PTLO - Earnings call transcript Q2 2024

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Operator

Hello, and thank you for standing by. Welcome to the Fiscal Second Quarter 2024 Conference Call and Webcast. I would now like to turn the call over to Barbara Noverini, Director of Investor Relations at Portillo's to begin.

Barbara Noverini

Thank you, operator. Good morning, everyone, and welcome to our fiscal second quarter 2024 earnings call.

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

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

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

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

Michael Osanloo

Thanks and second Barb, morning, quarter good earnings you, call. XXXX our Thank joining everyone. us on for

of Let me saying quarter that second start fell by my expectations. short results

our to environment, projection to why our undeniable headwind we the positive did margins an within we done. earlier In expect deliver improvement mix, we is There's grew on half of be XX.X%. the in did this on of bottom to see negative a compared it's for work the with that was single-digit second maintain versus see healthy we slightly restaurant-level year. still must X.X%. the improvement these Although first macroeconomic in quarter, metrics sharp X.X% in to have and room total flat year, manage Based sequential comp definitely QX. in and we the to to comp and focus now improvement. low QX, a some top sales control. But of factors It We traffic line encouraging X all on

percent fiscal XXXX. restaurant least We now to we reducing This growth for we we'll in close unit about XX% open will And am in September. and total XX-plus boost will more open section. while restaurant XX expect to for Day her Michelle year. at in to Development will restaurant at to generate more the talk I the margins, our XX% communicated announce restaurants XXXX, this still percentage ahead importantly, level CapEx of XX% excited that XXth this

I hand Before three, industry-leading These strategic to X me us last taking progress our pillars and of quarter. building innovating Portillo's the amplifying our strong let things foundation These Two, the with teams. culture we revealed a pillars sit over returns and one, are: our benchmark on her, pillars world-class restaurants commitments. four against experience; operations. care and running help of great on recent deliver

let's specifics. dive into So the some of

our value running AUVs. the consistency sales When closely that improved speed and we the of taste Portillo's We've at A matter been our to We have your in our heartbeat experience. curate and that car, to refocus know leadership operation measuring proposition. away our value for your observing processes concluded factors most quickly. hard food leads on to sales. focus transactions element ensure transactions. served a QX, they GMs realigned the to they across and in many training that brand that operations for to that the our the in and our success and system. world-class took metrics and on on great too from I've relied and focus and working that experience. seeing a of is took need a to member is important our our channel to our team drive-thru our happy operations I've to GM's and still reiterate convenience return I'll you're right drive-through team to seconds guest our drive key change, drive-through members our recent industry-leading tool last year. We levels, get our share the has over for, back of known year-to-date, again. time comes improvement. look that focus, First, in drive we We're order Since participating over actually they XXXX the but and drive-through the period have we're We're In our single XX sense seeing experience, guests the they with speed of already urgency I'm progress. by drive-thrus. especially versus signs same we're recognize

to marketing locations. and launched second California. We explore last menu. experience our in visually kiosks pinpoint our through the images We're pillar pleased across add-ons guests to kiosk appeal Chicago studied of efforts helping restaurant in of We love to plan innovating suburban flagship in guest I'm experience. future to various by innovation. Portillo's Our is announce prototype practices We Chicago our we initiative centered to QX, And types. and best more install in industry location look how especially updating about first amplifying forward consumer quarters. menu the digital to this that and X excited we Portillo's in enhance on can that the the downtown suggest entrees kiosks on restaurants our idea engagement, using followed one week, you

our of Chicago ramping recently, is the This seen some If efforts or a to advertising you of our Chicagoland. have up in commercials billboards. full you've TV been area may in relaunch

with the will start you is guests did off in campaign this like see month XXXX. known advertising much it feel to not in, delicious drive Our the of we're and to highlighting focus campaign, The season. quarter straightforward, simple comprehensive the fourth we're the and kicks NFL hard just this confident It's when what coincide craveable of later on Portillo's food. for, hungry

really restaurants in reduction to clear, pillar us foot progress Our than excited X,XXX is build less industry-leading I'm and made our to a deliver about reduces footage It conceptualize, third strategic our capacity significantly industry-leading AUVs. front. this square be our X the To we've returns. without costs. constraining building reduction prototype. square a on foot with took X,XXX years test XX% build The square that's

in Texas will with end year. have X the We footprint by of the this restaurants

is final care pillar of great Our our strategic taking teams.

