and projections made in this presentation about our future business and financial results constitute forward-looking statements. These statements are based on management’s current business and market expectations, and our actual results could differ materially from those projected in the forward-looking statements. We see the risk factors contained in our Annual Report on Form 10-K and in our Form 10-Qs for a discussion of risks that may cause our actual results to vary from these forward-looking statements.

Our discussion today will include non-GAAP financial measures. A reconciliation to GAAP measures can be found via the link included on the presentation page within the Investor Relations section of our website.

We will start today’s call with prepared remarks from Brian Niccol, Chairman and Chief Executive Officer; and Jack Hartung, our Chief Financial Officer, after which we will take your questions. Our entire executive leadership team is available during the Q&A session.

And with that, I’d like to turn the call over to Brian.

Brian Niccol — Chairman and Chief Executive Officer

Thanks, Ashish, and good afternoon everyone. We hope everyone is doing well and staying safe during this unprecedented time. Given the circumstances, we will discuss Q1 results and recent trends in a few minutes. I want to start by updating you on our response to COVID-19 and its impact on our business.

Let me say upfront how proud and grateful I’m to all our employees for their positive attitude and efforts in providing guests access to our safe, delicious, high-quality food made from real ingredients. I want to thank our supply chain partners who have been dedicated, keeping our restaurant stocks with gloves, hand sanitizer mass and other necessary items to keep our employees, food and customers safe. I also want to thank our supply chain partners who have delivered our food with integrity ingredients to every open Chipotle restaurant during these challenging times in a healthy and safe way.

As a result, I’m pleased to report that only about 100 restaurants are fully closed at this time. These are mainly inside malls and shopping centers as well as 17 locations in Europe, while the rest of our restaurants remain open for to go and digital order ahead and delivery services, which is critical at a time where food options are limited.

Cultivating a better world takes commitment from all of us, and we are fortunate to have the financial strength to weather this storm. Jack will provide more details, but it’s important to note that we remain focused on conserving cash, while prudently continuing to invest in several areas that will help us show a strong recovery once guest activity begins to normalize. Specifically, I want to focus my discussion on three key topics, one, our efforts to take care of our employees, guests and communities; two, our emerging digital platform; and three, our recent comp trends. At Chipotle, investing in our people has always been the top priority. After all, they are our greatest asset. Well before COVID-19, we had industry-leading benefits for all employees that include free meals, paid sick leave, crew bonuses and debt-free degrees as well as mental health benefits and access to a health care concierge service for all employees and their families.

In the weeks since our world quickly changed, we continue to find ways to support our employees personally and financially. We express our appreciation for restaurant employees who were willing and able to continue work between March 16 and May 10 with assistance pay, a 10% increase in hourly rates. We approved discretionary Q1 bonuses of nearly $7 million to field leaders, general managers, apprentices and eligible hourly employees. We’re also providing an additional $2 million in assistance bonuses to general managers and apprentices for their services in April. And we expanded our emergency lead benefits to accommodate those directly affected by COVID-19. Beyond these benefits, we are working diligently to ensure that we’re doing everything possible to keep our guests and employees safe during this time of uncertainty.

At Chipotle, food safety is more than a collection of programs and processes. It’s part of our DNA. We have a culture of continuous improvement in which we regularly evaluate our processes to ensure that our customers have consistently excellent experiences. Over the past few years, we strengthened in many of our food safety initiatives, including wellness checks done before every shift and trained nurses available to evaluate any employee who may feel ill in order to determine whether they should be excluded from work with full pay, installed advanced technology air purification systems to reduce the risk of viruses, supplied Purell sanitizer for employees and guests, mandated hand-washing between tests and at least every hour as well as gloves being worn for all tests, enhanced food preparation and food handling practices designed to reduce food safety risks, improved internal training and education to ensure that all employees thoroughly understand the Company’s high standards for food safety and food handling, engaged a third-party consultant to perform regular inspections of all restaurants, and finally, creating an independent Food Safety Advisory Council comprised of food safety experts to provide ongoing guidance on best practices.

More recently, as the cases of coronavirus started to grow in the US, we formed a cross-functional task force that has been holding daily calls. This provides a real-time platform for us to stay current with market trends, regulations and mandates on COVID-19 based on feedback from the CDC, FDA, state and local agencies, as well as ensuring we get frequent updates on our own operations. It is also allowing us to make quick decisions and navigate these evolving circumstances, including recent additional precautions to safeguard employees and guests. These include increased sanitization of high-touch, high-traffic areas, providing mass for employees and a tamper-evident packaging seal. Customers can leave instructions in our app and online to request contactless deliveries and carryout. All of these initiatives give our employees and customers confidence that Chipotle remain steadfast in our commitment to keeping them safe.

We are also doing our part for the community by donating excess food daily to various food banks, celebrating National Burrito Day by thanking health care heroes with 100,000 free burritos and offering a new gift card program that supports health care workers on the front lines. Chipotle will be donating 10% to Direct Impact, [Phonetic] an organization working to provide personnel protective equipment and essential medical items to health care workers through May 31. In addition, Chipotle is doing a Buy One, Get One offer for burritos whereby Chipotle will donate one burrito to a health care worker for everyone purchase digitally from April 1 through April 26 as we continue to support those on the front lines of this crisis.

As I mentioned earlier, the majority of our restaurants are open for to-go orders, which is allowing us to successfully leverage the digital platform we put in place over the past two years. Q1 digital sales grew 81% year-over-year to $372 million, our highest ever quarterly level and represented 26.3% of sales. As people started to implement social distancing, we moved swiftly by driving further investments towards digital and delivery designed to reduce friction, while increasing convenient access. Although Queso Blanco is off to a terrific start, we re-prioritized our marketing efforts by offering free delivery from March 15 to at least early May and shifted from live sports to more online and streaming platforms. We also announced a successful national delivery partnership with Uber Eats that is helping drive new customers and greater frequency. Collectively, these decisions translated into strong engagement with our guest as evidenced by March digital sales growing 103% year-over-year and representing 37.6% of sales.

A recent survey among current Chipotle consumer suggests about 15% hedge fully delivered for the first time during the last two weeks of March based on their desire for fresh ingredients, craveable taste and good value. We believe this will have a lasting benefit, well beyond the current crisis and are pleased to report that we have maintained strong momentum into April with the month-to-date digital mix running in the high 60s. While delivery continues to be the fastest growing part of our digital platform, we are also pleased with our order-ahead business where average daily sales have doubled from the levels seen prior to COVID. This is part of the reason that we continue to shift our development pipeline more aggressively towards Chipotlanes as it helps drive our high margin digital order-ahead transaction.

