Portillo’s(US:PTLO)2024-08-06 17:59Financial Data and Key Metrics Changes - Total sales increased by 7.5% year-over-year, with revenues reaching $181.9 million, reflecting an increase of $12.7 million compared to the previous year [13][14] - Same-restaurant sales decreased by 0.6%, driven by a 2.3% decline in transactions, partially offset by a 1.7% increase in average check [14][15] - Restaurant-Level adjusted EBITDA increased by 4.3% to $44.6 million, with adjusted EBITDA margins at 24.5%, down from 25.3% year-over-year [17][21] - General and administrative expenses decreased by $1.7 million to $17.9 million, or 9.9% of revenue, from 11.6% in the prior year [17][19] Business Line Data and Key Metrics Changes - The company plans to open at least 10 new restaurants in fiscal 2024, which will increase unit growth percentage to nearly 12% [5][20] - The drive-thru channel has seen a 15-second improvement in speed year-to-date compared to the same period last year [8][31] Market Data and Key Metrics Changes - The company is focusing on the Chicago market with a comprehensive advertising campaign coinciding with the NFL season, aiming to drive guest traffic [10][30] - The company is entering the Houston market in the back half of the year, alongside continued expansion in the Dallas-Fort Worth area [57] Company Strategy and Development Direction - The company is focused on four strategic pillars: running world-class operations, innovating the Portillo's experience, building restaurants with industry-leading returns, and taking care of teams [6][12] - The company is implementing kiosk prototypes to enhance the guest experience and improve throughput [9][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the second quarter results fell short of expectations but noted sequential improvement in key metrics [4] - The company expects flat to slightly positive same-restaurant sales growth for fiscal 2024, driven by improved transaction trends and aggressive marketing efforts [5][25] Other Important Information - Commodity costs increased by 6.9%, primarily affecting beef, pork, and produce, but management anticipates easing in the latter half of the year [15][45] - The company is reducing its estimated range of capital expenditures for the year to $85 million to $88 million, down from $90 million to $93 million [22][26] Q&A Session Summary Question: What are the primary drivers for the expected acceleration in the second half? - Management noted improvements in transaction trends and aggressive marketing efforts as key drivers for expected acceleration [25] Question: How are you achieving lower CapEx? - Management explained that improvements in restaurant designs and the introduction of smaller footprints have contributed to lower CapEx [26] Question: Can you elaborate on the marketing campaign in Chicago? - The messaging remains consistent, focusing on brand awareness and showcasing the food visually [30] Question: What operational changes improved drive-thru speed? - Management emphasized the importance of managerial presence and real-time coaching to enhance drive-thru efficiency [31] Question: How is customer behavior affecting sales? - Management noted that customer behavior remains choppy, with varying performance across different channels [66] Question: What is the current status of guest satisfaction scores? - Management reported strong satisfaction scores but emphasized the importance of focusing on execution rather than just managing scores [68]