to programs training well. in growth. teams for development maintained for example, high We access past to our quarter, Ignite our and scholarship This treating continue concerted prepare accelerated launch leadership retention to our We highlight invest Greatness to programs and company. people very across program, increase to we higher For the We to education. team by our made program the a members Strive effort available launched some rates

care more team shareholders. Michelle. benefits, planning of care guests, resources than and value range health, we for them, our they program our services. of take dedicated financial employee a we including that, mental X,XXX also This take comprehensive a ultimately We over With implemented support let needs assistance wide approach me creating the members. hand legal ensures to that When holistic of provides of it meet

Michelle Hook

Thank Michael, good Great. morning, everyone. you, and

report more base. restaurants and revenue Please not the for periods. quarter of tables. restaurants year-over-year the opening distinguish This In of comp included of quarter, information our the see we revenue introduced and from our these composition our new reports in yet was comparable additions variances new supplemental XX-Q restaurants. sales about and the driven QX, new and for revenue tables to growth you refer contributions to in to the year-to-date base and XX-Q allow offer by the our These detailed supplemental Form both the

of the total cost X.X% base second offset the the of prices, $XXX.X in quarter, basis increase Comp price contributing quarter. to puts of over in same-restaurant approximate of X% the restaurants of which of average contributed to sales or quarter. in check comparable X-year in some reflecting not last increase million also third revenues offset actions, were same-restaurant certain product down decrease comparable a $XX.X of year-over-year decrease effective shifting $X.X due the Restaurants average of partially million, check by was year. effective partially in menu $XX.X our an offset revenues pricing restaurant million in in $X These a During increases at to million by earlier by X.X%, our was X.X%, driven With increase X.X%. of compared Revenue benefited an partially The revenues were The June, quarter higher increase. by second sales in this an stack million we weeks. a was X.X%. the decrease on just X%. In increase increase price higher by in retired us transactions driven an mix. X.X% approximately an drove areas

slightly we mentioned, flat XXXX. are growth fiscal for Michael to positive same-restaurant targeting As sales

a experienced quarter prices, second the X.X% Moving anticipated second of average due a partially revenues increase in quarter would costs year. peak in XX.X% packaging second in primarily to check. increases on was and our of offset XXXX. that mark to by the had XXXX the quarter In we from We largest for pressures of our commodity on This pork costs. the beef, beverage the commodity the percentage second the XX.X% of inflation to in increased commodity and Food, increase produce. quarter, as

inflation Our in the latter costs. produce will as some anticipate projections we fry easing hamburger, decrease indicate that french and half in

or second be of labor estimating to XXXX. driven our XXXX. and $X.X to quarter opening quarter offset expenses variable-based flat XX.X%. is quarter million commodity mid-single period. The XXXX transactions the the the of being was restaurants. rates year labor up average inflation still still XXXX, in in a from increased and lower the by digits prior inflation compared new project increase Labor percentage second versus the rate in to of primarily Other operating year check mid-single in were digits Hourly in the prior of increases. in the which was We of We benefit revenues are in to XXXX wage at second compensation as X.X% the X% by

XXXX the XX% restaurants. driven As XX.X% other expenses to the primarily year. the second of quarter to in a opening $X new second or the from of million Occupancy decreased slightly increased of percentage XX.X% operating compared of in to by XXXX, quarter revenues, prior expenses

expenses versus X.X% EBITDA XXXX, increased second prior were in X adjusted XX.X%, of decline EBITDA margins of a in XX This X.X% of level of margins reflects million restaurant-level which the in points lower softer As the EBITDA XXXX the the by to occupancy a were percentage Through prior Restaurant sales. driven basis first year. level revenues, of than to adjusted the is increased XXXX. quarter quarters points compared adjusted second XXXX. $XX.X year-over-year quarter of second Restaurant year. quarter XX.X% XX basis XX.X%

range We are in XX% the XX% of adjusted restaurant-level our to be EBITDA margins still to in estimating XXXX.

