Portillo’s Inc. (NASDAQ:PTLO) Q1 2023 Earnings Conference Call May 4, 2023 10:00 AM ET Company Participants Barbara Noverini - Director, Investor Relations Michael Osanloo - President and Chief Executive Officer Michelle Hook - Chief Financial Officer Conference Call Participants Brian Harbor - Morgan Stanley Sharon Zackfia - William Blair David Tarantino - Baird Sara Senatore - Bank of America Dennis Geiger - UBS Andy Barish - Jefferies Gregory Francfort - Guggenheim Securities Chris O’Cull - Stifel Operat ...

Part I – Financial Information [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) For the quarter ended March 26, 2023, Portillo's Inc. reported a 16.0% increase in total revenues to $156.1 million, driven by new restaurant openings and a 9.1% rise in same-restaurant sales, resulting in a net loss of $1.3 million due to increased operating expenses, higher interest costs, and a $3.5 million loss on debt extinguishment, with total assets increasing to $1.30 billion and cash decreasing to $14.6 million [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 26, 2023, total assets increased to $1.30 billion from $1.28 billion, while cash and cash equivalents decreased to $14.6 million and total liabilities rose to $878.7 million, primarily due to an increase in the Tax Receivable Agreement liability Balance Sheet Summary (In thousands) | Balance Sheet Items (In thousands) | March 26, 2023 | December 25, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14,611 | $44,427 | | Total current assets | $35,878 | $65,326 | | Total assets | $1,301,703 | $1,280,083 | | **Liabilities & Equity** | | | | Total current liabilities | $83,739 | $77,297 | | Long-term debt, net | $288,979 | $314,425 | | Tax Receivable Agreement liability | $292,490 | $252,003 | | Total liabilities | $878,717 | $847,182 | | Total stockholders' equity | $422,986 | $432,901 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) In Q1 2023, revenues grew 16.0% to $156.1 million, but the company reported a net loss of $1.3 million, or ($0.01) per share, primarily due to a $3.5 million loss on debt extinguishment, higher interest expense, and increased operating costs Income Statement Summary (In thousands) | Income Statement (In thousands) | Q1 2023 (Ended Mar 26) | Q1 2022 (Ended Mar 27) | Change YoY | | :--- | :--- | :--- | :--- | | Revenues, Net | $156,061 | $134,482 | +16.0% | | Total restaurant operating expenses | $121,240 | $106,499 | +13.8% | | Operating Income | $8,493 | $6,814 | +24.6% | | Interest Expense | $7,444 | $6,099 | +22.1% | | Loss on debt extinguishment | $3,465 | $0 | N/A | | Net (Loss) Income | $(1,273) | $550 | -331.5% | | Diluted EPS | $(0.01) | $0.00 | N/A | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $6.5 million, while net cash used in investing activities rose to $20.2 million for new restaurant construction, and net cash used in financing activities was $16.1 million, resulting in an overall decrease of $29.8 million in cash and cash equivalents Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Q1 2023 (Ended Mar 26) | Q1 2022 (Ended Mar 27) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $6,486 | $800 | | Net Cash used in Investing Activities | $(20,190) | $(6,279) | | Net Cash used in Financing Activities | $(16,112) | $(1,602) | | **Net Decrease in Cash** | **$(29,816)** | **$(7,081)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's structure, recent secondary offerings, and debt refinancing, including a new $300 million term loan and $100 million revolver facility, which led to a $3.5 million loss on debt extinguishment and an increase in the Tax Receivable Agreement liability to $298.8 million - As of March 26, 2023, the company operated **74 restaurants**, an increase from 71 at the end of 2022[26](index=26&type=chunk) - In Q1 2023, a secondary offering was completed, with the company not receiving proceeds, but its ownership in Portillo's OpCo increased from **67.0% to 75.2%**[27](index=27&type=chunk)[28](index=28&type=chunk)[78](index=78&type=chunk) - On February 2, 2023, the company entered a new credit agreement with a **$300 million term loan** and a **$100 million revolving facility**, used to pay off the previous 2014 Credit Agreement[56](index=56&type=chunk)[66](index=66&type=chunk) - The payoff of the 2014 Credit Agreement resulted in a **$3.5 million loss on debt extinguishment** from the write-off of deferred financing costs and original issuance discount[68](index=68&type=chunk)[148](index=148&type=chunk) - The estimated obligation for future payments under the Tax Receivable Agreement (TRA) totaled **$298.8 million** as of March 26, 2023, with an expected payment of **$6.3 million** related to tax year 2022 within 12 months[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 16.0% revenue growth in Q1 2023 to a 9.1% increase in same-restaurant sales and new restaurant contributions, improving Restaurant-Level Adjusted EBITDA Margin to 22.3% despite 8.9% commodity inflation, while also refinancing debt and planning nine new restaurant openings in 2023 [Financial Highlights and Recent Trends](index=35&type=section&id=Financial%20Highlights%20and%20Recent%20Trends) Total revenue grew 16.0% and same-restaurant sales increased 9.1% in Q1 2023, leading