Portillo’s(US:PTLO)2024-02-27 19:30Financial Data and Key Metrics Changes - In Q4 2023, total sales increased by 24.5% to approximately $188 million, with same-restaurant sales growing by 4.4% and transactions increasing by 1.3% [4][41] - For the full year 2023, total sales rose by 15.8% to approximately $680 million, with same-restaurant sales growing by 5.7% and average unit volumes reaching $9.1 million per restaurant [30][41] - Restaurant-level adjusted EBITDA grew by 42.7% to $46 million in Q4 2023, with margins expanding by 310 basis points to 24.3% [4][118] - Operating cash flow increased by 24.4% to a record level of $70.8 million for the year [12][120] Business Line Data and Key Metrics Changes - Catering currently represents about 5% of overall revenue, with expectations for growth in this channel through marketing and expansion into new markets [33][152] - The company opened 12 new restaurants in 2023, including six in Q4, marking the highest number of openings in a single year [18][21] Market Data and Key Metrics Changes - The company reported strong performance in growth markets, particularly in Fort Worth, Texas, and Claremont, Florida, which opened successfully [20][21] - The company plans to enter the Houston market in 2024, with expectations for strong performance similar to the Dallas-Fort Worth area [21][132] Company Strategy and Development Direction - The company aims for long-term mid-teens revenue growth primarily through new restaurant openings while maintaining positive same-restaurant sales growth [24][30] - The focus remains on operational excellence, enhancing guest experiences, and strategic pricing actions to drive traffic and revenue [5][47] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential challenges in the operating environment, including consumer sentiment and weather impacts, but expressed confidence in the business's health and growth trajectory [42][93] - The company is committed to leveraging operational efficiencies and menu innovation to enhance margins and drive traffic [47][162] Other Important Information - Food, beverage, and packaging costs as a percentage of revenues decreased to 34.8% in Q4 2023, down from 35% in Q4 2022, despite a 4.4% increase in commodity prices [25][44] - Labor costs as a percentage of revenues decreased to 25.4% in Q4 2023 from 26.5% in Q4 2022, driven by increased revenue [44] Q&A Session Summary Question: Pricing strategy for 2024 - Management has not yet made decisions on pricing for 2024, emphasizing the need to assess consumer sentiment and competitive landscape before making adjustments [52] Question: Kitchen efficiency and operational improvements - Management highlighted ongoing efforts to improve kitchen efficiency and service speed, which are critical for driving traffic and enhancing customer experience [62][145] Question: Performance of new restaurant openings - New units are expected to initially perform below the average margin but are anticipated to improve as they mature [112] Question: Catering growth potential - Catering is seen as a significant growth opportunity, particularly in new markets, with plans to enhance marketing efforts in this area [151][152] Question: Advertising strategy in Chicago and other markets - Management plans to use advertising selectively, focusing on markets where it can drive traffic effectively, such as Chicago and potentially Arizona and Indiana [124][126]