PTLO - Earnings call 3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Portillo's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Barbara Noverini Portillo's Director of Investor Relations. Please go ahead.

Barbara Noverini

Good morning, everyone, and welcome to our fiscal third quarter 2023 earnings call.

release presentation press investors.portillos.com. posted earnings XX-Q, and are supplemental at Our Officer. me is and Executive Financial today the Michelle Osanloo, Chief With call Chief Michael on President and Hook, Officer; results Any and which commentary based current of not management's and on about future made our performance. are business are forward-looking here conditions statements, are guarantees expectations future We update these law. do forward-looking by not statements unless required

materials. Today's from our quarterly call statements. Our risk cause to alternative to identify of are their reference to our make are non-GAAP earnings non-GAAP comparable Reconciliations these may XX-Qs measures, actual XX-K these included GAAP vary to materially and posted that factors results counterparts GAAP which this measures. in most measures forward-looking an will financial not morning's

our we lines we remarks, questions. after open your will Finally, for deliver the prepared

to turn let Chief Officer. me Now call Executive the Osanloo, and President Michael over

Michael Osanloo

good you, growth restaurant highlight level third call. of results XXXX the earnings our continue Barb, and Thank quarter XX.X%. operational labor our we EBITDA Thank benefit our total efficiency joining excellent to this and even you base. into utilization, throughput, for These restaurant quarter XX.X% leverage translated as as demonstrated expand morning, We growth everyone. of operating of sales

a unit our model. growth about talked growth development ability the business strength for of in of the strategy profitable differentiator consistency and fantastic is our all Day key our At of sustain Our disciplined our is to driver for September, profitable execution valuation. how ongoing brand, key support a Portillo's. The Development our the we operations

fans our for and plans are excited our about. growth shared expanding also country markets, know which we the that across We accelerating

of Colorado, economic We reaction flows had frontiers the of current already to financial in environment. our and the It through of because the continues a ebbs carry can Georgia. we've Nevada fans business. the long new from game us and play fact, strength In great our confidently of

always sluggishness. restaurant continue also the that seen we've grew will contributions meaningfully is new impact fourth performance. this as that We're The restaurants good new restaurants, and improvement a class outperform the factor. increase in of our development quarter. restaurants continue company, restaurants same in for XXXX our restaurants. of end our XXXX industry. the done into us opening to our And quarter, newly XX going well, of X.X% the third we opened we that it which will of Revenue The our our As that industry-wide growing already of expectations. improvements different an expect the as momentum. restaurant is Keep newly with and see sales will a growth In engine. XX restaurants QX, now and already strength from in this What's opened with contribution on to countercyclical news operating this drove transaction year-over-year of entered comes year strong underwriting they've mind early is incredibly despite fluctuate, growth. bulk year the Comps from class our the we that can read development

drive in So investors not growth some development the can in self-funded term, future. count to just on far-flung our revenue near

companies the more self-fund deliver can history. all this model. our even XXX cash of a that. XX-year Again, few this of single than development restaurant doing We're flow to generate shared say year business we We're testament We restaurants expansion we points well ago, our increased with you margin throughout and we a few plans enough XXXX. have several Our operating to weeks year-over-year is profitable year basis growth track on third in ever full level quarter also year-over-year. for to as XX.X% add margin

Queen opened class in Cicero, growth, of what's which opened design, we about Creek, Arizona since both feature we've open Arlington, Speaking our Illinois Texas, talk the will kitchen efficient, for left more and In Allen, modern let's and and of successfully next 'XX. Texas. of in QX, week

X Worth, open to in and on Algonquin, Clermont, Rosemont Fort of Texas, The quarter. other Illinois, are in XXXX, Florida, class the restaurants the track fourth

As a X Midwest X this X the state in we're of growing have in opened Arizona Texas, Sun those of reminder, are will restaurants Florida, Belt, and home Illinois. we our in still XX with in X in X year. the and

members at to meal Portillo's certain delicious a experiential team Guests driving environment. we our an the in on I'd base. a life. to are As a growing impact rely team long-term our meaningful grow, continue shareholder Portillo's is They guests, our thank vibrant reason fan can to point taking for like brand make for why care Portillo's amazing bringing a a of great I'm value. price on by that members with

it financial So quarter's the with me that, to performance. let hand to discuss over Michelle