Another element that is benefiting from the current environment is our rewards program, which now has more than 11.5 million enrolled members. Over the past month, daily signups spike nearly fourfold, which is another sign that our digital platform is gaining traction. We are pleased to report that 65% of newly enrolled rewards members are new to the Chipotle brand, up from 51% pre-COVID. In addition, 61% of previously store-only rewards members are now new to digital versus 8% pre-COVID. While it’s early days, we are starting to leverage this growing installed base with personalized promotions to better engage and incent behaviors. We are seeing modest transaction increases across all frequency bands and expect this lever to become a bigger driver in the future as we gain greater customer insights, while continuing to expand our digital ecosystem.

Lastly, let me provide a few comments on trends during the quarter and thus far in April. Despite lapping a 9.9% comp in Q1 2019, we had a tremendous start to 2020 with our comps running at plus 14.4% with nearly 11% transaction growth through the end of February, including a 2% benefit for leap year. This highlights that our five key strategies continue to resonate with guests and as a reminder, these are making the brand visible and loved, creating innovations utilizing a stage-gate process, leveraging our digital make line to expand access and convenience, engaging with customers through our loyalty program and running successful restaurants with a strong culture that provides great food, hospitality, throughput and economics.

We began March on a very positive note, but as COVID-19 restrictions became more prevalent, our comps deteriorated and ended up declining 16% for the month, with the week ending March 29 being the trough at down 35%. This resulted in the Q1 comping up 3.3% with transactions down 1.4%, including a 1.3% leap day benefit. Restaurant level margins were 17.6%, and adjusted diluted EPS was $3.08, down 9% year-over-year.

April has seen our comps improve with the most recent week adjusted for Easter being in the negative high-teens range. No one can predict the magnitude, nor duration of this crisis, but we are focused on winning today, while we cultivate a bright future for our employees, guests, communities and shareholders. By staying calm and working collaboratively to leverage our strong brand, business model and balance sheet, we are confident in our ability to get through the current downturn. In fact, we are continuing to judiciously invest in key areas of our business, so that when we come out of the other side, we will emerge even stronger. We know it won’t be easy, but Chipotle is well prepared to regain our prior momentum and extend our brand leadership.

Our recent consumer survey showed that the vast majority of our pre-coronavirus consumers envisioned coming back to the restaurants at a similar or higher rate than before. As a result, we believe our long-term opportunity to significantly expand AUVs, margins and store base remains in place. Thanks once again to all of our employees and partners for their dedication and hard work during these difficult times. We will get through this together and be stronger as a result of the tremendous passion and commitment from everyone. And lastly, I would be remiss, if I didn’t offer a heartfelt thank you to the health care workers for their heroic efforts on the front lines of this pandemic.

With that, here is Jack to walk you through the financials.

John R. Hartung — Chief Financial Officer

Thanks, and good afternoon everyone. These are unprecedented times, and I could not be more proud of the way all of our people from crew and managers and our restaurants, the support teams in the field and all of our support staff in Columbus and Newport Beach have all stepped up to support each other and do everything possible to help navigate through these challenges.

Unlike typical earnings calls, I will not go through our financials line-by-line, but instead will briefly share how we were performing before the effects of COVID-19, and then turn most of my focus on how we’re managing the business to ensure we come out of the crisis stronger than ever. Our comp through February was 14.4%, which includes nearly 11% transaction growth, including a 2% benefit from leap day. Restaurant margin was nearly 22% through February as our restaurant managers and teams were doing a great job managing the business and leveraging the strong top line to drive good margin flow-through.

During the month of March, our weekly comp progression was up 12% for the week ending March 8, down 4% for the week ending the 15th and down 34% to 35% for the weeks ending March 22nd and the 29th. Sales improved to around down 30% as we entered April and then improved again over the past week with comps adjusted for Easter and the down high-teens range. Since the beginning of April, in-store ordering is down around 75%, while delivery is up about 150% and order-ahead is up nearly 120%, highlighting the importance of our digital platform and setting us up for a bright future as digital sales tend to be sticky. Digital is currently accounting for nearly 70% of sales.

Given the uncertainty surrounding the impact of COVID-19 on the US economy and on our sales trends, we were withdrawing our previous fiscal 2020 comp guidance. We ended Q1 with $909 million in cash and short-term investments and no debt, which puts us in a strong financial position to navigate this crisis. As sales fell quickly from the COVID impact, we proactively began to manage cash outlays to preserve liquidity. Situation is fluid, and we constantly reevaluate. We — here are some of the initiatives we have implemented so far. When we bought back about $54 million of stock during the quarter, we suspended our buyback program on March 20 just a few days after our dining rooms were closed, and we have no plans to restart the buybacks in the near term.

In the restaurants, our operators have done a tremendous job adapting to lower sales as they are efficiently managing food ordering, prepping and cooking to minimize waste, while ensuring each guest receives a freshly prepared meal. They’re effectively scheduling labor hours to accommodate the needs of our crew and shifting hours to support our growing digital business and are reducing non-essential controllable costs. As a result, our restaurants are breakeven at a comp of right around down 30% to down 35%, and that excludes recent employee investments such as the 10% assistance pay for crew and discretionary bonuses for our managers and also excludes the free delivery that we’re operating in our app. And these investments have cost us about $20 million for the month.

Outside the restaurants, our supply chain teams have been constantly and diligently working with our supply partners to ensure there are no major disruptions. They’ve done a tremendous job making sure that our restaurants have all the essentials, such as soaps, cleaning supplies, gloves and hand sanitizers as well as ensuring our restaurants are stocked with our delicious ingredients. I’m pleased to say that we’ve been able to avoid wide outages, while minimizing food wastes. We’re also in contact with our landlords about rent deferrals and rent abatements. We are a strong tenant with significant growth ahead of us, and we expect our landlords will partner with us during this difficult time period.

On the G&A front, we, of course, halted all non-essential travel, and we are reconsidering the hiring of project consultants. And we’re negotiating longer payment terms on the larger contracts. These will help balance preserving cash in the near term with investing for the long term. Cash G&A is running around $20 million to $25 million per month. And as the recovery takes longer than expected, we have the ability to make additional adjustments as needed.