by driven administrative or million of as XX.X% XXXX $XX.X equity X.X% $X.X of variable-based in second was the higher The offset $XX.X expenses. implementation from in well decrease expenses was expenses XXXX. and to primarily second partially associated of advertising general revenue by million decreased ERP revenue million with lower quarter of or by Our the and This compensation. quarter our as

G&A supporting will We committed expenses and growth managed this our greater to efficiency have year remain in achieve costs. priorities. that shown We we controlling have our in these investing strategic carefully and

strategies marketing. this boosting allocating funds continue sales, will year We towards aimed including at

We these in proceed and will initiatives. investments discipline cautiously hiring maintain in our

Given our year. the lowering year, expenses are for G&A these we this on our focus spend estimates

timing G&A million quarter second $XX the to increased the of to estimating Preopening was now to million in planned second X.X% to $X.X and range million of previous new are to XXXX. our quarter restaurant million This We XXXX and due XXXX $XX in $XX number executed increase between the in be million. openings. from $XX X.X% of versus of expenses expenses

now Michael restaurants new we mentioned, at targeting least XXXX. open to are in XX As

quarter million Below the expense million of may result EBITDA of million clear $XX an on adjusted line, into X.X%. second now XXXX, of million in second of XXXX, are in interest quarter led of opened million $X XXXX between the $XX.X the guided we pipeline, previously preopening range $X.X increase a quarter view our million $XX.X EBITDA our of was second of this number in versus and by of higher As This the interest estimating a the on this $X borrowings increase flex restaurants of the from due expenses XXXX our driven facility. rate update an in This XXXX. additional million. revolver in was increase early from second to $XX.X of $X.X to million XXXX. quarter to effective be timing the All to we depending to the XXXX

the end today, of the $XX decrease revolver under outstanding are As million, of a from QX. $XX our million borrowings of

interest loan the effective tax XXXX. revolver rate and Our expense $X.X the second quarter X.X% facility million is on X.X% XXXX Income XXXX. was versus in term of for

the quarter for tax XX.X%. second effective rate was Our

Class as exercised fluctuate effective equity equity-based rate tax future Our are as A awards ownership will increases and invest.

rate Cash cash. to expect to year-over-year approximately be operations tax XX% continue quarter million ended $XX.X by with XX%. the We We XX% the from year-to-date. $XX.X increased in to year to million full

balance flow openings using this new cash our in We year restaurant to will be our beyond. plus and cash support operating growth

As we fourth a cost. at the begin in footprint restaurants this mentioned, smaller Michael year will opening quarter our reduced of build

As result, year. our reducing are expenditures of a we for range this estimated capital

now capital $XX million with it Michael. of previously to time. expecting range $XX you to versus Thank million. million range We are your between back to expenditures guided $XX to turn And million $XX for that, I'll our

Michael Osanloo

incredible our the fresh, experience and so commissaries. food it's we confident frontline of Michelle. center the dedication our culture our The ensuring fun, is our at I'm made-to-order results. I our get not really for long-term teams achieve you, organization, Thank Thank to the thank focused I at members, you. restaurant to and teams Across our recipe in we've we the of energetic guests commitment, at how here our people. want and to people Portillo's managers, success. am our lasting team a because on It's everyday secret proud environment. deliver support of created have in that all ability

Operator

Thank you.

now a be Instructions] poll session. for will we questions. moment One question-and-answer please We [Operator while conducting

question the Senatore first Sara Bank The comes line of of with America. from

Sara Senatore

half hear which year than assumes lapping that please, easier, you're a is you the at as I I'll full a Hopefully, second least the then I and are comp start me. the stronger well. just but X you can first know guide have the mentioned clarification, question marketing, on the year half. a with first, comparisons is question. I think and

the just So think drivers unchanged targeting even. I given clarification your and see you like you is pretty you acceleration these through of prototypes operating smaller about the restaurants in year just have have it building of talk sounds that some innovated was environment then could about I as what the And the you been CapEx. new these know of primary footprints. more

So more that in out how have to did how Just smaller take CapEx work you that newest you've done the have given or more already? even can prototype -- to the you much you restaurants of cost footprint? lower be just you are done getting

Michael Osanloo

Michelle the clarify first CapEx. and the then Great. Sarah, I'll I'll part, handle let on