Michelle Hook

the increase in to we due compared sales. QX, quarter million This growth. million, same-restaurant of of XXXX and in was strong an revenues In XXXX XXXX. continued XX.X% line to $XXX.X an primarily or see opening our the restaurants increase new in reflecting top and Revenues of third $XX.X to were revenue increase

was to New partially to offset during check of revenue by average offset increased partially an by increase decrease in $XX in sales growth million in X.X% X.X% approximately the X.X% check Same-restaurant mix. Higher the an third contributed menu which driven was increase X.X%, in transactions. by product quarter, restaurants quarter. a attributable average prices,

have mix. quarter we and earlier, and into combined going our improvements mentioned the transactions seen fourth Michael As

an We positive Food, partially decreased of on in XX.X% percentage increase primarily of quarter third-party XX.X% of are third committed increase in a packaging was the commodity XXXX delivery revenues XXXX. to third This the and our to revenue growth due long-term as costs in primarily growth lower in offset quarter to growth. through restaurant X.X% revenue delivering targets a beverage our deliver and new from by prices. continuing to top while commissions,

team partially quarter to Labor at of a our year. quarter period. of X.X% benefits of from offset decreased third the primarily variable-based labor an and in the up members, inflation of and a revenue, committed and year-to-date our versus XXXX. remain This XXXX In by for labor compelling driven the quarter year investments XXXX by full team XX.X% prior hourly percentage in third rate the third to the incremental third compensation. estimate higher as additional Hourly including our X.X% we investments utilization, revenues in continue members decrease rates increases and increase was We the in mid-single-digit providing commodity package. to up in XX.X% wage were compensation quarter, made

increase $X.X XX% in estimate XXXX. labor or was the full to restaurants, the opening restaurants the continue expenses quarter an transactions primarily increase utilities our card and of card opening as year. new third transition and for in new mid-single-digit credit to inflation We fees increased X.X%, to credit XXXX. in as This primarily as insurance higher expenses. of Occupancy driven cashless or an million drove the well Other due in $X.X operating by expenses drive-thrus million increased XXXX of

ongoing year. percentage we opening creation. prices cost operational compared adjusted ongoing to in a margin the our long-term new decreased May, strategy and of X did continue have XX.X% X.X% level execution level a were of increase EBITDA the on term, a price quarter in to have million X.X% pricing operations effective increased of third of margin X do level this disciplined pricing increased X%. implement drive at by planned X first pricing. EBITDA expenses Restaurant that the prices Restaurant from elevate deploy few restaurant menu as reminder, top increases increased approximately the pressure of of and XXXX, of to XX.X% improvement fiscal adjusted XXXX margins of inflationary restaurant anticipate improvement third to to EBITDA These beginning January, is which and efficiencies. value revenues, of The the quarter actions on increase goal for X.X% of X pricing, adjusted towards X%. brand, new restaurants XXXX. EBITDA the of adjusted we development of lower XXXX. the of $XX.X our quarter our XX.X% XXXX year, in to restaurants the profile restaurant off strategic of We menu expansion believe all our contribute combat an adjusted all pressures The roll As compared $XX.X quarters we have On from We Near in result of a occupancy in guest in quarter the actions, margins the openings consistency and quarter rolled of was XXXX. approximately prior In the the third level an the At this us experiences we off taken ongoing puts this in strength pricing third months million level fourth of EBITDA efforts of revenue. shareholder start. which last October, in driven our by by year.

We well monitor cost in pricing coming the quarters. pressures, to the consumer competitive will as continue decisions as landscape our to inform our sentiment

variable-based in increased XXXX by by quarter compensation was increase from professional the expenses. driven a an wages million the of Our third XX% higher primarily offset and and in fees G&A $X.X quarter increase expenses insurance partially related in XX.X% to costs, and in of third This decrease XXXX.

related restaurant X.X% the the of year. to $XX estimating increased Preopening the quarter third fiscal $XX of due be million XXXX. planned to was million increase quarter openings. the location to We expenses are geographic from activities XXXX the The new timing in and of X.X% third in currently $X.X G&A of our for range million full in to to

by line, Below to in was of XXXX million quarter terms revolver the this with $XX.X term XXXX, slide million XXXX versus EBITDA third $X.X decrease the was of lending million EBITDA the million All our from a XX.X%. quarter quarter XXXX. XXXX, of third expense increase of primarily the facility. an loan quarter $XX.X and of improved third adjusted third of of $X.X of driven the decrease interest This in in associated

interest QX, the of of end third and $X.X of in As an was XXXX. the quarter the million third increase from the loan XXXX, X.X%. of was effect revolver quarter on Income $X.X expense million term rate of the of tax