With regard to capex, we’re delaying non-essential reinvestments, including deferring all remodels that don’t involve the digital make line or the addition of Chipotlane, but we are pulling forward those remodels that involve adding a second make line for the few restaurants who don’t already have one, digitizing the second make line in those restaurants that require a remodel to fit the digital make line and a few remodels where we’re able to add Chipotlane. Combined with new store construction, which I’ll talk more about in a few minutes and our tech investments, our capex is running around $30 million to $35 million per month. That being said, we have the flexibility to defer or eliminate much of this capex if needed, but we believe making these investments today will pay off in the long run.

To recap, our monthly ongoing cash burn is around $50 million to $60 million assuming we breakeven at the restaurant level and our G&A and our capex is in the range I just described. Encouragingly if comps can be sustained at the levels seen over the past week of down high-teens, restaurant cash flow would be in the plus $20 million range, so our net cash burn would be cut by about one-third. While we don’t plan to utilize the PPP loan provision of the recently passed CARES Act, we expect to see a liquidity benefit of around $100 million primarily from deferring social security tax payments and accelerating tax depreciation and previous returns. Although we generated taxable income in Q1, we don’t expect to have any related tax liability due to the tax deductions related to option exercises and equity vesting in the quarter.

Finally, although we don’t currently need access to the debt markets, we’re working on a $250 million to $500 million revolving credit facility with our banking partners to provide us additional access to funding should it be needed. Even before adding this facility, our balance sheet along with the CARES tax deferrals can sustain us for well over a year, and that assumes our comps are at the down 30% to down 35% level where our restaurants breakeven. Last week trend gives us optimism that our comps will continue to improve in the coming months.

Our new unit development pipeline is continuing to build as we remain confident about the long-term opportunity to more than double Chipotle restaurants in the US, and we’re already beginning to see an increase in sites available as other businesses have pulled back. This will allow us to opportunistically expand the quantity of sites, while also enhancing the quality of our robust pipeline. During the quarter, we opened 19 new restaurants with 11 having a Chipotlane, and Chipotlanes continue to have a higher overall digital mix than in the recent weeks is approaching 80%. In addition, the mix of higher margin order-ahead and pick-up transactions has more than doubled for these restaurants as compared to the pre-COVID time frame. And while Chipotlane opening sales are outpacing non-Chipotlane openings by about 5% to 10% before COVID, they now are higher by over 30%. Our optimism for Chipotlanes is further enhanced by our most recent opening a few weeks ago in Eureka, California. Day one sales of nearly $15,000 was one of the highest opening days of all time.

As a result of the continued strong performance at Chipotlanes and less competition for new sites, we will see even greater proportion of Chipotlanes in our pipeline, which will enhance customer access convenience and increase new restaurant sales, margins and returns. Year-to-date, we have opened 28 restaurants with another 49 under construction. However, we have begun to see construction delays and therefore, have preemptively delayed groundbreaking on the majority of projects in April. So we have a better visibility into when construction will pick up momentum again, we believe it’s prudent to withdraw our prior 2020 new restaurant opening guidance.

Lastly, you may have seen, we signed a deferred prosecution agreement to resolve the DOJ investigation that was previously reported relating to food safety incidents beginning in 2015. The agreement will be in fact for three years — in effect for three years and the DOJ agreed to not take further action so long as we comply with the agreement and pay a $25 million fine with $10 million being paid on June 1 and prepayments of $5 million every 30 days after that first payment. These payments will unfortunately hurt our liquidity a bit, but we’re ready to put this old matter behind us.

In closing, despite uncertainty about the near-term impact of COVID-19, our talented and committed team, the strength of our brand and the resiliency of our economic model gives us the confidence and conviction to make the right long-term investment for our people, for our customers, for our Company and for our shareholders. Amid these unprecedented conditions, we will remain focused on not simply managing through the crisis, but taking actions that will allow us to emerge even stronger. I just want to thank all of our extraordinary team members for their commitment during these challenging times. Their efforts are very much appreciated.

With that, we’re happy to take your questions.

Questions and Answers:

 

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today will come from David Palmer with Evercore ISI. Please go ahead.

David Palmer — Evercore ISI — Analyst

Thanks. Good evening. Jack, a question for you, you were talking about some cash burn rate $50 million, but actually might be a third less than that on a monthly basis at the current comp decline rate. And I think you said something like $30 million to $35 million of capex is included in that. So I guess that — does that mean just roughly speaking that you’re breaking even or a little bit better than that at this sort from a just a pure EBITDA standpoint at the current decline rate that you’ve seen lately?

John R. Hartung — Chief Financial Officer

Yeah.

David Palmer — Evercore ISI — Analyst

And I have a quick follow-up.

John R. Hartung — Chief Financial Officer

Yeah, that’s right. That’s right, David. So if you look at the sales for the last week and listen, we’d love for that to be the trend for us to improve from there. But we just hold it at the trend we’re seeing from the last week, which is down in the high teens. We earned cash flow restaurant level about $20 million, our G&A is in the $20 million to $25 million range. So you’re absolutely right. Before capex, we’re right about at EBITDA breakeven. And just a quick question on your — on the coastal areas, those urban centers, you can imagine certain parts of the country are particularly hard hit right now. Are you seeing a pretty widespread and the type of comp decline that you’re seeing or is that mitigated by something more of a disruption among the competitive set in those areas and whatever you’re doing digitally? Thanks.

David, it is a wide range of comp out there. As you can imagine, the Northeast has been hit the hardest. Parts of the middle of the country are much further ahead in terms of the recovery. And so, it gives us great optimism that we can see our way out of it and get towards and then, eventually into positive territory from a comp standpoint.

David Palmer — Evercore ISI — Analyst

Thank you.

John R. Hartung — Chief Financial Officer

Thanks, David.

Operator

And the next question will come from Sara Senatore with Bernstein. Please go ahead.

Sara Senatore — Bernstein Research — Analyst

Thanks. I have a follow-up and a separate question. So the follow-up is just on the question of sort of disparities in your comp trends. Our sense is that things like daypart mixer or off-premise versus on and also, things like urban versus suburban are determining a lot of what’s happening in terms of the recovery. Can you remind me sort of what your sales mix might have looked like before this whether lunch or dinner or what percentage of your stores are in urban market versus suburban. I’m just trying to get a sense of how much of this is just a function of what the business look like beforehand versus anything unique to the brand and then, one other question, please?

