Q1 2025 Performance - Total revenue reached $1764 million, a 64% increase compared to Q1 2024[7, 29] - Same-restaurant sales (SRS) grew by 18% in Q1 2025[7] - Net income attributable to Portillo's Inc was $3313 million, compared to $4562 million in the same quarter last year[28] - Restaurant-Level Adjusted EBITDA was $36656 million with a margin of 208%[7, 32] Fiscal 2025 Financial Targets - The company plans to open 12 new units[9, 12] - Same-restaurant sales are projected to grow by 1% to 3%[12] - Revenue growth is targeted at 10% to 12%[12] - Adjusted EBITDA growth is expected to be 5% to 8%[12] Long-Term Growth Algorithm - The company aims for low single-digit growth in same-restaurant sales[16] - Annual unit growth is targeted at 12% to 15%[16] - Revenue growth is projected in the low teens[16] - Adjusted EBITDA growth is expected in the mid-teens[16]

Financial Performance - Portillo's Inc. reported quarterly earnings of $0.05 per share, exceeding the Zacks Consensus Estimate of $0.04 per share, but down from $0.08 per share a year ago, representing an earnings surprise of 25% [1] - The company posted revenues of $176.44 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.57%, compared to $165.83 million in the same quarter last year [2] - Over the last four quarters, Portillo's has surpassed consensus EPS estimates three times and topped revenue estimates only once [2] Stock Performance - Portillo's shares have increased approximately 10.6% since the beginning of the year, while the S&P 500 has declined by 3.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $199.89 million, and for the current fiscal year, it is $0.35 on revenues of $791.92 million [7] Industry Outlook - The Retail - Restaurants industry, to which Portillo's belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Portillo's stock performance [5][6]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 reached $176.4 million, reflecting an increase of $10.6 million or 6.4% compared to the previous year [16] - Same restaurant sales increased by 1.8%, contributing approximately $2.6 million to revenue growth [17] - Restaurant level adjusted EBITDA was $36.7 million with a margin of 20.8%, a decrease of 110 basis points from the previous year [24] - Adjusted EBITDA decreased by 2.6% to $21.2 million compared to Q1 2024 [25] - General and administrative expenses increased to $18.9 million, representing 10.7% of revenue [25] Business Line Data and Key Metrics Changes - New restaurants not in the comparable base contributed $7.9 million to revenue growth [16] - The average check increased by 4.9%, driven by a 4.4% increase in menu prices [17] - Labor costs as a percentage of revenues increased to 26.6% due to lower transactions and increased wage rates [22] Market Data and Key Metrics Changes - The Dallas Fort Worth advertising campaign increased brand awareness by about 10% and drove high single-digit sales increases in that region [8] - Newer markets remain vulnerable until brand awareness is established, as seen in Houston [36] Company Strategy and Development Direction - The company plans to open 12 new restaurants in 2025, with 10 in the new Restaurant of the Future format [14] - The Portillo's Perks loyalty program aims to enhance customer engagement through personalized offers [9] - The company is focusing on operational excellence, including hospitality, speed, and accuracy [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic pressures but expressed confidence in the brand's resilience and strategies [15] - The company expects comp sales growth to be in the range of 1% to 3% for the remainder of the year [19] - Commodity inflation is forecasted at 3% to 5% for 2025, with significant pressures from beef prices [21] Other Important Information - Cash from operations increased by 4.1% year over year to $9.5 million [28] - The effective interest rate decreased to 7% from 8.4% in 2024 [26] Q&A Session Summary Question: Concerns about new restaurant performance in Houston - Management indicated that the slower performance is due to brand awareness issues rather than operational problems, and they are increasing marketing efforts to build awareness [36] Question: Impact of recent openings on revenue guidance - The widening of the revenue range is primarily related to the class of '24 openings rather than expectations for '25 [38] Question: Update on breakfast test in Chicago - The breakfast test is being conducted quietly to ensure operational execution, with plans for broader marketing if successful [42][86] Question: Performance of new units and marketing strategies - Management noted that marketing efforts were less aggressive in Houston compared to Dallas, which contributed to slower initial performance [94] Question: Insights on the Portillo's Perks program - Initial metrics indicate strong guest responsiveness to offers, exceeding internal expectations [104]

