Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $181.4 million, an increase of $3.2 million or 1.8% year-over-year, driven by non-comparable restaurants [13] - Same restaurant sales declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million, attributed to a 2.2% decrease in transactions, partially offset by a 1.4% increase in average check [13] - Restaurant-level Adjusted EBITDA decreased by $5.3 million to $36.7 million, with margins dropping 330 basis points to 20.2% [17] - Adjusted EBITDA was $21.4 million, a decrease of 23.4% from the prior year [19] - Cash from operations decreased by 32.3% year-over-year to $48.7 million year-to-date [20] Business Line Data and Key Metrics Changes - The company experienced pressures on margins from non-comparable restaurants, with restaurant-level Adjusted EBITDA margins estimated to be in the range of 21%-21.5% for 2025 [17] - Other operating expenses increased by $2.3 million or 10.8% compared to the prior year, primarily due to new restaurant openings and increased repair and maintenance costs [15] Market Data and Key Metrics Changes - The company plans to open eight restaurants in 2026, with a focus on gradual growth and avoiding cannibalization in existing markets [31] - The company is leveraging affiliate marketing and catering to expand reach in new markets [10] Company Strategy and Development Direction - The company announced a strategic reset, slowing development in 2025 and 2026, and focusing on delivering an outstanding guest experience [6][7] - A smaller-format restaurant model is being deployed to achieve good unit economics with sales of $4 million to $5 million [9] - The company aims to drive more transactions through its unique menu offerings and the Portillo's Perks Loyalty Program [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, citing strong customer demand in new markets [4] - The company anticipates commodity inflation of 3%-5% in 2025, with significant pressures coming from beef prices [14][35] - The effective tax rate for the full year is expected to be approximately 21%-23% [20] Other Important Information - The company recorded a non-cash impairment charge of $2.2 million related to the Barnelli's trade name [18] - The company ended the quarter with $17.2 million in cash and $323 million in total net debt [20] Q&A Session Summary Question: Marketing efficacy and strategy moving forward - Management acknowledged the need to drive trial and awareness in newer markets and emphasized ongoing marketing investments in both new and core markets [22][24] Question: Pricing strategy and value perception - Management indicated that current pricing is below industry inflation rates and emphasized the importance of driving traffic into restaurants [26][27] Question: Development plans for 2026 - Management confirmed plans to open eight restaurants in 2026, with a focus on gradual growth and potential expansion in new markets [30][31] Question: Commodity costs and labor inflation - Management noted ongoing pressures on beef costs and confirmed labor inflation guidance of 3%-4% for the year [33][35] Question: Consumer behavior and marketing efforts in Texas - Management reported no noticeable shifts in consumer behavior by demographic cohorts but emphasized focused marketing efforts in Texas to drive brand awareness [45][48]