tax rate XXXX. effective Our of third XX.X% in was for versus quarter quarter the XX.X% the

taxable effective our or XXXX, versus of driven third of quarter income A which loss. tax Class ownership, equity in increases share an rate the increase increased primarily Our by

rate the full the quarter to We million with approximately in cash. ended to XX% $XX.X be tax expect year XX%. We

cash We our $XX capital currently increased being our $XX As self-funding previous this be deployed to a million reminder, $XX to million flows CapEx range we into to million our $XX future cash of ahead We and on operating XXXX pipeline. million. range of based by new growth. the restaurant available invest range versus the estimate the

development Michael. at I'll and disclosed net Our remain it growth in time. And cost healthy day remain in for build the we in top average Thank restaurant you turn bottom delivering back beyond. that, and to with line to December. per line We range your committed XXXX

Michael Osanloo

And we really growth company, right of great open earn we questions, we all to just before Portillo's, to profitably. We're we core margins. how offer. have a grow manage for am QX proud to and our teams I I'd was business because another reiterate with like the our and continuously quarter

it's Our team investors work the creates our that members funding operations; to dedication really can both engaged This keep experience bottom and you'll coming us on This our line starts to Their deliver our for growth. every spin. and with And flywheel. that fantastic top hard efficient to back. guests and starting count day. is drive them see on keeps single a which

expect last with And future. to line open that, We the questions. for momentum into the long our let's

Operator

comes William Sharon [Operator question Zackfia Instructions] from Blair. first Our

Sharon Zackfia

trends, here happening well or proposition a you in third more I think of as seasonality know guess slowdown saw in to power be you normally up about I the I other on and just business? that think return value you recent you pre-pandemic think in seasonality? you And as given of it quarter. of what something to the XXXX? there's concur the the bring a you about October, abates do but else do about you kind did pricing the how call part don't talk was more that seems towards think normal of do quarter you the in Or look rebound normal kind lot

Michael Osanloo

appropriate. talk normally going felt context talk how about and Yes. yes, to and was on don't we what's has Sharon, opined it, else given everyone But thanks. And the on. it we like

to you're are mindset. is board October. We XXXX across right. in think back what seeing strong of the kind the in restaurant I XXX% We're more I a momentum back going normal to of rhythm industry think And

bit little quarter. we the typically, fourth restaurant back a a quarter roaring quarter And Third always of is industry. sluggish for in the come

pattern consistent much we're a seeing So with past. the more

our else. that, look And part at feel So suit With also We we strong We not all we we pricing look, casual, a guess, sort feel to cautious, versus optimistic QSR. monitoring I price of in position. very versus very we and a any little your we're everybody happy -- QSR for guess, just second quarter. of compare the regards question, But have but by we're to going our best We very the ourselves very, it our went, fast we're about pricing October. I the feel competitors. we basket and of typical of year. on to play foregone fourth our were and are

in that whether we're going we issue. not and anything do a a great of position But have X% January, can. As value not lap to do feel or want really That's to Michelle and we the going to indicated, for guests. there. protect evaluating what be we price our off pricing our still we're we're We really

the us. that's for act So balancing

Sharon Zackfia

slightly the up as but I has labor is I investors hear all long-term investment does don't which stack quarters. the guess, for of And like time couple a want how if I been Portillo's from to a point, traffic negative,

if But help big what's at contextualize why term you've the So investors term traffic what's it kind great could base I traffic. of that burdened population. the the be consumer know by happening declining you think, long optimism where you're when kind on in would got And Chicago this they if of and look number? frame like help near saying with maybe well, could you the

Michael Osanloo

Yes.

growth thank for look, well, I the that think So challenging. in Midwest in negative a declines, population we're makes answer. in right? and it up But as very state, you said very, population transaction you Chicago, teaming actually particularly the

have to You other people. from effectively share steal

with As Texas, significant Arizona. Florida, is I states All enumerated, growth. the growth bulk of our population

in we think of and macro to are almost will growth we in appropriate. just position so putting like beneficiary brand our land state it's and of But and with transaction markets. in a a the be standpoint, putting trends we're fight we of other repurposing tailwind, that, where in Midwest, are the restaurant all steal negative are -- and that ourselves along where We're can with those the a the strength arbitrage. all where in these there. And What is markets transaction Chicago companies to we the we from ourselves capital, of capital with our transaction can rise share rest repotting in we with the that tide

our and the about we're comp that quarterly strength, the some margin the over fluctuation. traffic I transaction Portillo's So strength. not -- don't Portillo's We're that. strength, But is that's especially too for us. confident in play in strength play to in have up torque frankly years, the Portillo's period going quarters, over very

