Portillo's Inc. Q1 FY2025 earnings call

• Thanked dedicated team members for their hard work. - Q1 performance was affected by weather challenges but rebounded in March. - Launched Portillo's Perks loyalty program, with initial focus on enrollment. - Conducted advertising campaigns in Dallas-Fort Worth and Phoenix to increase brand awareness. - Focused on operations improvement, including testing camera vision technology for drive-thru speed and optimizing kiosks. - Conducted a breakfast test at five Chicagoland restaurants, with positive early feedback. - Planned to open 12 new restaurants in 2025, including various formats like the new in-line walk-up restaurant in Central Florida.

Total revenue for the first quarter was $176.4 million, with same restaurant sales increasing 1.8%. Restaurant level adjusted EBITDA was $36.7 million, representing a margin of 20.8%. Revenues from non-comparable restaurants contributed $7.9 million to the quarter's growth. Same restaurant sales were driven by a 4.9% increase in average check, partially offset by a 3.1% decrease in transactions. The higher average check was due to approximately 4.4% increase in certain menu prices and a 0.5% increase in product mix.

• Cap sales growth expected in the range of 1% to 3% vs previous flat to up 2%. - Total revenue growth expected in the range of 10% to 12% vs previous 11% to 12%. - General and administrative expenses estimated in the range of 80 million to 82 million vs previous 82 million to 84 million. - Adjusted EBITDA growth estimated at five to 8% vs previous 6% to 8%. - Forecasted commodity inflation of 3% to 5% in 2025, with significant pressure from beef. - Estimated labor inflation of 3% to 4% for 2025.

• Macro pressures affecting newer restaurants, with newer markets being more vulnerable until they establish footing. - Economic uncertainty making it hard to predict the rest of the year. - Weather challenges impacting performance in certain months. - Tariff uncertainties that could impact the business, though forecasted to be minimal.

Q: Sharon Zackfia asked about the slower start of fourth quarter openings in Houston and action plans to jumpstart the market.

A: Michael Osanloo responded that it's about building awareness in new markets, doubling down on field marketing, and not panicking as guest metrics are consistent with best markets.

Q: Brian Harbour asked about the timing of openings and location-specific issues.

A: Michelle Hook responded that one opening was delayed due to permitting challenges, but others are on track for back half, with back half historically being more weighted for Portillo's.

Q: David Tarantino asked about Portillo's Perks program metrics.

A: Michael Osanloo stated confidence in reaching sign-up goals and excitement about testing offers and marketing in the back half.

Q: Andy Barish asked about drive thru efforts.

A: Michael Osanloo responded that operations are improving speed and problem resolution, boosting drive thru performance.

Q: Chris O’Cull asked about marketing in new markets and new unit performance.

A: Michael Osanloo discussed continuing pulse advertising in new markets, and Michelle Hook provided insights on new unit underperformance being due to relative unknown status and need for awareness building.