Financial Data and Key Metrics Changes - In Q4 2025, revenues were $185.7 million, an increase of $1.1 million or 0.6% year-over-year [10] - Same-restaurant sales declined by 3.3%, resulting in a revenue decrease of approximately $5.4 million [10] - Restaurant-Level Adjusted EBITDA decreased by $4.7 million to $40.6 million, with margins dropping approximately 270 basis points to 21.8% [13] - General and administrative expenses decreased by $0.9 million to $19.4 million, or 10.5% of revenue [14] - Adjusted EBITDA was $24.7 million, a decrease of 2.1% compared to the prior year [15] Business Line Data and Key Metrics Changes - Non-comparable restaurants contributed $7.8 million to the total year-over-year revenue increase [10] - The Kennesaw restaurant opened in November and generated over $2 million in sales in its first eight weeks [4][10] - The company plans to open 8 new restaurants in 2026, with capital expenditures expected to be between $55 million and $60 million [17] Market Data and Key Metrics Changes - The Texas market expansion has been a headwind, impacting consolidated restaurant-level margins by 180 basis points in Q4 [13] - The company is focusing on improving labor management and profitability in lower-volume restaurants in Texas [8] Company Strategy and Development Direction - The company has reset its development strategy, slowing new store openings to focus on healthy unit economics [4] - The new approach involves separating new unit openings with more time and distance to build awareness and demand [7] - The Perks program has over 2 million members and is expected to drive traffic improvements in 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in the Texas market but is optimistic about the potential for future growth [4] - The company anticipates mid-single-digit commodity inflation, particularly in the beef category, impacting costs [12] - Management is focused on transaction growth rather than pricing increases to drive revenue [11] Other Important Information - The company ended the quarter with $20 million in cash and $334 million in net debt [17] - The effective tax rate for the year was 12.4%, down from 16.2% in 2024 [17] Q&A Session Summary Question: Kennesaw restaurant sales and future expectations - Management reported Kennesaw generated $3.8 million in sales in its first 100 days, with expectations of settling around $200,000 per week [22] Question: Clarification on EBITDA results in Texas - Management confirmed both margin expansion and profitability improvements were observed among Texas restaurants [25] Question: New growth strategy impact on hiring - The new strategy may lead to less efficient openings and challenges in distribution, but the trade-off is deemed acceptable [30] Question: Regional performance in comps - No significant gaps were observed between Chicagoland and outer markets, though Arizona faced some pressure due to cannibalization [33] Question: Consumer value proposition in Chicagoland - Improvement in value perception scores was noted, driven by promotional offers and operational focus [38] Question: Marketing spending expectations - A slight uptick in marketing spend is expected, focusing on an "always-on" approach rather than pulsing [86]

Financial Data and Key Metrics Changes - In Q4 2025, revenues were $185.7 million, an increase of $1.1 million or 0.6% year-over-year [11] - Same-restaurant sales declined by 3.3%, resulting in a revenue decrease of approximately $5.4 million [11] - Restaurant-Level Adjusted EBITDA decreased by $4.7 million to $40.6 million, with margins dropping approximately 270 basis points to 21.8% [14] - General and administrative expenses decreased by $0.9 million to $19.4 million, or 10.5% of revenue [15] - Cash from operations decreased by 26.7% year-over-year to $71.9 million [18] Business Line Data and Key Metrics Changes - Non-comp restaurants contributed $7.8 million to the total year-over-year revenue increase during the quarter [11] - The average check remained flat, with a 2.3% increase in net effective menu prices offset by a 2.3% decrease in product mix [11] Market Data and Key Metrics Changes - The Texas market expansion continued to be a headwind for the business, impacting consolidated restaurant-level margins by 180 basis points in Q4 [14] - The Kennesaw restaurant in Atlanta opened in November and generated over $2 million in sales in its first eight weeks [5][6] Company Strategy and Development Direction - The company has reset its development strategy, slowing new store openings and focusing on healthy unit economics [5] - Future growth strategy includes entering new markets with a focus on building awareness and demand before opening subsequent restaurants [8] - The Perks program has over 2 million members and is expected to drive traffic improvements in 2026 [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the Texas market but expressed confidence in the brand's future [10] - The company anticipates mid-single-digit commodity inflation, particularly in the beef category, impacting costs [12] - For 2026, the company expects to open 8 new restaurants and total capital expenditures in the range of $55 million-$60 million [18] Other Important Information - The company experienced a 4% increase in commodity prices, impacting food, beverage, and packaging costs as a percentage of revenues [12] - Interest expense decreased to $5.7 million due to a lower effective interest rate [17] Q&A Session Summary Question: Kennesaw restaurant sales and future expectations - Management confirmed Kennesaw generated $3.8 million in sales over its first 100 days and does not expect it to reach $14 million [23] Question: EBITDA growth and margin expansion in Texas - Management indicated both margin expansion and profitability improvements were observed in Texas restaurants [26] Question: New growth strategy impact on hiring and operations - The new strategy may lead to less efficient new openings but is expected to improve long-term performance [31] Question: Regional performance and comp analysis - Arizona faced pressure due to cannibalization from a new restaurant, but overall performance was consistent across markets [33] Question: Consumer value proposition in Chicagoland - Improvement in value perception scores was noted, driven by promotional offers and operational focus [38] Question: Marketing strategy and spending - A slight uptick in marketing spend is expected, focusing on an "always-on" approach rather than pulsing [87] Question: Mix and transaction growth - The company is addressing mix headwinds through initiatives like kiosks to improve ticket size [90]