Michelle Hook

a unit Sure, comp and go forward. definitely that saying to ebb the and our we but about revenue growth reiterate is growth pipeline, going growth revenue growth remarks, really said call, prepared long-term the how development to that that growth us. of to I'll that's in that new in we're think, the we low that is. know from just on And flow, that And as see comp units, important going going as his talked we will as and minute we're really propel Michael single-digit I I not and jump algorithm, in drive right, the new the generate for

Portillo's. so thesis definitely investment for say that's And I'd the

Operator

comes with Andrew question Jefferies. next Barish Our from

Andrew Barish

seasonality line, leverage against maybe nice little a you there. bit. Again, goes where the On some labor

quoted for only think increases the wage you I around the quarter. X% were

part that So did Just the those picked we the investment the read kind drive took with up into of latter comments steam wage that you XQ? trying the in to results. of

Michelle Hook

No.

investments we those make did wage in increases. normal terms Andy, think, you're July up were was X.X%, increases. labor I and they of the early And June, late right. in QX

into that So be we saw there I what we the the was I'll rate to the was QX inflation it. expect very as go nothing with call in increases similar ordinary, QX, And will of QX. out that

I call indicates an inflationary QX standpoint. from out, would different would that that than look Andy, So QX nothing any

Michael Osanloo

Keep number wage in mind, is on and that inflation year-to-date X.X%.

in as head. something have So to just your that's

Michelle Hook

Yes. point, you when just under just started we're We to you versus And given back XX% Andy, when we're of wage last, the we Michael's in year-to-date. XXXX. roll and X% some that again, to increases prior had versus actually years that And up XXXX, to up XX% go look under off. at even up started

investments made but see So X we're normalize. starting the yes, significant we've years, labor over that past in to

Andrew Barish

number the And restaurant all us those guidance year-over-year. kind of it's there quarter. to openings then with Great. of in be assuming or but to fourth openings I'm level just quarter, sequentially help with X that new guardrails the just the with those kind anything of on sequentially margin or openings, in any going down

Michelle Hook

QX. look when open going Yes. mentioned are say, you opened I to open Arlington would restaurants, you to going in those Andy, Michael and the at remaining shortly. And in look we October then later already is at subsequent when

does as And margin picture to the pricing impact pricing when you bit that impact off but look so you the of the margin, get you a that in rolls also at yes, well. to X.X% rolls little QX off that

'XX offset do QX. But look yes, margin do And decline quarter-over-quarter, improvement. so versus you at expect when QX versus 'XX QX margin sequential I I expect, in QX

Andrew Barish

what we've and industry for in then in I'm final to start been kind fourth the the hearing about one data. with And one to it. seen others happy just from hear Got line me. of quarter,

sort with holiday business kind week. got be fourth of we that really kind of year hurt should aware of ago of the Anything weather the unfolds and last the think else as just your the I quarter versus catering year, expedience.

Michael Osanloo

Yes.

had excellent in right really us live will that's a and Christmas, Elliott, from Andy. Winter holiday income that season. after was for It for name Your the week catering Christmas me, week We Storm a big recollection, it ruined standpoint. but a

really is catering that. did it more from on Midwest, guess, from XXrd weather, out rug And that So unique we our I a the for recall pulled that year that out will mild knock wood this have in hoping for pull week. rug the But business. you We're a so under us. underneath the in

weeks, we will have little week, do So a XXrd like-for-like obviously, XX extra numbers of but report year. for a bit we'll which create the momentum

Operator

Our comes David Baird. from next with question Tarantino

David Tarantino

Michael, I'm last for [indiscernible] mild also for the weather [indiscernible]. hoping more in

same is some I One had magnitude hoping we're sense the in us the questions. the just you what So you here. from of referenced. October saw couple could a on you trend improvement the I give that was page so third on of maybe all that quarter of