We've but area, I've think just of a marketing. to in our awareness. aggressive mean, but business the trend discounting, that lot put Chicago comp initiated Our -- focus. the quarter-over-quarter. I the in our only marketing, And have it's keep now, on pretty particularly bunch talked also improved marketing, transaction on benefit are enablers we're trends seeing we're that which trend I that seeing, one of about have mind, recently and our for highly us, a of is know -- throughput, to key and we've we a and getting really not the focus brand is that we marketing, this responsive We

second positive let so gets accelerate a believe of us into our continue to X Michelle CapEx. to that's I'll things, the and performance comp. year, the what half will we talk to flattish And slightly about those

Michelle Hook

the that CapEx, into Yes. we other we in restaurants X,XXX mentioned, as that as the coming that improvements million footprint. then online as of on were pivot in restaurants back well those to are restaurants the the have and year to building for of half able we And as And that were well. coming X dollars future, some we $X.X where were QX mentioned are in even going we the that, the we builds CapEx we make restaurant of more are million. those were save online we to But those in X able this not square Sarah, foot year some built before the those are some on be elements $X.X design to to X of to those able range but between

into of have costs we well we year in at to this as as the build play we're restaurants XX start that XX this build line as lower to And those that. new building come of well sight then those So XX, some cost. start pipeline footprint, on as there

obviously with is that level now comfort our higher. So

so million $XX very And the putting we lower of million. where that's feel range out $XX comfortable to

Operator

Next question O'Cull the Stifel. comes Chris from with line of

Christopher O'Cull

of launched round to you level in or maybe know fresh last the you've a year. us I you to investment I Michael, ran any could Chicago relative marketing late of tweaks But here in third made the quarter. messaging campaign you was the hoping help understand

Michael Osanloo

good remind Chris. that much is morning super see we love messaging responsive our -- very is The they of We The business consistent. messaging how is Portillo. first, actually people when

So to show We but be our beautiful essentially images glib, it's it's of not point. food. food

how think I they people Portillo's. the And we it. love the remind excited them taste, of smell, about we just get the much sites

So campaign that's ad what the with it is. It's very last consistent year.

Bears billboards We've games. campaign. the in It's we of up, strong area a year. around material a have really a enthusiasm It's probably quarter Chicago spots out. of the the TV more bought lot We gotten with last but the in NFL it fourth off spend. We kicks spent for series the onset There's land a of lot bears. than of some of

move we to a material to model Now know that. I going it us. don't model I to I'm would you're but for model how spend, the it. help going try is or that it needle encourage sure not think you and it's to

Christopher O'Cull

you you headroom in this been service changes the to much Can that opportunity us mentioned sales then, operational I improvement? throughput drove then comp maybe of improvement improved drive-through how in improvement? And you of able terms you know Michelle, there? help then have have correlate understand to more the And that impactful speed Great. the most And in quarter. the

Michael Osanloo

try very what So excellence XX answer -- XXXX, of time X because faster XX-month In about we let quick were We've just and last a that drive-thrus it our be efficient. simplistic, to trailing really Portillo's and presence sure drive-through minute it's real-time training now. And at carved period. X feedback, you manager our just back we almost but lost don't really bit. on team to of Chris, managerial seconds real-time We in were outside past that this a up in sure started are for we means key outside little making there's the period adeptly thing. I want a members success. time. for working to the as fast it's throughput me coaching, be to sort we're emphasizing members coaching and is And that a our our weeks giving making at in our and the to that whole that team than way And expectations as

a So that enthusiastic back, I'm of the to we've bunch it a we're carved have embraced teams still but go. bit because little And course, this. there's very time about of contest at optimistic very great and bit doing and better. Portillo's little people competitions not this. I'm they that great so encouraging about rewarding But be a to the are and all

an execute to are know. and We need to now what the machine. against, We just execution know teams