to a **$6.8 million** increase in Restaurant-Level Adjusted EBITDA to **$34.8 million**, despite ongoing **8.9%** commodity inflation, which the company addressed with menu price increases Financial Highlights | Financial Highlights | Q1 2023 | Change from Q1 2022 | | :--- | :--- | :--- | | Total Revenue | $156.1 million | +16.0% | | Same Restaurant Sales | +9.1% | N/A | | Operating Income | $8.5 million | +$1.7 million | | Net Loss | $(1.3) million | -$1.8 million | | Restaurant-Level Adjusted EBITDA* | $34.8 million | +$6.8 million | | Adjusted EBITDA* | $19.6 million | +$2.0 million | - Commodity inflation was **8.9%** for the quarter, compared to 15.7% in the prior year quarter, with the company estimating mid-single-digit commodity inflation for the full fiscal year 2023[114](index=114&type=chunk) - The company plans to open **nine new restaurants** in 2023[113](index=113&type=chunk) [Consolidated Results of Operations](index=38&type=section&id=Consolidated%20Results%20of%20Operations) Revenue increased by **$21.6 million** (16.0%) driven by a 9.1% rise in same-restaurant sales and new restaurant contributions, while labor expenses decreased to **25.9%** of revenue due to sales leverage, despite general and administrative expenses rising **19.7%** to **$18.8 million** - The **9.1%** increase in same-restaurant sales was driven by a **7.0%** increase in average check and a **2.1%** increase in transactions[123](index=123&type=chunk) - Labor as a percentage of revenue decreased by **1.8%**, primarily due to leverage from higher average check and transaction volumes, which offset wage rate increases[127](index=127&type=chunk) - Pre-opening expenses increased by **$1.8 million** to **$2.3 million** due to the timing and location of new restaurant openings[136](index=136&type=chunk) [Key Performance Indicators and Non-GAAP Financial Measures](index=44&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Financial%20Measures) Key metrics showed positive operational trends, with Average Unit Volume (AUV) increasing to **$8.7 million** and same-restaurant sales growing **9.1%**, leading to an improved Restaurant-Level Adjusted EBITDA Margin of **22.3%**, despite a slight decrease in Adjusted EBITDA Margin to **12.6%** Key Performance Indicators | Key Metrics | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total Restaurants | 75 | 70 | | AUV (in millions) | $8.7 | $8.3 | | Change in same-restaurant sales | 9.1% | 8.2% | | Adjusted EBITDA Margin | 12.6% | 13.1% | | Restaurant-Level Adjusted EBITDA Margin | 22.3% | 20.8% | - The Comparable Restaurant Base for calculating same-restaurant sales included **63 restaurants** for the quarter ended March 26, 2023[157](index=157&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 26, 2023, the company had **$14.6 million** in cash and **$85.6 million** available under its new **$100 million** revolving credit facility, with cash flow from operations expected to be sufficient for the next twelve months, despite a material **$298.8 million** Tax Receivable Agreement obligation - As of March 26, 2023, the company had **$14.6 million** in cash and cash equivalents and **$85.6 million** of availability under its 2023 Revolver Facility[169](index=169&type=chunk) - The company estimates its obligation for future payments under the TRA totaled **$298.8 million**, with a payment of **$6.3 million** related to tax year 2022 expected within the next 12 months[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes to its exposure to market risks compared to its 2022 Annual Report on Form 10-K disclosures - There have been no material changes to the company's exposure to market risks as described in its 2022 Annual Report on Form 10-K[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 26, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[196](index=196&type=chunk) - There were no changes to internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[197](index=197&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to various legal proceedings and claims arising in the normal course of business, with management believing their ultimate outcome will not materially affect the financial statements - The company is party to legal proceedings in the normal course of business but does not expect the outcomes to have a material effect on its financial statements[91](index=91&type=chunk)[199](index=199&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) The company highlights updated risk factors, including potential impacts from employment and labor laws, unionization activities, such as a recent vote at one commissary, and risks related to recent banking sector instability that could affect cash access or financing - On April 13, 2023, team members at one of the company's commissaries elected to be represented by a union, which could impact compensation arrangements and operating costs[204](index=204&type=chunk) - The company identified new risks related to the financial condition of U.S. banking organizations, noting that future bank failures could threaten its ability to access its cash and cash equivalents or secure financing[205](index=205&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2023, the company completed a secondary offering