Michael Osanloo

dirty Michelle giving is is me look person. a my IR as

into we're say transactions, positive I now. and say right Let's can in just that definitely territory I of all think the that's terms

very a So that. about of we're also bit little also that Chicagoland. in G&A -- spent -- on spend, part we we're optimistic in advertising We've of money

you're brand-enhancing If Bears impact whenever like advertising. for World games do positive have And will you it marketing Bears some Football a or us. watching seen been you've an and fan, have we Monday the Night to that, unfortunate tends Series, or Portillo's

bit to surprised some continues a if wouldn't fourth the that, be and seen little into that I drive quarter. And we've so of momentum

some we're to think make remain that the levers I pulling seen. sure and optimistic, have what we traffic we're trends So

David Tarantino

The contribution. is new other question I unit on had

little saw sales of a weekly it came modeled way maybe than in is you the it, guess we had average units light like I new the for we and it quarters. what looked little prior So lower what a in model the

it in understand coming there's wanted just dynamic might of going whether else kind be of the the that related early honeymoons some I of part off if So on? and to to or year something the

Michael Osanloo

are for should fourth function in each their function think and them already the timing the on of in convention quarter, quarter. if quarter. each of Most coming depending into do our late them and check softer. ones in opening opening unit, you And quarter. the quarter. that It's it's I new But we're of because I not adjust a models the honestly you model the Obviously, units you a when when towards fourth to as the modeling would encourage didn't they're up we assume double of within mid-quarter you end be that. a fourth your

David Tarantino

so second Perfect. And on comment, any Texas opened Michael, that's far? the location, how

Michael Osanloo

We're We're very with We're with Alan. happy very with Allen. happy Allen. happy very

mean, I coming at then the It's a eager 'XX. to going think early Texas. and super Fort Denton about beautiful I'm The is is I already -- preannounced team shortly to get And excited got after Worth at. Arlington we're We're Arlington bit. we've chomping be open. restaurant. that, we in

for So X which of I'm an audacious XX state in excited for just in to and restaurants Metro that's we accomplished. Dallas the is to within months, us, -- on Texas that get took us task

Operator

with question next comes Stifel. Christopher from Our O'Cull

Christopher O'Cull

Michael, to the industry more has started promotional. get

initiatives think to mentioned needs take keep to if flat here it traffic what But the company you other advertising I recently. positive incremental to. can

Michael Osanloo

Yes.

to with one I So knit want that thing.

has industry gotten get Portillo's don't the does not promotional. We discount. promotional. So

see do not brand-enhancing I going So support a we when are. activities. shrinkflation. to do That's you're not just who dollar menu. we to We're going not

And delicious. a craveable, our food, of reminder right? Portillo's. who is. marketing why Just it's our Portillo's of pictures a reminder Because is people of love showing It's it's

hearing team plate, the of is an like that. Portillo's job I sort with the things sounds of creative advertising, to think the onion did on they rings which of fall your amazingly our crunch as existing the

So trends, it's all impact the And of brilliant seeing of Chris. advertising. the macro brand-enhancing we're

are in So our a dining full. where that. price dining, refuge And I because casual that from rooms think are really are we they points that's with

food a it's really beautiful fantastic well environment, us. have working and in We for

in a by exactly did aggressive you're activities QX, discounting of don't get discount. some and describing, Our very slowdown that's what drive-thrus which, because we QSR, little again,

with And a our or that better, come to burger. they'll shopper go $X economy want when back dining a a dollar burger rooms. chooses to sit be to us they when burger they'll going there's down or so to their gets And into family, come our versus get

I happy how that ride are we And is and going to just where positioned. it going is going brand-enhancing -- promote we to how of with we're not craveable but flow food in people think little bit. to delicious a remind so not We're a ebb We're discount, way. our we're and

other The is to lever us for pull excellent execution.

One talk don't that's why things back. they it's think choose it's because long-term reason medium great that discount fix, a great of I restaurant. you guests #X a people the about it's a I short-term coupon something. to went when It's give to because experiences fix not to to had a there, is experience, But not I or because want and a day, or the go every single go back of and I when a

another operationally be, over to the the And We're that and mantra just And drive that will yourself restaurant and so being differentiate going long way internally. can medium consistent be our that's term we performance. and most can you sound is sound. operationally that by company traffic drive

Christopher O'Cull

maybe just improvement through items may you something to or maybe you either And think some changes whether improve -- the value give Okay. performance an that I'm that enhance value? the fair. That's to proposition, wondering margin And was there's of margin else this menu the quarter. could back impressive some whether clearly opportunity be think then of to there

Michael Osanloo

Yes.