Brian Niccol — Chairman and Chief Executive Officer

So I’ll start, Jack. And then you can chime in. So obviously, Chipotle had a pretty good split between lunch and dinner. Pre this crisis, we’ve definitely seen a little bit of an uptick in our dinner business, our dinner occasion with a little downtick in the lunch occasion. And I think that’s driven by just the natural consumer behavior of people not going out and about. The positive is the digital experience and it has introduced people to a new behavior and a new occasion for Chipotle, which is solving that occasion for a family meal or dinner that historically, maybe they already had Chipotle for lunch and they haven’t considered us for that. So we’re seeing a slight pivot just in more dinner occasion and with a little decline in the lunch occasion. And a lot of that I think is driven by just the situation people being sheltered at home and then also the ease at which the digital occasion, both contactless pickup as well as the contact delivery. And I think one thing that’s also driving all this order-ahead growth is people are just realizing how easy and contactless the order-ahead experiences, which is showing up in the Chipotle execution as well as using our mobile pickup channels.

And then on your question about suburban versus urban, and one of the strengths of Chipotle is our suburban footprint. Frankly, really, the whole concept started from a suburban standpoint. And that continues to be a strength. And frankly, one of the things that’s worked out really well is as we brought on partners, whether it’s DoorDash or Uber Eats, we’ve really spent a lot of time making sure they had coverage in the suburban markets.

And then, obviously, we have a presence in urban markets as well. And not surprising, as Jack mentioned, the Northeast or the New York is more — is a laggard as a region, relative to what we’re seeing in our other regions on the recovery. But we’re seeing a lot of positive things happening in our digital business. It will be very interesting to see, as we are given the opportunity to start to open our dining rooms here in the next, call it, weeks or a month, how we’re able to continue to keep people engaged in our delivery business, our digital business. Because the one thing that, hopefully, you picked up in here is our rewards database just went from 8 million to almost 12 million. And that’s going to be a very valuable asset, I think, going forward as we work through the recovery.

Jack, I don’t know if there’s anything to add?

John R. Hartung — Chief Financial Officer

No, I think you covered it really well, Brian. Thanks.

Brian Niccol — Chairman and Chief Executive Officer

Okay.

Sara Senatore — Bernstein Research — Analyst

Thanks. Very helpful. Just both of you were in the industry back during the global financial crisis. If you think back then, would you anticipate as we come out of this — there’s a silver lining, possibly better opportunities on real estate or maybe some of the capacity come out? I was just curious what your institutional memory might tell you about what we look at like on the other side?

Brian Niccol — Chairman and Chief Executive Officer

Yes. Look, great question. I think this is really the strength of our brands, our balance sheet and our digital business is going to, I think, set us up very nicely on the opportunities that present themselves as we get to the other side of this. The obvious opportunities, I think, are some things we’ve already talked about.

We’re not shying away from sites and our ability to get the sites that we believe are best for our future digital business and our Chipotlanes. And then I also think just very much being on trend with people having access to real wholesome nutritious food is going to continue to be at the forefront of good health.

And I think good health and well-being is going to be an even more important trend in the consumer psyche going forward. And I think we’re very well positioned in the fast casual category and the brand in the fast casual category to get people access to that higher quality food with integrity in the access and the experience that they want, which is the least amount of friction with arguably the least amount of contact. And we’re well positioned for all those things. And then the strength of our balance sheet and the strength, frankly, how we’re able to flow every incremental dollar allows us to invest in future real estate, future sites, future digital, and we’re optimistic once we get to the other side of this.

Sara Senatore — Bernstein Research — Analyst

Thank you.

Operator

And our next question will be from Katherine Fogertey with Goldman Sachs. Please go ahead.

Katherine Fogertey — Goldman Sachs — Analyst

Great. Thank you. I wanted to touch base on menu innovation. It’s not something that was really brought up too much on the call today, but how you’re thinking about the forward here? And in particular, as we’re looking at the consumer here, the financial impact that virus has had on the consumer, where are the opportunities you think to grow check or potentially even take share just given your price point relative to the competition? Thank you.

Brian Niccol — Chairman and Chief Executive Officer

Sure. So look, we are still big believers in our menu program. I think we’ve talked about this. We saw opportunity in beverage we still believe there is an opportunity in beverage for us to have. Beverages with same type of commitment to organic, no artificial ingredients, less sugar, the juices. So you’re going to see us continue to push into beverages.

And then the case of Blanco launch, I got to tell you was — it was coming out of the gates as evidenced by where our comps were, right, in January and February, it was getting huge positive feedback. Our teams were loving it, the customers were loving it, and I think there’s an opportunity still to reengage people in case of Blanco once we get past this.

And then we’re still working hard at bringing back carne asada. And then there’s a few other things that are going through our stage gate process, which we’ve had to delay just because this is not the environment where you can go test and the restaurants to really understands consumer experience, operational experience. But we have some early reads on this, and we feel really good about being on trend with different meats, different grains, I think what we’ve always talked about it is we want to meet customers’ requests. So we’re testing the quesadilla, but we also want to leave consumers to higher quality food or different food experiences, and that’s why you see us talking about things like briskets and color flour rice and so on and so forth.

So, consumer sentiment hasn’t changed on the desire for those things. We just have to make sure we do it at the right time because we want to come back operationally strong with the core business before we start adding some of those things.That’s helpful. And then just one follow-up here on commodity. We’ve seen a lot of deflation across the entire universe. Is there any opportunity for you guys to lean in and lock in some contracts? What’s the environment like here? And how can you kind of kind of leverage this current backdrop? Thank you.

John R. Hartung — Chief Financial Officer

Yes. Katy, on the commodities, it’s likely to be a favorable commodity scenario going forward. We deal with a lot of small farmers. And so generally, we don’t have a great opportunity to lock in like you would if you were buying the commodity meats, for example.

Although we definitely think that there’s going to be a time for us to be able to support our farmers in a way where we can bring not only strong demand, but hopefully growing demand as well. And we think that will lead to favorable pricing. But in terms of locking in, that’s not likely. The only wildcard, as usual for us, is avocados. And we’ll see this should be a favorable or pretty favorable year for us, but we’ll see how demand and supply match up. And hopefully, this will be a more normal year since we’ve had two or three or four years now in a row of pretty volatile avocado cost.

Katherine Fogertey — Goldman Sachs — Analyst

Great. Thank you.

Operator

And our next question will be from David Tarantino of Baird. Please go ahead.

David Tarantino — Robert W. Baird & Company, Inc. — Analyst

Hi, good afternoon. I hope everyone is doing well. My first question is on just the commentary around real estate and recognizing that you do have the enviable position of a good balance sheet that you might be able to take advantage of some opportunities. Just wondering if you could maybe comment further on how you’re envisioning the rate of growth exiting the crisis that we’re seeing now. Do you think there’s opportunity to accelerate the pace of unit growth maybe in 2021, 2022, however you want to answer that?

