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 - Same restaurant sales increased by 0.4% in Q4 2024, while full-year comp sales were down 0.6% [8][9] - Total revenue for Q4 was $184.6 million, a decrease of $3.2 million or 1.7% year-over-year, but grew 6.1% when excluding the impact of an additional operating week in Q4 2023 [9][26] - Restaurant-level adjusted EBITDA for Q4 was $45.2 million, with a margin of 24.5%, compared to $26.1 million in Q4 2023 [9][36][39] - Adjusted EBITDA decreased by 3.6% year-over-year, but grew 6.3% when excluding the impact of the extra week [39] Business Line Data and Key Metrics Changes - Revenue growth in Q4 was driven by non-comparable restaurants contributing $8.6 million, while same restaurant sales growth contributed approximately $600,000 [27] - Average check increased by 4.1%, driven by a 4.7% increase in certain menu prices, partially offset by a 3.7% decrease in transactions [28] Market Data and Key Metrics Changes - The company anticipates commodity inflation of 3% to 5% in 2025, with significant pressures expected from beef [33][78] - Labor as a percentage of revenues decreased to 24.6% in Q4 2024 from 25.4% in Q4 2023, driven by an increase in average check and lower variable-based compensation [33] Company Strategy and Development Direction - The company plans to open twelve new restaurants in 2025, focusing on a smaller footprint to reduce build costs [14][134] - Key traffic-driving strategies include expanding kiosk usage, advertising beyond Chicagoland, launching a loyalty program, and improving operational efficiency [12][16] - The company is developing additional restaurant formats, including a more efficient operating model and walk-up locations [15][134] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the plans for 2025, despite challenges such as weather impacting early momentum [11][30] - The company expects revenue growth to be driven by new restaurant openings and modest same-store sales growth in the range of flat to 2% [30][110] Other Important Information - The company has implemented a new app-less loyalty program aimed at driving traffic and engagement [17][100] - Cash from operations increased by 38.5% year-over-year to $98 million year-to-date, with $22.9 million in cash at the end of the quarter [43][44] Q&A Session Summary Question: Weather impact on Q1 performance - Management has not quantified the weather impact but remains confident in achieving full-year guidance of 0% to 2% growth [48][50] Question: Drive-through speed improvements - Every thirty seconds of improved throughput in the drive-through is equivalent to one point of comp, and the company is working to reclaim 45 seconds of lost time [52][53] Question: Restaurant of the Future prototype performance - Initial performance of the new prototype is promising, with no significant difference in revenue or traffic compared to traditional formats [57][58] Question: Menu streamlining effects - Streamlining the menu has reduced complexity and improved throughput, with positive feedback from customers on key items [61][62] Question: Traffic growth expectations for 2025 - Management expects steady improvement in traffic throughout the year, with a conservative guide reflecting modest pricing and mix improvements [110][112] Question: New restaurant openings in Atlanta - The new restaurant in Atlanta is expected to open in the back half of 2025, with uncertain volume predictions [115][116] Question: Loyalty program rollout - The loyalty program is in soft launch and expected to fully launch in March, with anticipated positive impacts in Q2 [122] Question: New store maturity curve in Texas - New restaurants in Texas are performing more consistently with mature market expectations, with a focus on achieving density quickly [128][131] Question: Development of non-traditional formats - The company is fine-tuning the drive-through only format and exploring new locations, including walk-up options [96][98]