one pricing coming the And -- We of X.X%, value of we of couple anything we're is years. giving quality, reasons year. forego did not that that's the lowering to one to way the down I why great for last of essentially that's doing great shrinklation, and engage like any in this question. decided pricing back. our that's over think a remainder another It's any --

is what vacant. added value, we've on spend fact, we've done We money right? more In

think, selling best now. have, We the right that the I bacon industry restaurant in we're

we've you added are try bake amazing. that. our And We've if consistently done quality. inverters So

And improve do reducing I'd in lower other rather rather the meal, so rather to opposed improve other just of prices. prices improve aspects value. of maintain we're which to terms getting. thing is experience we'd raising We'd We'd lower cost value, getting the getting. some -- sort that's rather then prices of you're of that improve of the quality as and the what We'd quantity your we rather

Operator

Our Dennis UBS. question with from next comes Geiger

Dennis Geiger

observed last Michelle, highlight sort it's versus several on to out? the if week, anything months would to there, you Anything call of phase Great. the Wanted discernible on and behavior of dayparts, customer delivery? perhaps, ask additional Mike the whether changes, over off-premise

Michael Osanloo

some in our extra I pressures mix drive-thrus a dining largely, is promotional little them stable. in we're And rooms ways, activity is given think of bit bit on casual have of little channel pressure the have our very Unsurprisingly, QSR. our a given the that momentum dining facing.

it's so dynamic. -- really for us, it's nice a And

third-party every that The partners thing at frankly our that delivery look us doing good other are surprises all we of day is still a really job us. with

mystifying bit And there. confident But now. delivery. out feel that little It's where we with pressures news. continue a -- we're grow great given also right third-party we consumer to doing We really is are

Dennis Geiger

great. just And X-part then one That's question. maybe

that know update months but latest second on relates were have it's sort the development, she or time of some maybe X.X as as assume spent it et to the kind unrelated First, any of missed But course. ago, there? of steady But ago. into X.X timing, update there guess, modest, worth any the lot goes I next part since probably shifting of A we been I cetera. months on permitting, year. I spent question. even folks if quarter you this, I saw anything calling in of were just cannibalization,

open. going get are these obviously guys You to

shifted So just environment curious on sales. some the if has open with anything of that timing

Michelle Hook

the points. no gave the basis impact since last to XX the changes We're There's Yes, QX. we cannibalization. the Dennis, quarter XX in impact I'll same been take seeing at roughly

be So us. insignificant to fairly continues for

as So to same move forward. QX. be as it was we roughly headwind us don't we for that But it the significant a was expect in

Michael Osanloo

and to glib, I messed normal, those with sort acronym for sound snafu, military too things, permitting situation then don't up. to regard want all And it's but is whatever that of

cetera, et like in all with to kinds is cetera. getting up, this new ourselves face continue hooked have -- et a I of We we think normal. things last-minute delays We're just reconciled utilities

time into control, pad that the so can. for you're as et us not the stuff we And and build then disappointed can what just months cetera. build you continue weeks to so hours and control, control we restaurants adeptly quickly from as can cycle we still cushion, can't that we budgeting so actually enough And the building as lines,

Operator

question next Senatore, of America. from Bank comes Our Sara

Sara Senatore

-- sort should of you took I the food. of little a margins of amount sort bit margin about a to in fair like of expansion to from wanted seems price. of look flow-through you what specifically, ask like. idea come think Most the I And

So through get up operating, other I the and the or expansion similarly, coming Do on of like fourth lines? X you from occupancy, vein And right should the labor I little have to framework what's additional context the say, maybe for comp a sort in new in quarter. those in any particularly same like creeping some drags like units G&A number margin of on is of think bit.

have of the calibrate same-store to or then and restaurant line incremental also on And flow-through revenues follow-up sales question. trying versus one just So I'll kind margin G&A.

Michelle Hook

the see the look at You where us, 'XX improvement hit the on I that you I quarter-over-quarter, you when look running right? and think when line think you mean, really some Yes, head. Sara, I'll nail you that that's quarter-over-quarter. I food talk of on versus look commodities QX 'XX we're for you at what --

when have talked versus a be quarter, these so pricing later off, labor I on new but we a sequentially of does about particularly impact to headwind. have an going coming as think you that's do QX that bit about the And in, rolling we units think come the they're line. that if you're talking in QX,

that you coming will you And impacted at versus look I will from primarily so the the that that and because off. commodity generally you in 'XX labor line But year-over-year improvement be be the get see I 'XX quarter-over-quarter, sequentially, think so of commodities. rolling think and pricing impact QX generally with when line look when at is I

Sara Senatore

seen improvement, just mostly more thinking I was this commodities. versus had Yes. some that XQ, Okay. XQ year-over-year, you but idea from

same. the of sort that's So

Michelle Hook

had... have You

QX year, year. XX% running we at look last over XX% you about the this at versus of were If just

year so don't of expect this I much And to change QX sequentially.

very be commodity QX from standpoint. we will in to what inflation think saw I similar a

Sara Senatore

Okay.

from as about sense most year-over-year, of look should XQ tailwind similar coming the so of the margin the commodities. think the complexion And of XQ in we to

Michelle Hook

Correct.