Brian Niccol — Chairman and Chief Executive Officer

Yes. Look, David, I think there’s going to be an opportunity for us for two reasons because I think we’ve made tremendous progress on the people front. So, our turnover has really come down over the last, call it, year. So, we have more stability with our leaders. And then I also think, in the environment, we’re going to have the ability to recruit and retain even more people going forward, which will really set us up nicely for an acceleration in development.

And I think we’ve always talked about it. We just want to take a very measured approach to how we accelerate that growth because we want to open the restaurants with great teams, great experiences and great financials. And — but this will definitely present an opportunity where I think our pipeline will get bigger. And we’ll present the opportunity for us to staff them and run them really well so that we can continue to accelerate our growth plan.

David Tarantino — Robert W. Baird & Company, Inc. — Analyst

Got it. And then the second question I have is related to operations. And I guess how do you envision the operations working in your format in the world of social distancing on the other side of this as you open up your dining room I guess, what steps are you taking? And do you think you’ll see throughput constraints come back as you try to maintain social distancing on the line as an example?

Brian Niccol — Chairman and Chief Executive Officer

Yes. So, obviously, this is something we’ve been spending a lot of time on. And frankly, this morning, we spent a lot of time on it. We’re going to make sure that we provide all the indicators in the restaurant so that the customer has the confidence what they’re supposed to do to maintain the social distance, as well as our team members. But look, you’re going to see our team members wearing masks, you’re going to see our team members wearing gloves, you’re going to see a team member in the dining room that’s sanitizing tables and high-traffic areas. The hand sanitizer will be in the dining room. We probably will have to move things off of the drink station and make sure that we have a little bit more control of that, so that those things are clean and sanitized the way that we would want them to be, so that every person that gets a drink or grabs a Tabasco bottle can have confidence.

But look, think the one thing that is great about our business is our customers that come in the restaurant they know how to order a Chipotle. And they’re part of the process to move down that line quickly, as much as our employees are part of the process to move down that line quickly. And I think the combination of our digital business getting up to the 60%, 70% of sales. I think we’re going to hang on to as much of that as we possibly can, while we build back our dine-in business. And I think over time, some of these restrictions or behaviors will migrate back to the way it used to be. But the good news is our model is very durable in this environment for when we actually are able to open the dining room. But we’re going to be very specific on the actions we’ve taken in the restaurant to give people the confidence that they’re having a healthy experience. But in the near term, it’s going to be something that we’re going to have to learn our way through. And I’m confident Scott and his leaders will do a great job of managing the dining room reopening.

David Tarantino — Robert W. Baird & Company, Inc. — Analyst

Great. Thank you.

Operator

The next question will be from Andrew Charles of Cowen. Please go ahead.

Andrew Charles — Cowen — Analyst

Great. Thanks. In a normalized environment, marketing and promotional expense typically runs about 3% of sales. And given the headwinds the sales that we’re seeing throughout the industry, philosophical, are you looking to pare back spending in aim to run 3% marketing expense off the lower base of 2020 sales? Or are you looking to maintain kind of a similar $180 million to $190 million budget that you had at the beginning of the year? I’m thinking about in the context that, obviously, the shift from live sports to streaming platforms is less expensive advertising, but I would imagine this probably gets offset by subsidizing delivery fees for the foreseeable future.

Brian Niccol — Chairman and Chief Executive Officer

Yeah. Yeah. I mean, you kind of hit the nail on the head. What I think Chris and the team are really focusing on is every dollar we spend in the marketing is how do we maximize the return for the environment we’re in. And I think the team has done a phenomenal job of it, pivoting away from traditional television, frankly, and moving more towards delivery incentives around delivery, and then also using platforms social, digital. I love how the guys quickly pivoted to like Chipotle together, right? These are things that we were the first ones doing, because I think Chris and the team are very much in tune with where the consumer is. And where young people want to experience their brands and how they want to experience the brand.

So we’re going to spend to do those things. And whether the absolute dollars end up being a little different, probably. But really, what we’re focused on is getting the return so that we feel good about the dollars that we’re investing, and we see that showing up, obviously, in both the top line and then the bottom line. So very proud of where we are and how we pivoted our spending. And I think, we’ll continue to see us lead in this space.

Andrew Charles — Cowen — Analyst

That’s great. And then just my follow-up question is that, you guys disclosed a high 60%, almost 70% digital mix of sales so far in April. How does that mix of sales differ between carryout and delivery relative to what the — relative to the digital carryout and delivery mix before COVID-19? Is it safe to say that you’re seeing delivery sales now represent the majority of the digital sales for the most recent week?

Brian Niccol — Chairman and Chief Executive Officer

No. What I would tell you is, delivery definitely those first couple weeks in March really took off. But over the last couple of weeks, we have seen order ahead, frankly, catch up and — as our digital business has just grown in totality. And so the mix prior to COVID, we’re seeing a slight change in — I would say the biggest change is our catering business went away. And as a result, what we’ve seen is really kind of delivery be a little bit more of the leader with order ahead not far behind, but both are hugely, hugely up.

Andrew Charles — Cowen — Analyst

That’s great. Thanks guys.

Operator

The next question will be from Nicole Miller with Piper Sandler. Please go ahead.

Nicole Miller Regan — Piper Sandler — Analyst

Thank you. Good afternoon. I appreciate the update. I wanted to dig into the April, let’s say, less worse environment, quite a big jump. There is probably now a half dozen restaurant companies that have the statement. What do you think is happening on the consumer behavior side? Because it seems like right now and going forward, it’s all going to be about what the behavior is now and then the tipping point to see it changes. So I’d be curious on really just what the heck to think is going on? Is it so start crazy or advertising is kicking in? What do you think might be causing that?

Brian Niccol — Chairman and Chief Executive Officer

Well, look, I think there’s a couple of things; one, I think all the pantry loading behavior has slowed down. And I think also people have worked through their pantries. And I think also people realized they bought a lot of things that they end up having to throw away. And I think there’s fatigue in cooking.

So combine that with the fact that also tax refunds and stimulus money is starting getting into the hands of people. And I think people were like, you know what, I’ve got the additional cash, I’ve worked through my pantry loading and I think it’s time to break the routine of me cooking and being a little stir crazy and let’s reach out for restaurants to solve the solution. So I think that’s just the fundamental to set up right now, which is most stimulus money in the hands of customers. And then the pantry loading behavior, I think, has really slowed down dramatically and they’ve worked through all the goods that they purchased in their pantries.