Financial Data and Key Metrics Changes - In Q4 2025, revenues were $185.7 million, an increase of $1.1 million or 0.6% year-over-year. The revenue growth was driven by non-comp restaurants, contributing $7.8 million to the total increase, while same-restaurant sales declined by 3.3%, resulting in a revenue decrease of approximately $5.4 million [10][11] - Average check remained flat, with a 2.3% increase in net effective menu prices offset by a 2.3% decrease in product mix [10] - Restaurant-Level Adjusted EBITDA decreased by $4.7 million to $40.6 million, with margins dropping approximately 270 basis points to 21.8% [13][14] - General and administrative expenses decreased by $0.9 million to $19.4 million, or 10.5% of revenue [14] Business Line Data and Key Metrics Changes - The Texas market expansion continued to be a headwind, impacting overall performance, while the new restaurant in Kennesaw, Atlanta, opened with over $2 million in sales in its first eight weeks [4][10] - The company is focusing on a new development strategy, slowing new store openings to emphasize healthy unit economics [4][5] Market Data and Key Metrics Changes - The company reported a decline in same-restaurant sales, primarily due to a decrease in transactions [10] - The Arizona market experienced pressure due to cannibalization from a new restaurant opening [31] Company Strategy and Development Direction - The company is adopting a more measured pace of new restaurant growth, emphasizing unit economics and return on investment [15] - The strategy includes leveraging the Perks program to drive traffic and improve customer engagement [6][18] - The company plans to open 8 new restaurants in 2026, with capital expenditures estimated between $55 million and $60 million [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the Texas market but expressed confidence in the potential for improvement through targeted actions [12][14] - The company anticipates mid-single-digit commodity inflation and is focused on transaction growth rather than pricing [11][18] - Management is optimistic about the Perks program's role in driving traffic improvements in 2026 [6][18] Other Important Information - The company ended the quarter with $20 million in cash and a total net debt of $334 million [17] - The effective tax rate for the year was 12.4%, down from 16.2% in 2024, primarily due to changes in equity ownership and effective state tax rates [17] Q&A Session Summary Question: Can you provide insights on the Kennesaw restaurant's performance? - The Kennesaw restaurant achieved $3.8 million in sales over its first 100 days, with expectations of settling around $200,000 per week [21][22] Question: What are the implications of the new growth strategy on hiring? - The new strategy may lead to less efficient openings and challenges in distribution and oversight, but the trade-off is considered worthwhile [28] Question: How is the company addressing value perception in the Chicagoland area? - The company has seen improvements in value perception scores due to targeted promotions and operational focus on guest experience [36][39] Question: What are the priorities for the new CMO in 2026? - The new CMO will focus on driving traffic, particularly in Texas, and enhancing the Perks program to increase customer engagement [46][48] Question: How does the company plan to manage pricing and commodity inflation? - The company expects to face mid-single-digit commodity inflation and is cautious about relying on pricing increases, focusing instead on transaction growth [11][64]

Fourth Quarter Earnings Supplemental February 24, 2026 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES • risks related to or arising from our organizational structure; • risks of food-borne illness and food safety and other health concerns about our food; • risks relating to the economy and financial markets, including in relation to trade and tax policy changes and other macroeconomic uncertainty, including inflation, fluctuating interest rates, stock market volatility, recession concerns ...