Sara Senatore

Okay.

Michelle Hook

And better trends. perhaps then even transaction with

trends we As in we yes, seeing better mix combined, October, QX. look versus Michael what transactions when remarks, are my saw improved trends in in mentioned, we're we said than seeing at I prepared

Sara Senatore

that increase, that internal of sort to growth comp where there as you've should consistent construct goals still Right. of comp, upside your targets? with of as should about think long-term sort about think might look we sort margin thinking think sort of be G&A, similarly, your about what to again, of in as so terms variable trying of we're your algorithm, though that think And then similar sort it in about -- articulated should thinking terms just even sort on how long-term through trends. about variable when But I your the on of of we

Michelle Hook

correct. Yes,

you about XX% As about that about in think modeling rate we're of term, absolutely. we it we the you and long think know, think internally. revenue future, targeting That's G&A as how growth

quarter, range. fourth the the we For increased

sluggish advertising where we're our question market mentioned have have the spending quarter our our -- Chris' up, we definitely, a core on I we we're incremental why particular range the you're in We go lever range. that that's market the investment we're earlier, think market for seeing within it's where Michael in the seeing to of why as in Chicago can And fourth in of scale one -- pull as I Michael this, that's like that full pull think, dollars increase think And levers that can we we just that in land, mentioned, in we we Chicago, the made year, that G&A. in the environment scale. Sara. that's that of raised

Operator

from comes question with next Guggenheim. Our Gregory Francfort

Gregory Francfort

had of just couple I a quick ones.

a Chicago, comment trends things to out? declines, lot guys given just between I regionally, non-Chicago but not wanted about you I'm first The is regional know any -- have big or differences curious, traffic either the to call historically

Michael Osanloo

so. No. I I mean, Greg, wouldn't say

tell I Chicago ourselves not trends within it's overall, We trends, you, we Box. are consistent. we at think improvements and traffic the -- use pretty we are very and that trends would Chicago and compare I land, the our Black consistent And land. carefully look transaction obviously pretty

think is don't there's I With there. anything idiosyncratic our market product So yes.

Gregory Francfort

seen Okay. we've talk inflation about labor XXXX just range. to mid-single-digit a And then start Got companies it. few in the

expect? if kind I or something curious think be it interesting is you just if I regionally a to early, I'm that know be little guys I either would that that you with with that are you might below be that's think to next something you it's don't do know consistent what are of would running guys Or sort of guys run -- you that. might bit where able below year. that if

Michael Osanloo

couple talk of -- to are. But right? inflation going Keep of in so about noise -- mind labor that's a what's our whole forward. So going And let year-to-date happen where that Michelle bunch is thoughts. X.X%, it's we the there's So a this. I'll in

It's by overall news negatively now. a So right is good on is of our mixed our inflation. really kind affected labor staffing wage

We were better and getting means is the we news. much are experiences. good staffed than a last it great good is news The our which year, news are bad guests

volume. team, puts ops And we meant about is XX staffed. by The can on Creek kind that. That to be kitchen Our money. labor no-brainer because then a bit a when in efficiencies. and a labor bad right of made walking is reduce ban it Queen really over little And by news feet. effort, proud effort. get design new I'm go it deal new should the I very got we've mean, and fully operational big people a it's needless wasted the restaurants leverage kitchen something do there their refrigerator conveyance, a spending We of time, news, so you're to to pressure handle are off pays get means of positive continue appropriate more It line is our Allen, and wasted Texas. design I to feet

are designed, smart prep cetera. efficiently And more so et our about We've conveyance. it reducing reduces gotten kitchens work,

X those how removing efficiency really So great And it's staffed are? labor, getting well affect are value-added. rates, by is effort that you rising then factors not you

is the targeting we think to going are we our wage manage to inflation. offset how And the still of net those labor I of we're so line. can most Michelle. And --