Nicole Miller Regan — Piper Sandler — Analyst

That’s helpful. And so just a follow-up and last question on that point, to what degree can this serve as a proxy for the recovery? So if I think about Chipotle in ’15 and in ’16, what happened then as you perfectly positioned as you’ve been outlining for the last hour basically, to take this head on?

So I think back to that time, I would say that probably impaired the brand to some degree, was dilutive to the brand equity to some degree, specific to your brand, obviously. But that’s not the case, everyone’s being treated equally. So is this more like a remodel pattern? I guess, the real question is, everybody is, I guess, in the same boat, you close, reopen. And the question is how long to get back to the prior run rate?

Brian Niccol — Chairman and Chief Executive Officer

Yes. Look, here’s what I would tell you is, I’m very excited about the opportunity to get our dining arms reopen. I’m very excited about leveraging all the digital gains we’ve made. And then I’m also very optimistic about our ability to operate once the dining room is open.

We have our digital business running next to us in an environment where we’re working with elevated wellness practices, elevated food safety practices, because these are all things that we’ve been doing for years now that a lot of people are just starting to adopt. So I think we’re always going to be the ones that will look to figure out what we can do next on wellness and food safety. But I’m very confident about our operators being able to operate in that environment. And then I’m very optimistic about what will happen as the phased, kind of, reopening of the economies goes into effect because I think we’re going to hang on to a lot of our gains, digitally. And a lot of the gains we’ve made culturally and operationally as we reopen these dining rooms.

But look, that timetable, I think, is going to be driven very much about when the economy gets reopened so that people can start experiencing dining rooms and the full access of restaurants. So — but it looks like that’s going to start loosening up here over the next month or two.

Nicole Miller Regan — Piper Sandler — Analyst

Thank you.

Operator

And the next question will be from John Glass of Morgan Stanley. Please go ahead.

John Glass — Morgan Stanley — Analyst

Thanks very much. First, Jack, if I can just follow-up on the restaurant margin question you answered earlier about the cash consumption or the cash breakeven. What does that translate back into? If comps are down high teens, what is the percent restaurant margin that, translates into? And is unusual about that number I noticed you talked about? Is it fully loaded with the rent, for example? I think there was some increase in wages. On the other hand, maybe you don’t — I don’t know if you’re fully staffed restaurants. What’s unusual in the current restaurant margin?

John R. Hartung — Chief Financial Officer

Yeah. John, I don’t even have handy, what percentage of sales that would be. It’s still a very low margin. If we’re still down in the down teens, it’s still bumpy line item by line item. Our teams have done a great job of managing the business for the lower volume, but we’re not going to cut our staffing too short so that when the surge happens. The more people come in and the orders start to rise, we want to be ready for that. I think the point there is just that we can get breakeven at the 30, 35. We’re hoping this is a new trend. And so it reduces our cash burn by a lot.

What I would tell you we’re thinking about is when we think about what happens when the dining rooms reopen and we start to build back our dining room business. And as Brian mentioned, keep as much of our digital, we feel like we’ll be able to get back to the margins we are running before as we get back to that run rate. We were at a better than $2.2 million, our AUV on our way to $2.3 million. And we’re already showing through February, which January and February are not great margin months, and we’re already at 22%.

So we know when we get back to those volumes, the $2.2 million, and then on our way back to $2.3 million. That’s the kind of margins you could expect us to deliver. But we’re still down in the high teens. It’s still going to be a single-digit kind of margin, John, but it’s something that reduces the cash burn and allows us to make the right investments for the long term.

John Glass — Morgan Stanley — Analyst

That’s very helpful. And just a follow-up, you mentioned in the release, the CARES Act tax benefits were about $100 million. Is that all inside of 2019 and is that all expressed through the tax rate? Was there some of that in this quarter? And how do we think about how those benefits flow over the next quarters or year?

John R. Hartung — Chief Financial Officer

It’s all this year, John, but it’s all cash basis. So none of it is earnings basis. So, for example, it’s a deferral of things like self security taxes. We’re going to have to pay those beginning next year, but it saves us cash this year and we need it the most. And then there’s depreciation resets that we get for 2018 and 2019. And so from a book basis, there’s no change at all because the book depreciation doesn’t change, but our tax depreciation does. So it will affect our cash flow. It will affect our deferred taxes, will not affect our earnings margins or EPS.

John Glass — Morgan Stanley — Analyst

Got it. Thank you.

Operator

And our next question will be from Brian Bittner with Oppenheimer & Company. Please go ahead.

Brian Bittner — Oppenheimer & Company — Analyst

Thanks. Appreciate the question. With digital trends now at 70% of sales, I assume they’re not going to remain that high when we’re through this virus, but they’re probably going to remain pretty sticky, which means your delivery business is probably going to remain a much bigger part of your business moving forward. Is there a tipping point where you potentially think about mixing in some of your own delivery drivers? Or can you just talk a little bit more about the strategy for delivery if it becomes that large of a business? Thanks.

Brian Niccol — Chairman and Chief Executive Officer

Yes. So, obviously, we’re optimistic that we’ll hang on to both our order ahead business as well as the delivery business. And — but specifically to your question on delivery, I think the reality is it works off our digital make line, which sets us up for a very different walk on how we get to the margins we get through our delivery business.

And what we have said is, look, as partners potentially change commission rates or you see various economic impacts on it. There’s just a general understanding with the folks we work with, where it’s like, look, we need to make money at it, you need to make money at it, and we’ll figure out how we make this work. And fortunately, for us, our food works very well in the delivery occasion, our customer has had positive feedback on the experience and the partners that we have are very willing to have the right dialogue and be transparent with each other so that we can make the channel work for each other.

So we’re going to take a very smart approach to it, where it should be still viewed as a positive to have this occasion for the Chipotle business. And that’s the approach we’re going to take, and we’ll continue to be transparent with our partners as we work through this.

Brian Bittner — Oppenheimer & Company — Analyst

Thanks. Appreciate all the color, Brian.

Brian Niccol — Chairman and Chief Executive Officer

Sure.

Operator

The next question is from Sharon Zackfia with William Blair.

Sharon Zackfia — William Blair & Company — Analyst

Hi. Good afternoon. Hoping you could touch on the restaurant level labor situation and how difficult recruitment might be in this environment or a turnover has been trending? And then separately, Jack, it sounds like you’ve kind of implied this, but are there any structural cost changes to the model coming out of this?

Brian Niccol — Chairman and Chief Executive Officer

Well, I’ll take the labor thing, and then I can hand it over to you, Jack, on the structural question.

John R. Hartung — Chief Financial Officer

Okay.

