Portillo’s(US:PTLO)2022-08-07 18:11Financial Data and Key Metrics Changes - Total sales increased by 7.0% to $150.6 million in Q2 2022 compared to Q2 2021, driven by new restaurant openings and a 1.9% increase in same-restaurant sales [7][19] - Same-restaurant sales growth of 1.9% was primarily due to a 4.8% increase in average check, offset by a 5.6% decline in transactions [19] - Restaurant-level adjusted EBITDA decreased by 10.9% to $38.4 million, with margins at 25.5%, down from 30.6% in Q2 2021 [25][27] Business Line Data and Key Metrics Changes - Labor as a percentage of revenues increased to 25.2% in Q2 2022 from 24.5% in Q2 2021, driven by wage increases and new restaurant openings [23] - Cost of goods sold as a percentage of revenues rose to 34.4% in Q2 2022 from 30.0% in Q2 2021, largely due to a 15.2% average increase in commodity prices [21] Market Data and Key Metrics Changes - The company opened two new restaurants in the first half of 2022 and plans to open five more by the end of the year, maintaining a commitment to 10% new unit growth [15][16] - The brand's historical performance shows resilience across economic cycles, with a three-year geometric same-restaurant sales growth of 6.2% [20] Company Strategy and Development Direction - The company focuses on strategic price management, labor efficiency, and team member engagement to sustain profitability amid inflation and labor volatility [10][29] - Plans for new restaurant openings include locations in Florida, Texas, and Arizona, with a focus on high-visibility real estate [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of their approach, citing strong guest satisfaction scores and operational efficiencies [13][17] - The company anticipates continued challenges from commodity inflation and labor costs but remains focused on maintaining a strong value proposition for guests [11][24] Other Important Information - The company will hold its inaugural Investor Day on November 8, 2022, to share its growth story and engage with investors [5] - The company has locked in pricing on approximately 78% of its commodity basket for fiscal 2022 to mitigate risks from commodity price volatility [22] Q&A Session Summary Question: Sales trends and consumer behavior in Q2 - Management noted a positive performance in Q2 despite a tough comparison to the previous year, with a slight softening in consumer behavior observed [36][37] Question: Labor productivity and margin outlook - Management indicated that the efficiencies seen in Q2 are not expected to continue in the second half due to additional wage increases [39] Question: Value proposition and consumer ratings - Management highlighted that their overall satisfaction score is at a 24-month high, indicating strong consumer perception of value [47] Question: Development schedule and supply chain risks - Management confirmed that while there have been some delays, they are on track with their development schedule and are taking steps to mitigate risks [58] Question: Pricing strategy and consumer spending environment - Management emphasized their commitment to not discounting and maintaining a strong value proposition without compromising brand integrity [89][90]