[Part I: Financial Information](index=6&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the quarter ended March 30, 2025, reflect revenue growth, a decline in net income, stable total assets, and increased cash utilization for investing activities [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 30, 2025, total assets remained stable at approximately **$1.50 billion**, with a decrease in cash and a slight reduction in total liabilities, while stockholders' equity increased Balance Sheet Summary (As of March 30, 2025 vs. Dec 29, 2024) | (In thousands) | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,936 | $22,876 | | Total current assets | $41,857 | $52,651 | | **Total Assets** | **$1,499,296** | **$1,500,086** | | Total current liabilities | $165,910 | $135,569 | | Total long-term liabilities | $837,980 | $874,414 | | **Total Liabilities** | **$1,003,890** | **$1,009,983** | | **Total Stockholders' Equity** | **$495,406** | **$490,103** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the quarter ended March 30, 2025, revenues increased by **6.4%** to **$176.4 million**, but net income and diluted EPS declined despite a slight rise in operating income Condensed Consolidated Statement of Operations (Q1 2025 vs Q1 2024) | (In thousands) | Quarter Ended March 30, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | **REVENUES, NET** | **$176,437** | **$165,831** | | Total restaurant operating expenses | $139,781 | $129,460 | | OPERATING INCOME | $10,381 | $10,097 | | INCOME BEFORE INCOME TAXES | $5,350 | $4,207 | | **NET INCOME** | **$3,990** | **$5,344** | | NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. | $3,313 | $4,562 | | **Diluted EPS** | **$0.05** | **$0.08** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash from operating activities slightly increased, while cash used in investing activities grew, and financing activities shifted from providing to using cash Cash Flow Summary (Q1 2025 vs Q1 2024) | (In thousands) | Quarter Ended March 30, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,450 | $9,077 | | Net cash used in investing activities | $(19,040) | $(16,939) | | Net cash (used in) provided by financing activities | $(350) | $10,608 | | **Net (decrease) increase in cash** | **$(9,940)** | **$2,746** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail business operations, revenue recognition, debt structure, and subsequent events, including a new loyalty program, credit agreement amendment, and a cooperation agreement with an activist investor - The company launched a new app-less loyalty program, **Portillo's Perks™**, on March 3, 2025, with the liability for this program being **immaterial** as of March 30, 2025[41](index=41&type=chunk)[42](index=42&type=chunk) - On January 27, 2025, the company amended its credit agreement, resulting in a new **$250 million term loan** and an increased **$150 million revolving credit facility**, both maturing in 2030[58](index=58&type=chunk)[59](index=59&type=chunk) - The effective income tax rate was **25.4%** for Q1 2025, a significant increase from **(27.0)%** in Q1 2024, primarily due to lapping a prior year reduction in the valuation allowance[78](index=78&type=chunk) - On April 28, 2025, the company entered into a **cooperation agreement** with Engaged Capital, LLC, agreeing to reimburse Engaged Group's expenses up to **$300,000**[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025 revenue growth to new restaurants and same-restaurant sales, despite inflationary pressures, and plans to drive traffic, improve efficiency, and open 12 new restaurants in 2025 Financial Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $176.4M | $165.8M | +6.4% | | Same-Restaurant Sales | +1.8% | -1.2% | N/A | | Operating Income | $10.4M | $10.1M | +2.9% | | Net Income | $4.0M | $5.3M | -24.5% | | Adjusted EBITDA* | $21.2M | $21.8M | -2.7% | - The company plans to open **12 new restaurants** in fiscal 2025, with a focus on the **Sunbelt region**, including entering the Atlanta, GA and San Antonio, TX markets[109](index=109&type=chunk) [Consolidated Results of Operations](index=34&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2025 saw a **6.4%** increase in total revenue driven by new restaurants and same-restaurant sales, but profitability was pressured by rising operating expenses, leading to a decline in net income - Revenue for Q1 2025 increased **6.4%** to **$176.4 million**, driven by **ten new restaurants** opened in 2024 and a **1.8%** increase in same-restaurant sales[113](index=113&type=chunk) - The **1.8%** same-restaurant sales increase was composed of a **4.9%** increase in average check (driven by a **4.4%** price increase and **0.5%** mix shift), partially offset by a **3.1%** decrease in transactions[113](index=113&type=chunk) - Food, beverage and packaging costs increased **7.3%** to **$61.1 million**, representing **34.6%** of revenue, up from **34.3%** YoY, due to a **3.4%** increase in commodity prices[116](index=116&type=chunk) - Labor expenses increased **8.2%** to **$46.9 million**, representing **26.6%** of revenue, up from **26.1%** YoY, due to lower transactions, higher benefit expenses, and wage rate increases[118](index=118&type=chunk) [Selected Operating Data and Non-GAAP Financial Measures](index=41&type=section&id=Selected%20Operating%20Data%20and%20Non-GAAP%20Financial%20Measures) Q1 2025 key performance indicators showed mixed results, with same-restaurant sales growth, but a decrease in AUV and a slight decline in Adjusted EBITDA and Restaurant-Level Adjusted EBITDA margins Key Performance Indicators (Q1 2025 vs Q1 2024) | | Quarter Ended March 30, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Total Restaurants | 94 | 85 | | AUV (in millions) | $8.7 | $9.0 | | Change in same-restaurant sales | 1.8% | (1.2)% | | Adjusted EBITDA Margin | 12.0% | 13.1% | | Restaurant-Level Adjusted EBITDA Margin | 20.8% | 21.9% | Adjusted EBITDA Reconciliation (in thousands) | | Quarter Ended March 30, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $3,990 | $5,344 | | Depreciation and amortization | $7,040 | $6,944 | | Interest expense | $5,749 | $6,530 | | Income tax expense (benefit) | $1,360 | $(1,137) | | Other adjustments | $3,129 | $4,173 | | **Adjusted EBITDA** | **$21,209** | **$21,777** | Restaurant-Level Adjusted EBITDA Reconciliation (in thousands) | | Quarter Ended March 30, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Operating income | $10,381 | $10,097 | | General and administrative expenses | $18,903 | $18,540 | | Pre-opening expenses | $508 | $1,423 | | Depreciation and amortization | $7,040 | $6,944 | | Other adjustments | $(176) | $(633) | | **Restaurant-Level Adjusted EBITDA** | **$36,656** | **$36,371** | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 30, 2025, the company's liquidity includes **$12.9 million** in cash and **$71.7 million** from its revolver facility, following a debt refinancing, with a significant Tax Receivable Agreement obligation - Primary liquidity sources as of March 30, 2025, include **$12.9 million** in cash and **$71.7 million** available under the 2025 Revolver Facility[161](index=161&type=chunk) - The company estimates its future payment obligation under the Tax Receivable Agreement (TRA) to be **$316.2 million** as of March 30, 2025[168](index=168&type=chunk) - A TRA payment of **$7.7 million** was made in Q1 2025 for tax year 2023, and a payment of **$9.0 million** for tax year 2024 is expected within the next 12 months[168](index=168&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure since the disclosures in its most recent Annual Report on Form 10-K - There have been **no material changes** to the company's market risk exposure as described in the most recent Annual Report on Form 10-K[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of the end of the reporting period[185](index=185&type=chunk) - **No material changes** to internal control over financial reporting were identified during the