Brian Niccol — Chairman and Chief Executive Officer

But on the labor side of things, I think this is really where we’re seeing the power of our purpose and our culture, because we’re seeing turnover actually improve. We’re seeing fewer people walking away from Chipotle. We’re also seeing people that are with us, very proud to be with us.

And I think we’ve been very purposeful in executing against what we believe are our values and the right thing to do. And as a result, our restaurant managers, our restauranteurs, these folks have more tenure with us than we ever have. And they’re excited about the opportunity of the new restaurants we’re going to open, and they’re excited about how Chipotle is going to get to the other side of this. So, I think we will — based on the communication we’ve had with our employees. They’ve been very, very, very supportive of the Chipotle business, the Chipotle culture, and each other. And I think we’re very fortunate that way. And I think going forward, we’re going to be a place that people are going to want to work and so and we’re going to be a place where people are going to be able to grow. And I think that’s going to attract the right talent so that we can grow our business effectively.On the structural stuff, I’ll pass it over to Jack, but we don’t see that doesn’t seem to be a headwind. But over to you, Jack.

John R. Hartung — Chief Financial Officer

Yes, I don’t think so, Sharon. There’s going to be stuff in the short-term, like when the dining rooms reopen, and we’re actively talking about what exactly that means, and we’re going to have to follow everything that’s happening in the state and the local jurisdictions and the like. But it’s likely for some period of time, we’ll have an extra person in the dining room just to make sure the customers see that we’re constantly cleaning that if they have questions about social distancing or what have you, there’s somebody there. So, there’s likely to be some extra cost for a while.

On the other hand, with a higher digital we know that our digital business is more efficient, it takes less labor on that digital make line to serve as many customers. And so we’re, in fact, seeing efficiencies in that. We’re seeing that we’re using less labor to deliver some of the sales that we have to add hours for in the past. So, I think there’s pushes and pulls.

I think when we get fully to the end of this, past the transition and let’s say, a year from now or something like that; I don’t think there’s going to be any meaningful structural cost. I think our model will be fully intact. But it will be a little bit bumpy when we get — as we get from here to there.

Operator

And our next question will come from John Ivankoe with JPMorgan. Please go ahead.

John Ivankoe — JP Morgan — Analyst

Hi, thank you. A couple of clarifications, if I may. First, were the 100 restaurants that were closed, temporarily closed, included or excluded in the same-store sales commentary?

Brian Niccol — Chairman and Chief Executive Officer

They’re…

John Ivankoe — JP Morgan — Analyst

They’re included?

Brian Niccol — Chairman and Chief Executive Officer

Included.

John Ivankoe — JP Morgan — Analyst

Okay, perfect. And then secondly, 30% of your sales being non-digital, were 100% of your restaurants, I mean, I guess, could they serve non-digital transactions? Were there any examples in any markets where the stores had to be 100% digital, I guess, by market mandate or what have you? Or were you able to keep all the restaurants open for that not non-digital so far?

Brian Niccol — Chairman and Chief Executive Officer

Yes, we had a couple of hundred where we were purely digital. I think it’s like 200 or 300 range. But otherwise, the balance of the system, we’re still able to do come in and carry out.

John Ivankoe — JP Morgan — Analyst

And did you learn anything from any of those fully digital restaurants? I mean, is that — I mean do you think you could have done more of those restaurants and still even taking up the digital mix even higher? I mean what type of experience or learnings that you get from digital-only restaurants, which, obviously, were also cashless as well.

Brian Niccol — Chairman and Chief Executive Officer

Yes. So, look, one of the things that’s definitely true is the in-restaurant experience still provides another level of customization, which people still appreciate for a certain occasion. We still have great customization in our digital app and on the website. But look, if you want to build that little extra mile of customization, that’s something you get from an in-store experience.

So, that would probably be the biggest thing that we’ve noticed is some of our heaviest users or loyal users really appreciate having access to the dining room. But the good news is they’re getting experience with our app now. And they’re realizing — and you’ll see us do this going forward. We’re going to, I think, educate people more on how they can customize via the app and the web, because there’s a lot of very simple practices on — if you want to put your sauce on the side, it’s easy. If you want to do half and half, easy. And people still are getting used to how they do their customization. But I would say the biggest learning is our people that are very loyal to the idea of coming into the restaurant and getting their Chipotle their way, and that makes us unique. So that’s it.

John Ivankoe — JP Morgan — Analyst

Definitely, yes. it’s an obvious difference. And the final kind of question. In terms of reopening the dining room, I mean, what type of — what will you look for in the marketplace? I mean, obviously, some governors, Georgia being one or kind of vary ahead of the curve in terms of kind of getting people back out, others for different and obvious reasons, kind of on the other spectrum, but in a lot of local markets, mayors themselves are making decisions. So I mean, is there — do you want to open entire states at a time, markets at a time? And when you kind of think about reopening your dining rooms, even with a lot of social distancing are probably in place. And what are you looking for the permission to go out and start to reopen that full experience?

Brian Niccol — Chairman and Chief Executive Officer

Yes. So look, I think this is going to be a by restaurant approach for us. And this is one of the things that I think is terrific about us being all company owned. We have the flexibility and the capability to do it. So we’ve got a very — we’re very fortunate, too. We’ve got a leader of food safety and wellness, Kerry Bridge is her name. She’s very tied in right now with the CDC and the FDA. And she’s tracking for us and having those conversations so that as the government and the science and the data comes in, we can be best informed so that we can provide a healthy experience, both for our customer and our crews.

And we’re going to execute this restaurant-by-restaurant because I think what we’re seeing is this virus is very much proving to be very different depending on where you are in the country. And fortunately, we’re set up where we have the capability to open that way, our dining rooms. And I think we have the people capability to execute it in the restaurant, and we have the people capability to get the right information. So we make smart decisions as we reopen.

John Ivankoe — JP Morgan — Analyst

Thank you so much.

Brian Niccol — Chairman and Chief Executive Officer

Yes.

Operator

The next question will be from Jon Tower with Wells Fargo. Please go ahead.

Jon Tower — Wells Fargo — Analyst

Awesome. Thanks. I hope everybody is okay. Just a few on the Chipotlanes. And frankly, just thinking about this business going forward. In terms of — you mentioned earlier, the idea that real estate is opening up, and you’re getting access to potentially better sites. Are you also thinking that you may have potentially better rents going forward? And then on top of that, historically, you’ve shied away from the idea of owning any real estate, but clearly, you’ve got a fairly strong cash balance. Does that cash balance and potentially, real estate prices dropping, make it more attractive to move towards that ownership structure? And then I got another one after that, please?