Michelle Hook

Yes, that don't saw about that range inflation, mid-single-digit add, you being year, Greg, us we today. which indicates look think those at what anticipate as that would going just together. Yes. Nothing I we're seeing sit wage I we I to I'm than when be outside that 'XX, this obviously, as putting different plans we're today of here

Gregory Francfort

between coming more last X quarters. kind then I New it. Got that And week I rightsizing and than Christmas And big it next this XQ like volume week impact one for model the XQ last just potentially this just of Is you? maybe the also on on But the focused Year's, know one. but think shifts XQ call. I of and is impact both in terms XQ the a between would sales on year. of

Michelle Hook

the week that is after Christmas. generally -- It's Yes.

leading as mentioned. Michael up mentioned, we lot Christmas Greg, he see time, as to And of so a catering that

immediate 'XX. in the year mentioned Elliott. like would what Michael saw ended pickup last right I last so sales year, we And after an And we year in say saw

that pickup. in big first week a we So fiscal 'XX, saw

could a the little sense that you. because that last we're bit had pressured let be week, year, week, as XXrd me just year pickup could makes versus this year-over-year that lapping to So Elliott -- we if from be say it that you

long week short, blowout like us. a don't say I for it's So huge story

week see. bigger think Christmas a Eve, volume is when you that look I the that timing prior, lot the catering we of at Christmas

Operator

question next with Brian Harbour comes Morgan from Our Stanley.

Brian Harbour

early next beef on this those you be kind than Or have at about less even inflation commodities do XX, or XX% could think So point? the little of similar? you of something year side, just maybe to do follow on comments there on thoughts any a kind

Michelle Hook

is beef year. into up, Brian, next think don't I going lighten to

I call, 'XX. So pressured. taking that think positions I we're will on the last into mentioned still be

both And year to continue pressured. that some so deviate. I we're some labor. beef flats, when we QX we QX the But expect taken the I be I'll to say to into and when line thing about and trying we item, of basket, have look overall positions the look next said at of that to at same derisk

line. not that here mid-single digit seeing the sit anything would We'll for today year. beyond the outside get seeing mid-single-digit don't all 'XX year I today, as that the on that As I'm expect full what as of we be new for at range. with indicate 'XX we're into update well you to commodity I fiscal ICR anything But

Brian Harbour

thought suggested. broadly have think really X-wall so of been Yes, new year-to-date, higher you'd quicker you're they a they're just has that's Okay. quite store margins? margins, on influenced And you've comfortably strong sounds Do mean, by bit I of than as else mainly good. that ramping strong you kind store openings you just helped anything or kind maybe characterize

Michael Osanloo

job conveyance has been tell team gotten that we're and to other hostage buying been and not by that held to we're putting position beef right and Michelle the team reducing efficiencies -- and forward the the of out brag prices. -- I labor in have make control. to labor because doing as that not a done a my I you things beef creative would brilliant her of have so help. want people we've sure will Otherwise, about big

So of a flats my and for we we're happy market, that. track versus with the very I team beef versus are we're and really give to paying market, carefully where our what the credit lot

doing helps. of our like they funding open So your kind Absolutely, that of it's Undeniably, sure having that those restaurants it's behind maintaining are that lot of lot a there's margins. pick behind new a is our shovel growth. lifting make lot the great job goes But as into the team above robust margins heavy board that scenes scenes of those are. great and the a And shareholders helps. a target -- across Brian, as and of our work protecting to

Operator

question next Piper Sandler. with comes from Our Mullan Brian

Unknown Analyst

any but sequentially. I'm Brian. you this? It been changes could XXXX. if unique there's This is is but [indiscernible] what negative looks comment just wondering Portillo's, in on to if we wondering not to improved progress look just it as it as still into like for what's And mix it's I this on know like negative the dynamic mix. was could driving quarter,

Michelle Hook

going the X.X% point in to in we problem. absolutely, negative negative Yes, Yes, no about see in from to mix X.X% did QX. improvements your QX

improvements QX, and Michael's to we're asking mix. point, think I both seeing on in transactions

I'd we're transaction. per some into So the lower main the in of underlying seeing mix less component That's still improvements of change. items that say terms QX. we're seeing the that that attachment, of nothing's changed

changed out from that call So we line on that's what nothing would I item. previously discussed

Operator

further time. at questions this There no are

So today's teleconference. concludes this

your You for that Thank disconnect you may your participation. lines time. at

Portillo's (PTLO) 2 Nov 232023 Q3 Earnings call transcript