Portillo’s(US:PTLO)2021-11-19 01:43Financial Data and Key Metrics Changes - Revenues for Q3 2021 were $138 million, an increase of $18.3 million or 15.3% compared to Q3 2020, driven by a 6.8% increase in same-restaurant sales and the opening of new restaurants [26][27] - Same-restaurant sales increased by 6.8%, primarily due to a 7.9% increase in average check, despite a decrease in traffic [27] - Adjusted EBITDA for the quarter was $24.2 million, down 8.4% from $26.4 million in the prior year [36] Business Line Data and Key Metrics Changes - Drive-thru sales per restaurant increased from $3.4 million in 2019 to $4.9 million in the 12 months ending Q3 2021 [11] - Dine-in sales per restaurant decreased from $4.4 million in 2019 to $2.1 million in the 12 months ending Q3 2021 [12] - Delivery sales per restaurant grew from $500,000 in 2019 to nearly $900,000 in the 12 months ending Q3 2021 [13] Market Data and Key Metrics Changes - The company opened five new restaurants in 2021, including locations in Orlando, Florida, and Sterling Heights, Michigan, expanding its presence outside the core Chicagoland market [16] - The company plans to open seven new restaurants in 2022, targeting markets in Florida, Arizona, Indiana, Michigan, and an initial expansion into Texas [17] Company Strategy and Development Direction - The company aims for long-term growth with a potential for over 600 restaurants nationwide, planning for approximately 10% annual growth [17] - A new restaurant prototype, "Portillo's pickup," will focus on off-premise sales with no dining room, featuring multiple drive-thru lanes [19] - The company emphasizes a two-pronged expansion strategy: growing in core Midwest markets and targeting national markets across the Sunbelt [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from commodity and labor inflation, with expectations for continued pressure into Q4 and 2022 [45] - The company remains confident in its supply chain relationships and distribution strategy, despite industry-wide disruptions [30] - Management highlighted the importance of maintaining a strong value proposition while navigating pricing adjustments in response to cost increases [84] Other Important Information - The company completed its IPO on October 25, 2021, raising approximately $429.9 million in net proceeds [22] - Cash on hand post-IPO is over $40 million, with a significant reduction in debt by $155 million [37] Q&A Session Summary Question: Near-term margin challenges and future outlook - Management indicated that Q3 experienced significant commodity and wage inflation without pricing adjustments, but a 3% price increase was implemented at the beginning of Q4 to mitigate margin pressure [43][45] Question: Dine-in performance and drive-thru sales - Management noted that while dine-in traffic has been slow to recover, drive-thru sales remain strong and resilient, with no negative impact on drive-thru performance from the slow recovery of dine-in [52] Question: Performance of new stores in newer markets - New restaurants opened since Q3 2020 are performing above expectations, with average unit volumes approximately 35% higher than the target for year one [60] Question: Staffing levels and labor market dynamics - Management reported being approximately 10% understaffed in Q3 but noted improvements in staffing levels, especially in new restaurant openings [98] Question: Changes in prototype design for off-premise sales - The company is adapting its restaurant prototypes to focus on off-premise sales, reducing dining space and enhancing drive-thru and delivery access [100] Question: Catering business performance during the holidays - Management expressed optimism about the catering business for the upcoming holiday season, noting strong performance in recent weeks [111] Question: Pricing strategy and adjustments - Management stated that pricing is evaluated regularly, with adjustments made as necessary to respond to inflationary pressures while maintaining a focus on transaction growth [120]