quarter[186](index=186&type=chunk) [Part II: Other Information](index=50&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management believes their ultimate outcome will not materially affect the financial statements - Information regarding legal proceedings is **incorporated by reference** from Note 13. Contingencies[188](index=188&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have been reported since the latest Annual Report on Form 10-K - **No material changes** to the risk factors from the latest Form 10-K are reported[189](index=189&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) Director Gerard J. Hart adopted a Rule 10b5-1 trading plan on March 14, 2025, allowing for the potential sale of up to **29,821 shares** of common stock - Director Gerard J. Hart adopted a **Rule 10b5-1 trading plan** on March 14, 2025, for the potential sale of up to **29,821 shares**[193](index=193&type=chunk)

Financial Performance Overview [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Portillo's Q1 2025 results were mixed, with slight revenue and operating income increases, but declining net income and Adjusted EBITDA | Financial Metric | Q1 2025 | Change vs. Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $176.4 million | +6.4% | | Same-Restaurant Sales | +1.8% | N/A | | Operating Income | $10.4 million | +$0.3 million | | Net Income | $4.0 million | -$1.4 million | | Restaurant-Level Adjusted EBITDA | $36.7 million | +$0.3 million | | Adjusted EBITDA | $21.2 million | -$0.6 million | - CEO Michael Osanloo stated the team performed well through challenging macro conditions, driven by the launch of Portillo's Perks and marketing. The company is carrying momentum into Q2 and remains confident in driving traffic and sales[3](index=3&type=chunk) [First Quarter 2025 Detailed Financial Results](index=1&type=section&id=First%20Quarter%202025%20Detailed%20Financial%20Results) Total revenue grew **6.4%** to **$176.4 million**, driven by new restaurants and same-restaurant sales, but rising expenses and taxes led to a net income decrease - Total revenue increased by **$10.6 million (6.4%)**, with **$7.9 million** from new restaurants and **$2.6 million** from a **1.8%** increase in same-restaurant sales[6](index=6&type=chunk) - The **1.8%** same-restaurant sales growth was driven by a **4.9%** increase in average check (from menu price hikes and product mix), which was partially offset by a **3.1%** decrease in transactions[6](index=6&type=chunk)[9](index=9&type=chunk) - Total restaurant operating expenses increased by **8.0%** to **$139.8 million**, driven by new restaurant openings, a **3.4%** increase in commodity prices, and higher labor expenses[10](index=10&type=chunk) - Net income decreased by **$1.4 million (25.3%)** to **$4.0 million**, primarily due to a **$2.5 million** increase in income tax expense, which was partially offset by higher operating income and lower interest expense[13](index=13&type=chunk) - Adjusted EBITDA decreased by **2.6%** to **$21.2 million**, while Restaurant-Level Adjusted EBITDA increased slightly by **0.8%** to **$36.7 million**[14](index=14&type=chunk) Business Operations and Strategy [Recent Developments and Strategic Initiatives](index=1&type=section&id=Recent%20Developments%20and%20Strategic%20Initiatives) Strategic initiatives include loyalty program launch, expanded advertising, operational improvements, and menu price adjustments, alongside breakfast menu testing - Key traffic-driving strategies for 2025 include: - Launch of the 'Portillo's Perks' loyalty program - Advertising beyond the Chicagoland area - Operational improvements in speed, accuracy, and hospitality - Driving kiosk usage[6](index=6&type=chunk) - The company is testing a breakfast menu at **five locations** in Chicagoland, an initiative that began early in the second quarter[6](index=6&type=chunk) - To address cost pressures, menu prices were increased by approximately **1.5%** in January 2025 and an additional **1.0%** in April 2025[4](index=4&type=chunk)[9](index=9&type=chunk) [Restaurant Development](index=3&type=section&id=Restaurant%20Development) No new restaurants opened in Q1 2025, but 12 new units are planned for the year, focusing on Sunbelt expansion, new markets, and a walk-up format - No new restaurants were opened during