of **8,000,000** Class A common stock shares, from which Portillo's received no proceeds, as funds were used to purchase equity from pre-IPO members, increasing Class A shares and decreasing Class B shares outstanding - The company completed a secondary offering of **8,000,000** Class A shares, with proceeds used to purchase equity from pre-IPO members, resulting in no cash received by Portillo's Inc[207](index=207&type=chunk)[209](index=209&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[210](index=210&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[210](index=210&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) No other material information was reported - No other information was reported[212](index=212&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications required by the Sarbanes-Oxley Act

Portillo's Inc. (NASDAQ:PTLO) Q4 2022 Earnings Conference Call March 3, 2023 10:00 AM ET Company Participants Barbara Noverini - Investor Relations Michael Osanloo - President and Chief Executive Officer Michelle Hook - Chief Financial Officer Conference Call Participants Sara Senatore - Bank of America Sharon Zackfia - William Blair David Tarantino – Baird Brian Harbour - Morgan Stanley Dennis Geiger - UBS Andy Barish - Jefferies Chris O'Cull - Stifel Gregory Francfort - Guggenheim Securities Brian Mullan ...

Berkshire Partners Acquisition 2015 - December '22 CAGR 72 8.3% (1) 38 Restaurants 2014 2015 2016 2017 2018 2019 2020 2021 2022 FINANCIAL PROFILE $57 $30 2020 2021* 2022 10.5% 5.4% (7.7)% 2020 2021 2022 | --- | --- | |-----------------------------------|---------------------------------------| | | | | Unit Growth | 4 new openings in the "Class of 2022" | | | 9 new openings in the "Class of 2023" | | Commodity Inflation | Mid single digits | | General & Administrative Expenses | $72 - $77 million | | Pre-Ope ...

Cautionary Note Regarding Forward-Looking Information Forward-looking statements in this report are subject to risks and uncertainties, potentially causing actual results to differ [Forward-Looking Statements and Risks](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risks) This section outlines forward-looking statements, noting their inherent risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements that are subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[11](index=11&type=chunk)[12](index=12&type=chunk) - Key risks include potential future impact of COVID-19, organizational structure risks, food safety concerns, reliance on IT systems, competition, labor market challenges, regulatory impacts, growth strategy execution, increased operating costs, and supply shortages[11](index=11&type=chunk) - Forward-looking statements are identified by words such as 'aim,' 'anticipate,' 'believe,' 'estimate,' 'expect,' 'forecast,' 'future,' 'outlook,' 'potential,' 'project,' 'projection,' 'plan,' 'intend,' 'seek,' 'may,' 'could,' 'would,' 'will,' 'should,' 'can,' 'can have,' 'likely,' and similar expressions[12](index=12&type=chunk) Part I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) Portillo's Inc. was formed in 2021 for its IPO and related reorganization, operating 72 restaurants across nine states with a multichannel model - Portillo's Inc. was incorporated on June 8, 2021, for its IPO and related reorganization, becoming the sole managing member of Portillo's OpCo and consolidating its financial results[16](index=16&type=chunk) - In 2022, the Company completed two secondary offerings, using net proceeds to purchase LLC Units and Class A common stock from pre-IPO LLC Members and Blocker Companies, increasing Portillo's Inc.'s ownership in Portillo's OpCo to **67.0%**[19](index=19&type=chunk)[20](index=20&type=chunk) - As of December 25, 2022, Portillo's owned and operated **72 restaurants** across nine states, including a 50% equity interest in one restaurant[25](index=25&type=chunk) - The company's growth strategy aims to increase its restaurant count by approximately **10% annually** over the long term, focusing on markets outside Chicagoland with existing presence and favorable macro-economic tailwinds[41](index=41&type=chunk) - Portillo's employs a values-driven, people-centered culture, recognized as one of QSR Magazine's Best Brands to Work For in 2022, with a focus on leadership development, employee engagement, and competitive total rewards including an Employee Stock Purchase Plan (ESPP)[49](index=49&type=chunk)[55](index=55&type=chunk)[63](index=63&type=chunk) IPO Details (October 2021) | Metric | Value | | :-------------------------------- | :------------------- | | Shares of Class A Common Stock Sold | 23,310,810 | | Offering Price per Share | $20.00 | | Aggregate Net Proceeds | ~$430.0 million | | Underwriting Discounts and Commissions | $29.1 million | | Other Offering Expenses | ~$7.1 million | [ITEM 1A. RISK FACTORS](index=11&type=page&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant risks that could adversely affect Portillo's business, financial condition, and results of operations - The business is vulnerable to changes in economic conditions, increases in food and commodity costs (e.g., **15.2% inflation in 2022**), and shifts in consumer preferences, which could impact profitability and