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]

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]

Financial Data and Key Metrics Changes - Revenues for the second quarter were $188.5 million, reflecting a 3.6% increase year-over-year [20] - Same restaurant sales increased by 0.7%, driven by a 2.1% increase in average check, partially offset by a 1.4% decrease in transactions [21] - Restaurant level adjusted EBITDA was $44.5 million with a margin of 23.6%, a decrease of 90 basis points from the prior year [25] - Adjusted EBITDA for the quarter was $30.1 million, an increase of 0.7% from the previous year [26] - Cash from operations decreased by 31.1% year-over-year to $28.7 million year-to-date [28] Business Line Data and Key Metrics Changes - Non-comp restaurants contributed $6.1 million in revenue during the quarter, while same restaurant sales growth was flat on a two-year stack basis [20][21] - The company is on track to open 12 restaurants in 2025, with build costs reduced to an average of $5.2 million to $5.5 million per restaurant [12][29] Market Data and Key Metrics Changes - Transactions were down 1.4% for the quarter, but there was a sequential improvement of 170 basis points over Q1 [9] - The company is focusing on multichannel marketing in key markets like Phoenix and Dallas, which have shown sales lifts [10] Company Strategy and Development Direction - The company is focused on building awareness and driving transactions while maintaining high-quality food and guest experience [6] - Key initiatives include multichannel marketing, operational improvements, kiosk adoption, and evolving the Portillo's Perks loyalty program [10][12] - The company is refining its new market playbook, with a focus on sustained marketing investment in Texas [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Texas but remains confident in mid-teens revenue growth by 2026 [36] - The company is actively managing inflationary pressures through price increases and operational efficiencies [22][23] - Management expects total revenue growth for 2025 to be in the range of 5% to 7% [28] Other Important Information - Berkshire Partners redeemed $7.3 million in LLC units for Class A common stock, reducing their ownership to approximately 5.2% [18][19] - The company is nearly 90% hedged on beef prices, which is expected to mitigate inflationary impacts [62] Q&A Session Summary Question: Mix in the quarter and path to mid-teens revenue growth - Management explained that while kiosk usage increased items per transaction, there was a trade-down effect impacting the mix [38] - They remain confident in achieving mid-teens revenue growth by 2026 through foundational work in Texas [36] Question: Performance of new stores and marketing efforts - Management noted that some restaurants are entering their second year, and marketing efforts are ongoing to improve performance [43][45] Question: Labor and commodity inflation outlook - Management expects labor inflation to remain at 3% to 4% for the year, while commodity inflation is forecasted at 3% to 5%, primarily driven by beef [62][67] Question: Breakfast testing and limited menu impact - Breakfast testing is going well, appearing to be incremental without negatively affecting lunch or dinner sales [85] - The limited menu in Houston had some learnings, and management is adding back popular items [91] Question: Portillo's Perks loyalty program - The loyalty program has nearly 2 million members, and management sees potential for it to drive repeat frequency in expansion markets [99][103]

Industry Trend - Chicago's food scene is shifting focus from deep dish pizza and Chicago style hot dogs to Italian beef sandwiches [1] - The popularity of Italian beef is surging, partly due to the Chicago-based show "The Bear" [1] - Italian beef has been a Chicago tradition for nearly 100 years [1] - The sandwich is becoming a cultural phenomenon, appearing on menus in small towns across America [3] Product & Culture - Italian beef is characterized as tender, juicy meat served on a bun, often with peppers and gravy [2] - The sandwich is a classic part of Chicago's culture, with each establishment offering its unique variation [2] - Italian beef was originally created for workers in the stockyards [3] - The sandwich is designed to be a quick, on-the-go meal [2] Company Influence - Mr Beef, a local shop, inspired "The Bear" [2] - The owner of Mr Beef had a small role on the show [3]

Financial Data and Key Metrics Changes - Total revenue for Q1 reached $176.4 million, reflecting an increase of $10.6 million or 6.4% compared to the previous year [18][19] - Same restaurant sales increased by 1.8%, contributing approximately $2.6 million to revenue growth [20] - Restaurant level adjusted EBITDA was $36.7 million with a margin of 20.8%, a decrease of 110 basis points from the previous year [27] - Adjusted EBITDA for Q1 was $21.2 million, down 2.6% from the previous year [29] - General and administrative expenses increased to $18.9 million, representing 10.7% of revenue [28] Business Line Data and Key Metrics Changes - New restaurants not in the comparable base contributed $7.9 million in revenue growth [19] - The average check increased by 4.9%, partially offset by a 3.1% decrease in transactions [20] - The company plans to open 12 new restaurants this year, with 10 in the new Restaurant of the Future format [16] Market Data and Key Metrics Changes - The advertising campaign in Dallas Fort Worth increased brand awareness by about 10% and drove high single-digit sales increases [10] - The company is running a similar campaign in Phoenix to boost brand awareness [10] Company Strategy and Development Direction - The company is focusing on four key tactics: advertising beyond Chicagoland, launching the Portillo's Perks loyalty program, continuous operational improvements, and optimizing kiosks [9] - The loyalty program aims for a personalized, data-driven approach based on guest behavior, with a goal of 1.6 million sign-ups by mid-year [56] - The company is testing breakfast offerings in five Chicagoland restaurants, with positive early feedback [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro pressures but expressed confidence in the brand's resilience and strategies to drive traffic [17] - The company expects comp sales growth in the range of 1% to 3% and total revenue growth of 10% to 12% for the year [22][23] - Management noted that newer restaurants are experiencing slower starts but are optimistic about their long-term performance [23][54] Other Important Information - Food, beverage, and packaging costs as a percentage of revenues increased to 34.6% due to commodity price increases [24] - Labor costs as a percentage of revenues increased to 26.6%, driven by lower transactions and increased wage rates [25] - The company ended the quarter with $12.9 million in cash and plans to use cash generated from operations to fund new restaurant growth [32] Q&A Session Summary Question: Concerns about new restaurant performance in Houston - Management indicated that the slower performance is due to brand awareness and not operational issues, emphasizing a focus on field marketing to build awareness [38][39] 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 [40][41] Question: Testing breakfast offerings - The breakfast test is being conducted quietly to ensure operational execution, with plans for broader marketing if successful [90] Question: Performance of new units and marketing strategies - Management noted that marketing efforts in Houston were less aggressive compared to Dallas, which contributed to slower starts [54][98] Question: Insights on the Portillo's Perks program - Initial metrics indicate strong guest responsiveness to offers, exceeding internal expectations [56][108]

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]