the first quarter ended March 30, 2025[16](index=16&type=chunk) - The company plans to open **12 new restaurants** in fiscal 2025, with a focus on the Sunbelt (primarily Texas) and new market entries in Atlanta and San Antonio in the second half of the year[17](index=17&type=chunk) - The first walk-up restaurant format is planned to open later in 2025[17](index=17&type=chunk) Outlook and Guidance [Fiscal 2025 Financial Targets](index=4&type=section&id=Fiscal%2025%20Financial%20Targets) Portillo's updated fiscal 2025 targets, raising same-restaurant sales growth, narrowing revenue growth, and lowering G&A expenses, with other targets unchanged | Metric | Prior Target | Updated Target | | :--- | :--- | :--- | | Same-restaurant sales | Flat to +2% | 1% to 3% | | Revenue growth | 11% to 12% | 10% to 12% | | General and administrative expenses | $82 - $84 million | $80 - $82 million | | Adjusted EBITDA growth* | 6% to 8% | 5% to 8% | | Unit growth | 12 new units | 12 new units (Unchanged) | | Restaurant-level adjusted EBITDA margin* | 22.5% to 23% | 22.5% to 23% (Unchanged) | [Long-Term Financial Targets](index=4&type=section&id=Long-Term%20Financial%20Targets) Long-term targets include 12-15% annual unit growth, low single-digit same-restaurant sales, mid-teens revenue growth, and low-teens Adjusted EBITDA growth | Metric | Long-Term Target | | :--- | :--- | | Annual unit growth | 12% - 15% | | Same-restaurant sales | Low single digits | | Revenue growth | Mid teens | | Adjusted EBITDA growth* | Low teens | Consolidated Financial Statements [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 revenues increased to **$176.4 million** with stable operating income, but net income attributable to Portillo's Inc. decreased to **$3.3 million**, resulting in diluted EPS of **$0.05** | (in thousands, except per share data) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues, Net** | **$176,437** | **$165,831** | | Total restaurant operating expenses | $139,781 | $129,460 | | **Operating Income** | **$10,381** | **$10,097** | | Income Before Income Taxes | $5,350 | $4,207 | | **Net Income** | **$3,990** | **$5,344** | | Net Income Attributable to Portillo's Inc. | $3,313 | $4,562 | | **Diluted EPS** | **$0.05** | **$0.08** | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of March 30, 2025, total assets remained stable at **$1.50 billion**, liabilities slightly decreased, cash and equivalents decreased to **$12.9 million**, and stockholders' equity increased | (in thousands) | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,936 | $22,876 | | **Total Assets** | **$1,499,296** | **$1,500,086** | | **Total Liabilities** | **$1,003,890** | **$1,009,983** | | **Total Stockholders' Equity** | **$495,406** | **$490,103** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased slightly to **$9.5 million** in Q1 2025, while investing activities used **$19.0 million**, resulting in a net cash decrease of **$9.9 million** and an ending cash balance of **$12.9 million** | (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $9,450 | $9,077 | | Net Cash Used in Investing Activities | ($19,040) | ($16,939) | | Net Cash (Used in) Provided by Financing Activities | ($350) | $10,608 | | **Net (Decrease) Increase in Cash** | **($9,940)** | **$2,746** | | **Cash at End of Period** | **$12,936** | **$13,184** | Non-GAAP Financial Measures and Key Metrics [Selected Operating Data](index=11&type=section&id=Selected%20Operating%20Data) Q1 2025 key operating metrics showed a **1.8%** increase in same-restaurant sales, but Average Unit Volume (AUV) decreased to **$8.7 million**, and both Adjusted EBITDA Margin and Restaurant-Level Adjusted EBITDA Margin contracted | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Restaurants | 94 | 85 | | AUV (in millions) | $8.7 | $9.0 | | Change in same-restaurant sales | 1.8% | (1.2)% | | Adjusted EBITDA Margin | 12.0% | 13.1% | | Restaurant-Level Adjusted EBITDA Margin | 20.8% | 21.9% | [Reconciliation of Non-GAAP Measures](index=12&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) For Q1 2025, Net Income of **$4.0 million** was reconciled to Adjusted EBITDA of **$21.2 million**, and Operating Income of **$10.4 million** was reconciled to Restaurant-Level Adjusted EBITDA of **$36.7 million**, by adjusting for non-cash