traffic[93](index=93&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk) - Achieving growth strategies, particularly opening new restaurants (aiming for **10% annual increase**), is subject to risks such as site availability, construction costs, and performance in new markets[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Significant competition in the restaurant industry, food safety incidents (e.g., E. coli report in 2021), and negative publicity pose risks to brand reputation, sales, and operating margins[114](index=114&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk) - The company's level of indebtedness (approximately **$322.4 million** as of December 25, 2022) could limit its ability to fund growth and operations, and variable interest rates expose it to interest rate fluctuations[152](index=152&type=chunk)[153](index=153&type=chunk) - Risks related to the organizational structure include potential conflicts of interest with Berkshire Private Equity, dependence on distributions from Portillo's OpCo, and substantial cash payments required under the Tax Receivable Agreement (estimated **$252.8 million** as of December 25, 2022)[162](index=162&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk) - Failure to protect intellectual property, security breaches in IT systems, and non-compliance with evolving privacy and data protection regulations could disrupt operations, harm reputation, and lead to financial losses[184](index=184&type=chunk)[185](index=185&type=chunk)[188](index=188&type=chunk)[195](index=195&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=35&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments from the SEC - No unresolved staff comments were reported[232](index=232&type=chunk) [ITEM 2. PROPERTIES](index=35&type=section&id=ITEM%202.%20PROPERTIES) Portillo's Inc. leases its home office in Oak Brook, IL, and operates 72 restaurants across nine states, along with two food production commissaries in Illinois - The home office is located at 2001 Spring Road, Suite 400, Oak Brook, IL 60523, and is leased[233](index=233&type=chunk) - As of December 25, 2022, the company operated **72 Portillo's restaurants** across nine states, including a restaurant owned by C&O (50% equity)[234](index=234&type=chunk) - The company operates two food production commissaries in Illinois and two non-traditional locations (a food truck and a ghost kitchen) in Chicago[234](index=234&type=chunk) Number of Restaurants by State (as of December 25, 2022) | State | Number of Restaurants | | :---------- | :-------------------- | | Arizona | 4 | | California | 2 | | Florida | 4 | | Illinois | 45 | | Indiana | 8 | | Iowa | 1 | | Michigan | 1 | | Minnesota | 3 | | Wisconsin | 4 | | **Total** | **72** | [ITEM 3. LEGAL PROCEEDINGS](index=36&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is incorporated by reference from Note 16, Contingencies, in the financial statements - Disclosure on legal proceedings is incorporated by reference from Part II, Item 8, "Financial Statements And Supplementary Data, Note 16. Contingencies"[237](index=237&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=36&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the company - This item is not applicable[238](index=238&type=chunk) Part II [ITEM 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities](index=37&type=section&id=ITEM%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) Portillo's Class A common stock trades on Nasdaq under 'PTLO', while Class B common stock is not listed, and no dividends are anticipated - Portillo's Class A common stock is traded on the Nasdaq Global Select Market under the symbol 'PTLO', while Class B common stock is not listed or traded[241](index=241&type=chunk) - As of February 23, 2023, there were approximately **30 shareholders of record** for Class A common stock and **14 for Class B common stock**[242](index=242&type=chunk) - No dividends have been declared or paid on common stock, and none are anticipated in the foreseeable future, with future decisions at the Board's discretion[243](index=243&type=chunk) - In Q3 and Q4 2022, the company completed secondary offerings of **8,066,458** and **8,000,000 Class A shares**, respectively, at **$23.75** and **$22.69 per share**, which facilitated the purchase of LLC Units and Class A shares from pre-IPO LLC Members[249](index=249&type=chunk)[250](index=250&type=chunk) Stock Performance Graph (October 21, 2021 - December 25, 2022) | | 10/21/2021 | 12/26/2021 | 4/1/2022 | 7/1/2022 | 10/1/2022 | 12/25/2022 | | :---------------- | :--------- | :--------- | :------- | :------- | :-------- | :--------- | | Portillo's Inc. | $100.00 | $131.75 | $82.10 | $57.53 | $67.66 | $59.0

◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ Depreciation and amortization Adjusted EBITDA Reconciliation Pre-opening expenses Restaurant-Level Adjusted EBITDA Reconciliation September 25, 2022 Other income, net Portillo's CAUTIONARY NOTE ON FORWARD-LOOKING 市计�rt�sefication from and roboting sticefieders, Nuthin finde néarfargya fring Prace Securities Entigles Englanthe Rt. of 1999年 PSS RAP, All Staclements office Program Pro statements of historical fact are forward-looking statements. Forward-booking statements discuss our current ...