Operator

from comes Tarantino line with of Baird. David the question Next

David Tarantino

the comments seeing third Michael, about wanted what clarify I to quarter. in just your you're

that we've from the other quarter-over-quarter heard I is, nature transactions lot question related companies to or comps my a or both? the And opposite improvement. we've of I Was seen. of guess you think the mentioned

clarify to that. I -- I just So wanted

Michael Osanloo

unusual. X.X to to And X.X. has X.X%. negative improved a had sound us, our if harken improved negative improved comp X.X. We negative does was to QX even negative back for QX, QX, But we little just slightly. mix you it transactions. No, our we

us. right think of tell what's guess help momentum, business doing I'm starting that you to we're you're -- to the So can going the David, back our -- enough pick I thinking to smart low-end to answer for and things that that not environment I up the know, our business. drive for the happening is and I'm What you. I think gaining you're I consumer. is macroeconomic is I to not flywheel

David Tarantino

that on what seeing to I comment you're the that, on I guess quarter-over-quarter I -- apply that. third was in Great. that guess, improvement maybe And confused, Maybe far so I quarter? did misunderstood

Michael Osanloo

just quarter. QX I -- don't not was versus I commenting on I'm the on QX. third commenting think

David Tarantino

Got it.

Okay.

rationale price then can Sorry very you explain And taking increase of I for question in had move? spending? the given in that recently a that guess, that And confidence confusion. approach the I guess on uncertain you I environment, took. on sensitivity maybe today's your the consumer

Michael Osanloo

guess I I cute, as I'm to of -- much a think increase. don't We so price be it trying Yes. not but

We price and local with is jurisdictions we our fairly do that. tiers. And keep try pricing and our have Despite rates margins like what do neutral. different what things labor to different might

period time. make a right up And number so costs there's much cleanup of fell all sticker no of that the labor did tier, them to not a had one that over one gone price methodical changing we've sure of increase in is about been time. jurisdictions swoop. We little have significantly a to bit pricing. We've more pricing this And at any shock

what handful that's a we're restaurants price pricing. by we've markets, into subsidized mean by right candidly the other we There's that them now and tier. So put being of tier

Operator

the from Piper line comes question Brian Mullan Sandler. of with Next

Brian Mullan

the throughput. a on follow-up Just topic of

improved as position tie the drive-thru. in is you're well. with something can you And Chief that opportunity the if about that I'm restaurant that also Operating team throughput for internally if see an Officer role? the think be to place? handled into spoken could Or looking in you just if You've fill wondering you you

Michael Osanloo

part that So the of absolutely, opportunity Portillo's. at Brian, I throughput first think throughput, your a question, there's

drive-through, not that your the on throughput, it's in just think it's when as probably inside I lose you well. focus

analytics most data drive-thru. suggest it's Our and in the our obvious that

better of in reasons kiosks. one testing do of restaurant. we're throughput the can And inside actually why terms the So it's we definitely

about excited I'm So test. the kiosk

in the is with but talk way think, future, throughput. that, of about we'll think another we more I it helping

the in So sure inside. for throughput and drive-thru also

me on. them. closely enjoying on shouldn't working my started job I at my I what We the are them, actively closely focusing here time I'm being looking very and it we're now. but with Portillo's with be kind to and of COO, for gets into work operators new what a focusing insight right a lot of close we

gives to so just a that And make to reinvigorate execution us great are the team that basic me to we things it the focus a be on chance machine and fantastic. few

a but a for going appreciates to for rush COO, into culture giant We it we're the is. fits and search We leader a not in sleeping anything. are actively Portillo's who want that world-class our

Brian Mullan

And follow-up on the my kiosk. Okay. actually is

you see to If the broadly. to first couple from like you stores, of were that deploy what I assume you'd more want

If your consumer about of you making some if do sure just front could get that, some might my just but the to guests. have not you sure what all intact of with quickly like And you ahead talk talk like, about guests that how set, interaction how something could saw? you would thrilled they experience -- stays center. the I'm be like the then for

So you're that? thinking about how

Michael Osanloo

than a restaurant. all been less I'm It's with be at to week honest one to you. open options,

really jump looks. to by conclusions. very and steal great any proud too want of how premature and the studied of deployed I'm not our don't it very best-in-class They I great it. proud love So proud I'm restaurant way to performance into we're concepts. the ideas have I companies, they've team.

And it are We're we very to it think exciting then everybody super looks. very what I I'm it think deployment We're rolling do kiosks gets. it doing our it good location. how how seems it deploy. quickly Downers see see the something Grove as have does out our in to we downtown I So excited to of And Chicago. works else, want that I can if California. to hopefully in for it as

Operator

Jefferies. The line with Barish next question Andy of the from comes

Andrew Barish

Yes.