and corporate expenses Reconciliation of Net Income to Adjusted EBITDA (Q1 2025, in thousands) | Line Item | Amount | | :--- | :--- | | **Net income** | **$3,990** | | Depreciation and amortization | $7,040 | | Interest expense | $5,749 | | Income tax expense | $1,360 | | Equity-based compensation | $1,950 | | Other adjustments | $514 | | **Adjusted EBITDA** | **$21,209** | Reconciliation of Operating Income to Restaurant-Level Adjusted EBITDA (Q1 2025, in thousands) | Line Item | Amount | | :--- | :--- | | **Operating income** | **$10,381** | | General and administrative expenses | $18,903 | | Pre-opening expenses | $508 | | Depreciation and amortization | $7,040 | | Other adjustments | ($176) | | **Restaurant-Level Adjusted EBITDA** | **$36,656** | [Definitions of Key Metrics](index=4&type=section&id=Definitions%20of%20Key%20Metrics) The report defines key performance indicators including 'Change in Same-Restaurant Sales' for comparable restaurants, and non-GAAP measures 'Adjusted EBITDA' and 'Restaurant-Level Adjusted EBITDA' for evaluating core operating performance - Change in Same-Restaurant Sales is the percentage change in year-over-year revenue for the Comparable Restaurant Base, defined as restaurants open for at least **24 full fiscal periods**. For Q1 2025, this base included **74 restaurants**[20](index=20&type=chunk) - Adjusted EBITDA is defined as net income adjusted for depreciation, amortization, interest, taxes, and other non-cash or non-core items to evaluate ongoing operating performance[24](index=24&type=chunk)[41](index=41&type=chunk) - Restaurant-Level Adjusted EBITDA is defined as revenue less restaurant-level operating expenses (food, labor, occupancy, other), excluding corporate overhead and depreciation. It is used to evaluate the performance and profitability of individual restaurants[24](index=24&type=chunk)[45](index=45&type=chunk)

Core Insights - Portillo's Inc. reported a 6.4% increase in total revenue for Q1 2025, amounting to $176.4 million, compared to $165.8 million in Q1 2024, driven by new restaurant openings and an increase in same-restaurant sales [4][8][9] - Same-restaurant sales rose by 1.8% in Q1 2025, a recovery from a 1.2% decline in the same period last year, attributed to a 4.9% increase in average check despite a 3.1% decrease in transactions [4][8][9] - The company experienced commodity inflation of 3.4% in Q1 2025, down from 4.8% in Q1 2024, while labor costs as a percentage of revenue increased by 0.5% due to lower transactions and higher benefit expenses [5][10] Financial Performance - Operating income increased by $0.3 million to $10.4 million, reflecting a 2.8% rise compared to the previous year [12] - Net income decreased by $1.4 million to $4.0 million, a decline of 25.3%, primarily due to a $2.5 million increase in income tax expense [13] - Restaurant-Level Adjusted EBITDA rose by $0.3 million to $36.7 million, while Adjusted EBITDA decreased by $0.6 million to $21.2 million [14] Operational Developments - The company opened ten new restaurants in 2024, contributing $7.9 million to the revenue increase [8] - Portillo's is focusing on traffic-driving strategies, including the launch of the "Portillo's Perks" loyalty program and testing breakfast offerings at five locations [7][17] - The company plans to open 12 new restaurants in fiscal 2025, with a focus on markets outside Chicagoland, particularly in Texas and Atlanta [17] Financial Targets - Updated financial targets for fiscal 2025 include same-restaurant sales growth of 1% to 3% and revenue growth of 10% to 12% [18] - Long-term financial targets project annual unit growth of 12% to 15% and mid-teens revenue growth [20] Key Metrics - Total restaurants increased to 94 as of March 30, 2025, from 85 a year earlier [41] - Average Unit Volume (AUV) decreased to $8.7 million from $9.0 million [41] - Restaurant-Level Adjusted EBITDA Margin was 20.8%, down from 21.9% in the previous year [41]