Portillo's Inc. (NASDAQ:PTLO) Q3 2022 Results Conference Call November 3, 2022 10:00 AM ET Company Participants Barbara Noverini - Investor Relations Michael Osanloo - President and Chief Executive Officer Michelle Hook - Chief Financial Officer Conference Call Participants Andy Barish - Jefferies Sharon Zackfia - William Blair David Tarantino - Baird Gregory Francfort - Guggenheim Securities Nicole Miller - Piper Sandler Chris O'Cull - Stifel John Glass - Morgan Stanley Operator Greetings, and welcome to P ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 25, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 001-40951 PORTILLO'S INC. (Exact name of registrant as specified in its charter) Delaware 87-1104304 (State or other jurisdiction of incorpor ...

Financial Data and Key Metrics Changes - Total sales increased by 7.0% to $150.6 million in Q2 2022 compared to Q2 2021, driven by new restaurant openings and a 1.9% increase in same-restaurant sales [7][19] - Same-restaurant sales growth of 1.9% was primarily due to a 4.8% increase in average check, offset by a 5.6% decline in transactions [19] - Restaurant-level adjusted EBITDA decreased by 10.9% to $38.4 million, with margins at 25.5%, down from 30.6% in Q2 2021 [25][27] Business Line Data and Key Metrics Changes - Labor as a percentage of revenues increased to 25.2% in Q2 2022 from 24.5% in Q2 2021, driven by wage increases and new restaurant openings [23] - Cost of goods sold as a percentage of revenues rose to 34.4% in Q2 2022 from 30.0% in Q2 2021, largely due to a 15.2% average increase in commodity prices [21] Market Data and Key Metrics Changes - The company opened two new restaurants in the first half of 2022 and plans to open five more by the end of the year, maintaining a commitment to 10% new unit growth [15][16] - The brand's historical performance shows resilience across economic cycles, with a three-year geometric same-restaurant sales growth of 6.2% [20] Company Strategy and Development Direction - The company focuses on strategic price management, labor efficiency, and team member engagement to sustain profitability amid inflation and labor volatility [10][29] - Plans for new restaurant openings include locations in Florida, Texas, and Arizona, with a focus on high-visibility real estate [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of their approach, citing strong guest satisfaction scores and operational efficiencies [13][17] - The company anticipates continued challenges from commodity inflation and labor costs but remains focused on maintaining a strong value proposition for guests [11][24] Other Important Information - The company will hold its inaugural Investor Day on November 8, 2022, to share its growth story and engage with investors [5] - The company has locked in pricing on approximately 78% of its commodity basket for fiscal 2022 to mitigate risks from commodity price volatility [22] Q&A Session Summary Question: Sales trends and consumer behavior in Q2 - Management noted a positive performance in Q2 despite a tough comparison to the previous year, with a slight softening in consumer behavior observed [36][37] Question: Labor productivity and margin outlook - Management indicated that the efficiencies seen in Q2 are not expected to continue in the second half due to additional wage increases [39] Question: Value proposition and consumer ratings - Management highlighted that their overall satisfaction score is at a 24-month high, indicating strong consumer perception of value [47] Question: Development schedule and supply chain risks - Management confirmed that while there have been some delays, they are on track with their development schedule and are taking steps to mitigate risks [58] Question: Pricing strategy and consumer spending environment - Management emphasized their commitment to not discounting and maintaining a strong value proposition without compromising brand integrity [89][90]

Second Quarter Earnings Supplemental August 4, 2022 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future perf ...