Core Insights - Portillo's Inc. reported a 0.6% increase in total revenue for the fourth quarter, reaching $185.7 million, while fiscal 2025 total revenue rose by 3% [1] - Same-restaurant sales decreased by 3.3%, and operating income fell to $10.3 million, a decline of $3.5 million; Adjusted EBITDA was $24.7 million, down by $0.5 million [1] - The company experienced growth driven by new restaurant openings, but faced a 4% increase in commodity costs and higher labor and benefits investments [2] Strategic Initiatives - Portillo's implemented a reset of its new restaurant growth strategy in the fourth quarter, focusing on operational fundamentals and dynamic marketing tactics [3] - The company expressed optimism about early results from these initiatives and anticipates further improvements in 2026 under the new CEO Brett Patterson [3]

Business Operations and Growth - As of fiscal year 2025, Portillo's owned and operated 102 restaurants across 11 states, with a 95.4% ownership of Portillo's OpCo[18]. - In fiscal 2025, Portillo's opened eight new restaurants, continuing to pursue growth with a focus on four-wall returns and gradual market entry[31]. - The company has a team member base of 7,890 as of December 28, 2025, including 478 restaurant managers and 7,118 hourly team members[33]. - The company operates two commissaries to ensure product consistency and quality for its signature menu items[54]. - Approximately 66% of the company's restaurants are located in the Midwestern United States, with 42% in the Chicagoland area, indicating a significant geographic concentration that may expose the company to regional economic fluctuations[86]. - The company operates 102 restaurants across 11 states, with a significant presence in Illinois, which has 50 locations[198]. Marketing and Customer Engagement - The Portillo's Perks loyalty program, launched in March 2025, amassed over 2 million members by the end of 2025, driving repeat visits and brand engagement[28]. - Portillo's marketing efforts in fiscal 2025 included targeted advertising in core markets and pre-opening initiatives for new locations, particularly in Georgia[29]. - The company has invested in marketing to promote delivery partnerships, which could negatively impact profitability if the delivery channel does not continue to expand[92]. Financial Performance and Risks - The company experienced 3.9% and 4.2% commodity price inflation for the years ended December 28, 2025, and December 29, 2024, respectively[67]. - Same-restaurant sales are critical to profitability, and any decrease could have a material adverse effect on the company's results[77]. - The company’s growth strategy depends on cash flows from operations, which may not be sufficient to meet capital expenditure needs[75]. - The company’s indebtedness may limit cash flow available for working capital, capital expenditures, and growth strategies, potentially impacting overall business operations[122]. - The Tax Receivable Agreement (TRA) requires substantial cash payments equal to 85% of certain tax benefits, which could significantly reduce available cash flow[131]. - The company’s quarterly results may fluctuate, and performance may not meet public guidance or investor expectations, leading to a decline in stock price[178]. Competition and Market Environment - The restaurant industry is highly competitive, with competition based on quality, innovation, price, and service experience[56]. - The company faces intense competition from both national and local restaurants, which could adversely affect traffic, sales, and operating profit margins if it cannot compete effectively[84]. - The reliance on a limited number of suppliers for key ingredients poses a risk of supply shortages and increased costs if contractual obligations are not met[94]. Regulatory and Compliance Issues - The company is subject to various governmental regulations, including those related to public health, safety, and employment, which could impact operations[59]. - The company is subject to various federal, state, and local laws and regulations, including those related to food safety, which could result in costly modifications to operations if compliance is not met[153]. - Compliance with current and future laws regarding nutritional disclosures may be costly and time-consuming, potentially impacting operations and reputation[154]. - Changes in labor laws and regulations could increase operating costs and adversely affect financial results[103]. Labor and Team Member Relations - Labor shortages and increased labor costs could adversely affect results, as competition for qualified team members may require higher wages and enhanced benefits[109]. - The company is currently involved in litigation regarding union representation at its commissaries, which could disrupt operations and increase costs if a significant number of team members unionize[108]. - Portillo's achieved a record 91% participation rate in its annual engagement survey, indicating strong team member engagement levels[41]. Food Safety and Quality Assurance - Food safety is a top priority, and incidents could negatively impact the brand and reputation, affecting sales[81]. - The company engages in regular audits for food safety and quality compliance across its restaurants and commissaries[55]. Technology and Cybersecurity - The company completed the implementation of a new ERP system in 2024 and a new Human Capital Management (HCM) system in 2025, which required significant investment in personnel and financial resources[138]. - The company has experienced attempts to compromise its information technology systems, some of which have been successful but not material, indicating a need for ongoing investment in security measures[140]. - Cybersecurity risks are managed through a comprehensive strategy, including third-party vendor assessments and internal system protections[182]. - The company maintains a cybersecurity insurance policy deemed appropriate for its size and risk profile, although it may not fully cover costs associated with a cybersecurity incident[191]. Environmental and Social Responsibility - The company may face increased costs and reputational harm due to pressures related to environmental sustainability and social initiatives[118]. - Natural disasters and unusual weather conditions could disrupt operations, leading to lower sales and increased operating costs[117]. - Environmental laws may increase operating expenses and expose the company to liabilities related to hazardous materials[161]. Corporate Governance and Structure - The company’s organizational structure may impede potential takeovers, which could deprive investors of premium opportunities[125]. - The company incurs significant costs to comply with public company regulations, which may divert management's attention and increase operational costs[163].