John R. Hartung — Chief Financial Officer

Yes. Listen, good question. It’s likely that rents are going to relax a little bit. Now we typically go after A sites and A trade areas. Those tend to hold their value, their rent values more than if you’re going to go to a B or C location. But I would still think when there’s less competition out there that we’re going to see relaxed rents.

The thing that I think we’re most excited about is, where landlords might have been resistant to add a Chipotlane in the past like picture and cap and then a landlord having to redo the whole circulation around that property because we’ve asked for a Chipotlanes. While they might have resisted that a bit in the past, we’re not seeing much resistance of that anymore. The fact that we’re looking to go into a site, we’re continuing to grow that’s what we’re most excited about.

But we do think we’ll be able to get more sites, higher quality sites, more Chipotlanes, and I would expect that the rents would be –should be at least incrementally more attractive. We’ve never really been against buying. If there’s an opportunity to buy a site, we typically are going after going into somebody else’s building. So we don’t do a lot of free standards.

We do free standards, they’re often on the pad of a shopping center. And typically, the landlord or developer, they like to keep those. But I have to tell you, if a developer is cash poor and they’re looking to sell a site and if the price is right, we’ll certainly be there and we’re willing to definitely buy that land. So we can lock in our occupancy costs forever.

Jon Tower — Wells Fargo — Analyst

Great. And then just on the Chipotlane following that line of thinking, you had mentioned, I think, previous calls, greater than 55% of the development was going to be tied to Chipotlane and for 2020, at least, in thinking about the where that can move for the balance of this year and next year?

Are we talking about this being a higher run rate going forward in terms — as a percentage of the mix? And are we talking somewhere between 80% to 90% of new stores being in that Chipotlane format?

John R. Hartung — Chief Financial Officer

Definitely going to be higher, 80% to 90% might be a little high because we still do open up in some storefronts and some urban areas as well. But it’s definitely going to be higher than the 50% to 60%. In fact, we’re even seeing that deals that we’ve already done or have mostly done.

We go back and say, hey, by the way, we talked about that Chipotlane and you weren’t that crazy about it, what do you think about it now? And we’re getting landlords to say, you know what, if you’re still willing to go to the site, we’ll do it, right. I do think for this year, you’ll see the percentage of Chipotlanes inch up. And then I think for next year, I think you’ll see a stair-step, I don’t know that 80% or 90% is realistic, but certainly higher than 60% and maybe north of 70% as well. But we’ll see. So far, the reaction from the landlords has been good. So we’re very, very optimistic.

Jon Tower — Wells Fargo — Analyst

Great. Thank you. Stay healthy everybody.

John R. Hartung — Chief Financial Officer

Thank you.

Operator

And the next question will be from Jeffrey Bernstein with Barclays. Please go ahead.

Jeffrey Bernstein — Barclays — Analyst

Great. Thank you very much. First, Jeff, just a clarification on the restaurant margin conversation we talked about earlier. It’s obviously hard to read the most recent trends, but still think it’s fair to assume that $100,000, equating to 200 basis points of margin? Or is it in the short to medium-term that there are going to be some structural headwinds that would make that a little bit harder to achieve, even if you do think that — I think you said ultimately, you do think that those two numbers would once again go lock step together?

John R. Hartung — Chief Financial Officer

Yes. I think long term, we’re 100% on that same page that when we get back to, call it, $2.2 million, we could be at 22. And then every $100,000 of volume, you can get an extra 100 basis points of margin. I just think between now and then, it’s going to be bumpy.

It’s going to be bumpy because there’s going to be dislocations throughout the country and how the recovery happens, it’s not always perfect when you add volume or pause on volume that you get the right response in terms of the labor management, the management of food and waste and things like that. And listen, we’re not going to go crazy over that as we navigate through this recovery. But I think once you get through the recovery, I think our earnings power, our margin power is going to be fully intact.

Jeffrey Bernstein — Barclays — Analyst

Got it. And with that said, as we — I know you withdrew your 2020 guidance, which seems prudent. But as we think about 2020 and 2021 modeling, I know it’s difficult at this point. But from a sensitivity standpoint, how do you think about each point of comp or each 100 basis point of margin in terms of a framework to think about earnings over the next year or so?

John R. Hartung — Chief Financial Officer

Got it. And with that said, as we — I know you withdrew your 2020 guidance, which seems prudent. But as we think about 2020 and 2021 modeling, I know it’s difficult at this point. But from a sensitivity standpoint, how do you think about each point of comp or each 100 basis point of margin in terms of a framework to think about earnings over the next year or so?

I think in the interim, I think it’s just too hard. And listen, it’s going to be bumpy. I mean, EPS is not going to be that predictable. And so what is going to be predictable is the investments we’re going to make. We’re going to make them in our people. We’re going to be able to make investments in our future.

In terms of real estate, we’re going to make sure that from an employment brand, from a customer brand and from the investments we’re making for the future, that we’re going to do all the right things. In terms of EPS in the short-term for the next few quarters, just be ready for that to be bumpy. But I think the investments we’re going to make and the impact that we’re having, positive impact we’re having on our brand, I think, creates a bright future for us beyond that.

Jeffrey Bernstein — Barclays — Analyst

Understood. Thank you.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Brian Niccol for any closing remarks.

Brian Niccol — Chairman and Chief Executive Officer

Yeah. Thank you. And thank you, everybody, for taking the time to discuss our current situation in the Chipotle business. I want to just first reiterate what I said at the beginning. A huge thank you and gratefulness to all our employees and supplier partners that are keeping the Chipotle experience up and running in our communities. Couldn’t be prouder of the way we have handled this in the way that our culture has really shown itself. So very proud of everyone and frankly, very humbled by seeing all of it.

The other thing I will leave you all with is, and we’ve kind of talked about this throughout the whole Q&A. We’re very fortunate that the Chipotle brand is as strong as it is, compounded by a very strong balance sheet with, I think, very smart investments that we made on the digital side, as well as on our operations and food safety culture. And I think that just sets us up to navigate the current situation at hand. And I look forward to getting back to achieving the results we had frankly in January and February, once we get past this crisis.

And I’m confident that, as Jack mentioned, we’re going to be very prudent on managing our cash, but we’re also going to be very smart about investing in the Chipotle proposition for the future. So thank you again everybody. Hopefully, everyone in families and friends are healthy and safe out there, and I look forward to talking to all of you in the future. Best. Take care.

Operator

[Operator Closing Remarks]