Core Insights - Portillo's reported fourth-quarter revenue of $185.7 million, reflecting a year-over-year increase of $1.1 million or 0.6%, primarily driven by new restaurant openings outside the comparable base, while same-restaurant sales declined by 3.3% [1][6] Financial Performance - The average check remained flat, with a 2.3% increase in net effective menu pricing offset by a 2.3% decrease in product mix, leading to a net effective pricing of approximately 3.2% for the full year [6] - Restaurant-Level Adjusted EBITDA fell by $4.7 million to $40.6 million, with a margin decline of about 270 basis points to 21.8%, impacted by Texas expansion losses [9] - Adjusted EBITDA for the quarter was $24.7 million compared to $25.2 million a year earlier, with expectations for flat Adjusted EBITDA in 2026 [10] Cost Structure - Food, beverage, and packaging costs increased to 34.6% of revenue from 34.1%, driven by a 4% rise in commodity prices [7] - Labor costs rose to 26.0% of revenue from 24.6%, influenced by lower transactions and wage increases, with hourly labor rates up 3% [8] Development Strategy - The company is implementing a more measured development strategy, with plans to open eight new restaurants in 2026, and the next Atlanta location not expected until 2027 [3][5][13] - The Kennesaw restaurant generated over $3.8 million in sales in its first 100 days, utilizing a smaller prototype design [4] Marketing and Customer Engagement - Portillo's Perks loyalty program surpassed 2 million members, focusing on engagement through promotions rather than a traditional points-based system [16] - Marketing spend is expected to increase slightly in 2026, with a focus on building brand awareness in newer markets [17] Operational Improvements - The company reported a decrease in hourly turnover to under 80% and improved drive-through service speed by nearly 40 seconds [18] - Off-premise channels, particularly pickup, showed significant growth in 2025 [18] Financial Outlook - The company expects to generate positive free cash flow in 2026 and plans to use excess cash to pay down its revolving credit facility [15] - General and administrative expenses are projected to be between $80 million and $82 million for 2026, including a $4.5 million bonus headwind [13]

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 - Revenues for Q3 2025 were $181.4 million, reflecting an increase of $3.2 million or 1.8% compared to the previous year [14] - Same restaurant sales declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million for the quarter [15] - Restaurant level adjusted EBITDA decreased by $5.3 million to $36.7 million, with adjusted EBITDA margins decreasing to 20.2% from 23.5% in the prior year [18][19] - Adjusted EBITDA for the quarter was $21.4 million, a decrease of 23.4% from the prior year [21] - Cash from operations decreased by 32.3% year over year to $48.7 million year to date [23] Business Line Data and Key Metrics Changes - Non-comp restaurants contributed $5.6 million to the total year-over-year revenue increase during the quarter [14] - The company experienced a 2.2% decrease in transactions, partially offset by a 1.4% increase in average check [15] - Food, beverage, and packaging costs as a percentage of revenues increased to 34.5% from 33.7% in the prior year, primarily due to a 6.3% increase in commodity prices [16] Market Data and Key Metrics Changes - The company plans to open eight restaurants in 2026, with several already in progress [37] - The company is focusing on new market entries and has plans for gradual growth in 2027, particularly in Atlanta and other growth opportunities [39] Company Strategy and Development Direction - The company announced a strategic reset, slowing development in 2025 and 2026 to focus on delivering an outstanding guest experience [7] - The development strategy will reflect a more gradual pace to avoid cannibalization and allow for better customer experiences [11] - The company is leveraging its Portillo's Perks loyalty program to stimulate visits, especially in new markets [12] 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 [5] - The company is addressing low-volume restaurants and working to improve trial and labor efficiency at these locations [10] - Management noted that the operating environment remains fluid, with pressures from inflation and consumer behavior impacting performance [58] Other Important Information - The company recorded a non-cash impairment charge of $2.2 million related to its legacy Barnelli's trade name [20] - The effective tax rate for the third quarter was impacted by a decrease in the valuation allowance, with an expected full-year tax rate of approximately 21% to 23% [23] 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 [28][30] 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 [32] Question: Development plans for 2026 and beyond - Management confirmed plans to open eight restaurants in 2026, with a focus on gradual growth and avoiding oversaturation in existing markets [37][39] Question: Commodity cost outlook - Management noted ongoing pressures on beef costs and projected labor inflation of 3% to 4% for the year, with no significant geographical concentration in wage increases [44][46] Question: Consumer behavior trends - Management did not observe notable shifts in consumer behavior by demographic cohorts but acknowledged pressures in the drive-thru channel [62]