$X.X missed. Just you inflation. the continues peak a commodity be will the what Did for be in on quick the that to the the Michelle, think XQ I clarification, say year? you increases million

Michelle Hook

peak Andy, We and anticipated that's we had expect that. be year, correct. the would always still for the QX Yes,

fry in back we are we of the and in hamburger costs So of the some easing do produce in the our mentioned the back half french half. expect easing year. I And expect areas

Andrew Barish

of 'XX getting Okay. first I mean, without the without front some out too And far then seems with for of in guidance the increase, if it for 'XX of number quarter far as it implies getting preopening openings or anything. too

of share 'XX going be were a You spaced further you hoping insight we at evenly more in openings, that closer to that this terms get any point? year to was would to as like

Michelle Hook

have Yes, mentioned pipeline. the Andy, XXXX clearer view into I we a think, obviously, I

expected into always 'XX 'XX, we more do great. smooth. get expect be But to that a look we not so And as we to little cadence

And part of rent that you so as includes a costs component. deferred know, preopening

in in to as XX 'XX. But some that where of yes, 'XX confidence bit restaurants That's start those we we increase these 'XX seeing in gives bit of incurring cost. get we that what So line little sight we into of a we're and us item. and smooth expect saw a better that be have again, little line more than what

Andrew Barish

just one, Michael. you. final one Got And

in you that. set it's continue football kind I what up into of lap a trying into the to you fourth did us year? marketing next the level month? of Chicago. On it Can sense quarter ramping give on last just guess, to Does

Michael Osanloo

a dribble the into Andy, spend. -- quarter, hair it's Yes. primarily a but might It's quarter third it fourth a

Operator

bet. You

from Blair. question Curtis the Next comes with Matt line William of

Matthew Curtis

value you of the lean on on on bundled you? to you on you question for the impact a have the more are meals. mean I Just comfortable ticket broadly, more now half? I in in semis second did need do where And relative Or then, average you right return peers? with think value any in guess, Xs April to meaningful are

Michael Osanloo

I it they It's for business. them. tell like makes should to first markets, be seem having X. question. our getting It lot sense would tell great a our what famous curate guests be a it's does helps the in especially you positive would I impact you, we're of redeploying happy and it with it a on because

a a as seeing uptick. slight are mix well We check as uptick

So about I'm that. happy

pricing. we're We In terms provides a on is that of get. -- provide what a not brand does an value value a a phenomenal of EDLP that brand be for We're value, guest we're going low merchant, sort to meals. brand We're everyday that not sale.

price are points excellent. Our

Our beef is huge. sandwich

huge. us are one portions. ski fries inflation is or for Our calling out shortening No

see on give a a the of spend can You and guests cost sales. it in we great food, lot our of in We what money they're receiving. value

a not experience fair I'm point, value. for think the who a wonderful we're consumer So still I great price -- and great a wants

Matthew Curtis

doing Okay. know across it drive-thru the speeds fast back the get are how promotional that the right could going intensity food in drive Understood. is you now? a to I talk just improving. through for drive-thru then just hear minute. to traffic But And light let's space about of

Michael Osanloo

I speedy, bit your some it It's mean terms The efficient, think pressure it's is question, probably by engaging intensity. speed in and while being getting that just bin. made fresh, not our drive-thru. mean very for we I largely to drive-thru they're a discounting, of on mitigate challenged our I of promotional the drive-thru us And way promoting is by bit we probably and have little aggressive are drive-thrus. order, and fast, little being a QSRs excellent That's little in answered because a you will of traffic big the businesses. The to Matt. compete our fast into We a in in how hand execution. drive-thrus order, the to bit get got made better. to sitting hot, food that's delicious. guest a own in

Operator

Stanley. comes line Brian the from question Harbour with of Next Morgan

Brian Harbour

the of the -- improvement drove think seen to of you driven in year? was that prior have customer in terms mentioned, kind can you still just that's you of slight mix? that And do it? response, mix was moderate the what that else anything Or balance through largely behavior clarify kind of the Michael, that