Financial Performance - Total revenue for Q4 2025 was $185.7 million, an increase of 0.6% or $1.1 million compared to Q4 2024[3] - Same-restaurant sales decreased by 3.3%, resulting in a decline of $5.4 million in revenue for the quarter[3] - Operating income for Q4 2025 was $10.3 million, a decrease of 25.3% or $3.5 million compared to Q4 2024[9] - Net income for Q4 2025 was $6.3 million, down 49.5% or $6.2 million from Q4 2024[10] - Restaurant-Level Adjusted EBITDA for Q4 2025 was $40.6 million, a decrease of 10.3% or $4.7 million compared to Q4 2024[11] - Total revenue for fiscal 2025 was $732.1 million, an increase of 3.0% or $21.5 million compared to fiscal 2024[13] - Same-restaurant sales for fiscal 2025 decreased by 0.5%, resulting in a decline of $2.9 million[13] - Operating income for fiscal 2025 was $43.7 million, a decrease of 24.8% or $14.4 million compared to fiscal 2024[16] - Net income for the fiscal year ended December 28, 2025, was $21,092, a decrease of 40% compared to $35,076 in the previous year[42] - Adjusted EBITDA for the fiscal year was $97,331, down from $104,760, reflecting a decline of 7.4%[43] - Net income for Q4 2025 was $6,277,000, representing a net income margin of 3.4%, compared to $12,429,000 and 6.7% in Q4 2024[53] - Adjusted EBITDA for fiscal year 2025 was $97,331,000, with an Adjusted EBITDA margin of 13.3%, down from $104,760,000 and 14.7% in fiscal year 2024[53] - Operating income for Q4 2025 was $10,331,000, with an operating income margin of 5.6%, compared to $13,833,000 and 7.5% in Q4 2024[57] - Restaurant-Level Adjusted EBITDA for fiscal year 2025 was $158,402,000, with a Restaurant-Level Adjusted EBITDA margin of 21.6%, down from $168,114,000 and 23.7% in fiscal year 2024[57] Expansion and Growth - The company opened eight new restaurants in fiscal 2025, bringing the total to 102[19] - Fiscal 2026 outlook includes the opening of 8 new units and a restaurant-level adjusted EBITDA margin target of 20.5% to 21%[21] - Portillo's continues to expand its restaurant footprint, operating over 100 locations across 11 states, with plans for further growth in new markets[30] Operational Costs and Expenses - Total restaurant operating expenses for the quarter were $145.171 million, accounting for 78.2% of net revenues, compared to 75.5% in the prior year, indicating an increase in operational costs[38] - General and administrative expenses for fiscal year 2025 totaled $77,140,000, compared to $75,089,000 in fiscal year 2024[57] - Depreciation and amortization for Q4 2025 was $7,623,000, up from $6,568,000 in Q4 2024[57] - Interest expense for fiscal year 2025 was $22,808,000, down from $25,616,000 in fiscal year 2024[53] - Strategic realignment costs in fiscal year 2025 amounted to $6,474,000, including $4.4 million related to the company's strategic reset[56] - The company incurred a loss on disposal of property and equipment, along with impairment charges totaling $2,635,000 in fiscal year 2025[55] Financial Position - Total assets increased to $1,606,534, up from $1,500,086, representing a growth of 7.1% year-over-year[40] - Total current liabilities rose to $193,956, an increase of 43% from $135,569 year-over-year[40] - Cash and cash equivalents at the end of the period were $19,963, down from $22,876, a decrease of 12.5%[42] - Long-term debt, net of current portion, decreased to $237,977 from $275,422, a reduction of 13.6%[40] - Total stockholders' equity attributable to Portillo's Inc. increased to $467,797, up from $401,061, a growth of 16.6%[40] Customer Engagement and Market Adaptation - The company emphasizes its loyalty program, Portillo's Perks, which enhances customer engagement and retention through rewards and exclusive offers[31] - Portillo's is focused on enhancing its digital ordering and delivery platforms, which are critical for adapting to changing consumer preferences and market conditions[35] Risks and Challenges - The company faces various risks, including economic uncertainties, competition, and operational challenges, which could impact future performance and growth strategies[35]