Core Points - Portillo's is celebrating Italian Beef Day with a month-long event featuring exclusive offers and activities [1][10] - The celebration includes a BOGO sandwich deal for loyalty program members, a CTA Blue Line train takeover, and a nationwide scavenger hunt [2][8] Company Overview - Portillo's was founded in 1963 by Dick Portillo and has grown to over 90 restaurants across 10 states, known for its Italian beef sandwiches and other Chicago-style foods [4] - The company offers a loyalty program called Portillo's Perks, allowing members to earn rewards and access exclusive deals [5] Marketing Activities - The BOGO deal allows Portillo's Perks members to buy one regular Italian Beef sandwich and get one free throughout May [8] - The CTA Blue Line train will be wrapped in Italian Beef-themed branding from May 5 to June 1, promoting the sandwich [8] - A social scavenger hunt will take place in multiple cities, including Chicago, Dallas, and Phoenix, where fans can find swag bags containing branded merchandise and free sandwich cards [8]

Core Viewpoint - Portillo's Inc. has entered into a cooperation agreement with Engaged Capital to identify a new director with restaurant operations experience for its Board of Directors [1][2] Group 1: Cooperation Agreement - The cooperation agreement aims to enhance the Board's expertise by adding a director with relevant restaurant operating experience [1][2] - Engaged Capital played a role in introducing Jack Hartung to the Board in January, indicating a collaborative relationship [2] - Engaged Capital has agreed to customary standstill and voting agreements as part of the cooperation [2] Group 2: Company Strategy and Performance - Portillo's Board is focused on driving traffic, improving margins, and delivering industry-leading unit economics for shareholders [2] - The company is taking actions to shrink restaurant size, drive sustainable same-store sales, and improve restaurant margins, indicating a strategic focus on operational efficiency [2] - Portillo's is recognized for its iconic brand and industry-leading average unit volumes (AUVs) both in and outside of Chicago [2] Group 3: Company Background - Portillo's was founded in 1963 and has grown to over 90 restaurants across 10 states, known for its Chicago-style hot dogs and other menu items [4] - The company offers a loyalty program and ships food nationwide, enhancing customer engagement and market reach [4] Group 4: Engaged Capital Overview - Engaged Capital is an investment advisor focused on building sustainable businesses and creating long-term stockholder value [5] - The firm engages with management and boards of undervalued public companies to unlock embedded value [5]

Core Viewpoint - Portillo's Inc. has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system highlights the strong correlation between changes in earnings estimates and near-term stock price movements, making it a valuable tool for investors [3][5]. - Institutional investors play a role in this relationship, as they adjust their valuations based on earnings estimates, leading to stock price fluctuations [3]. Company Performance and Outlook - The upgrade for Portillo's Inc. reflects an improvement in its underlying business, which is expected to drive the stock price higher as investors recognize this trend [4]. - Analysts have raised their earnings estimates for Portillo's Inc., with the Zacks Consensus Estimate increasing by 4.2% over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimates, with a proven track record of generating significant returns, particularly for Zacks Rank 1 stocks [6][8]. - Portillo's Inc. is positioned in the top 20% of Zacks-covered stocks, indicating its strong earnings estimate revision feature and potential for market-beating returns [9].

Core Viewpoint - Portillo's Inc. will report its first quarter 2025 financial results on May 6, 2025, before market opening, with a live audio webcast scheduled for 10:00 AM ET [1] Company Overview - Portillo's was founded in 1963 by Dick Portillo, starting with a $1,100 investment in a hot dog stand called "The Dog House" in Villa Park, IL [3] - The company has expanded to over 90 restaurants across 10 states, offering a menu that includes iconic Italian beef sandwiches, Chicago-style hot dogs, char-grilled burgers, fresh salads, and chocolate cake [3] Investor Relations - The financial results webcast will be accessible on the company's investor relations website, with a replay available shortly after the event [2] - Investors can also listen via telephone, with a toll-free number provided for domestic calls and an international number [2]