Core Insights - Portillo's Inc. reported a slight revenue increase of 0.6% in Q4 2025 compared to Q4 2024, driven by new restaurant openings, despite a decline in same-restaurant sales [6][10][14] - The company is implementing a new restaurant growth strategy and focusing on operational fundamentals and marketing tactics to improve performance in 2026 [5][23] - Fiscal 2025 saw a total revenue increase of 3.0% year-over-year, but same-restaurant sales decreased by 0.5% [10][14] Fourth Quarter 2025 Performance Highlights - Revenues reached $185.7 million, up from $184.6 million in Q4 2024, an increase of $1.1 million or 0.6% [6][10] - Same-restaurant sales decreased by 3.3%, equating to a $5.4 million decline, primarily due to a 3.3% decrease in transactions [6][10] - Operating income fell to $10.3 million, down 25.3% from $13.8 million in Q4 2024 [9][10] - Net income for the quarter was $6.3 million, a decrease of 49.5% from $12.4 million in Q4 2024 [11][10] - Restaurant-Level Adjusted EBITDA decreased by 10.3% to $40.6 million [12][10] Fiscal 2025 Performance Highlights - Total revenue for fiscal 2025 was $732.1 million, an increase of $21.5 million or 3.0% from $710.6 million in fiscal 2024 [14][10] - Same-restaurant sales decreased by 0.5%, attributed to a 2.5% decrease in transactions, partially offset by a 2.0% increase in average check [14][10] - Operating income for the year was $43.7 million, down 24.8% from $58.0 million in fiscal 2024 [17][10] - Net income for fiscal 2025 was $21.1 million, a decrease of 39.9% from $35.1 million in fiscal 2024 [18][10] - Restaurant-Level Adjusted EBITDA for the year was $158.4 million, down 5.8% from $168.1 million in fiscal 2024 [19][10] Development Highlights - In fiscal 2025, Portillo's opened eight new restaurants, bringing the total to 102 [21][10] - The new restaurant openings included a smaller prototype designed to reduce costs and improve service efficiency [21][10] - As of the filing date, the total restaurant count increased to 104 with two additional openings post-December 28, 2025 [21][10] Fiscal 2026 Outlook - The company plans to open eight new units in fiscal 2026 and anticipates mid-single-digit commodity inflation and labor inflation of 3% to 3.5% [23][10] - The target for restaurant-level adjusted EBITDA margin is set between 20.5% and 21% [23][10] - General and administrative expenses are projected to be between $80 million and $82 million [23][10]

Core Insights - Portillo's has appointed Brett Patterson as President and CEO, effective February 23, 2026, who will also join the Board of Directors [1] - Patterson has extensive leadership experience in the restaurant industry, focusing on operations, team development, and sustainable growth [2] - The Board believes Patterson possesses the necessary qualities to lead Portillo's into its next growth phase while maintaining the brand's unique identity [3] Company Overview - Portillo's is a fast-casual restaurant chain based in Chicago, known for its Italian beef sandwiches, Chicago-style hot dogs, and other menu items, with over 100 locations across 11 states [5] - The company operates a model that combines dine-in, drive-thru, takeout, and delivery, aiming to provide an experience-focused dining environment [5] - Portillo's is committed to expanding its brand and bringing its iconic food to a wider audience across the country [5] Leadership Vision - Patterson aims to enhance the company's overall strategy, focusing on market positioning, new restaurant growth, and operational excellence [3] - He emphasizes the importance of investing in team members and improving the guest experience as part of the company's growth strategy [3][4] - Patterson expresses excitement about joining Portillo's, highlighting the brand's strong culture and passionate fan base [4]

Company Overview - Portillo's, Inc. (NASDAQ: PTLO) has expanded from a small hot dog trailer in Chicago to over 100 restaurants across 11 states, offering a unique menu that includes Italian beef sandwiches, Chicago-style hot dogs, char-broiled burgers, fresh salads, and chocolate cake [2] Upcoming Earnings Event - Portillo's will host a Q4 & FY 2025 Earnings Webcast on February 24 at 10 a.m. EST, with the earnings release scheduled to be published before market open on the same day [1]