Michael Osanloo

the know I dispositive that if mix it's have if to factor. don't Brian. I to perplex at me I'm I being mix, factor, negative it's you're some point, negative much continues There's a itself. noise probably in when data. mix, does so The mitigate it think over think honest, lapping

mix. I'm so And hopeful with

help are with some We in mix. strategies engaging to

famous mix. help I think that is the can X with something

mix. the actually hoping I'm kiosks that think I help with can

so some we've bit it And a mix little to does facing. that me strategies but taking mix, help the with been perplex challenge we're

Brian Harbour

sales a what half. new any normalization And basis, on of Michelle, still in second has that I that comments of about The how units it of were on Yes, thinking? been think makes kind kind just consistent you sense. you mean, the with

Michael Osanloo

reception. very Yes. our We're I'll thrilled new our are the units. consumer at theme, an happy as with you, with I'm expectations. tell performing overarching They

I a our that think up incredible to us in think we years to restaurant minimum in -- to Dallas could get efficient in scale have we've don't X for is I scale, It's ever DFW. opened imagined. than is a something X less like company quickly

trajectory we're the about super and restaurants. new excited our So trends the of

Michelle Hook

Brian. add, I'd Yes,

Houston the we've about before enter half know this the to going I in talked our new that back market. are the market as year We year. of

get excited that's, going we restaurants about and And Houston it's year we've within excited operate those that's scale, we're we're on half continued all So get just awareness. very in. not to is only market, within as half to to those But continuing well those then efforts restaurant in the in the key and scale market to drive And going to other We to cost Michael excited the to think continued what year. but awareness the And back that as about up that that Michael the drive out mentioned, opened well as to to what think, do we entrants mentioned, of then continued to Dallas primarily talk scale through about the markets. is about building. driving up awareness. markets, efficiencies drive as of I first scale another in we're getting we're new Arizona markets as as build DFW. the really And I focus markets in

Operator

done the questions? are Harbour, with you Mr.

Brian Harbour

you. Yes. Thank

Michael Osanloo

questions? Operator, other any are there

Operator

Jim have from a question Stephens. Salera from Yes, we

James Salera

forward-looking if looking ask could question. at one I one Maybe backward

kind First, look seeing coming low indicate of the backward growth And me notes out throughout April the would in believe one. single-digit last If for restaurant the deteriorated I same-store serve that my kind sales talked about of you quarter guys quarter. those trends results the obviously, XQ. of quarter, correctly,

there's So kind just year? anything any half of throughout quarter, be of the if kind into and we the continuing should that the the puts that happened takes on of aware color back there of

Michelle Hook

a quarter, in most more April, moved is of single-digit we bit the absolutely say month into probably that June. only see was say, I I'd challenged low you're would pickup saw May I'd a challenged. we out call and bit Yes. say the then And a correct. did the comp. as I'd thing we little Jim, was

characterize for -- that's in year choppiness So it. just for traffic, that's to like would this continued some give color, but quarter, I par was it we you is how this the everything in the course environment,

James Salera

does Okay. we quarter, give you detail analog as kind on much but have about... just of Great. any -- want the I go XQ? as into know kind don't guys And too of we to that think to

Michelle Hook

say... Yes, I would

James Salera

...chopppiness on quarter. the

Michelle Hook

use Yes. think Jim, I'd continue No, to word that. I I choppiness. use choppy. would I There's the say,

is going kick month later as advertising NFL our to this into in to the really kicks start mentioned, gear. Michael season As

we that's And to beyond. QX so intra-quarter, see choppiness we'll continue that But does. and see expect whether to what that

James Salera

spots to wings, Okay. Great. the food kind maybe of from kind around the consumers follow-up see day? isburg'stealers question one those I'm concepts about But of think do and the and advertise among that to And at we out how and stand restaurants around if Excited on the game although have myself. of had one of football, all surveil all marketing. you other choose message that pizza, Portillo's pierce options bars,

Michael Osanloo

This but little its brand is punches to going that Chicagoland. weight a cocky, sound just above we're in a

TV different consumer's catches us. dynamic Chicago a for it it's is in or a actively in land, markets, when we're the Portillo's lot marketing, of on So other But attention.

a are advertise XX-year-old Chicagoland, don't we We beloved in and regularly. brand

positive impact for a has it do, us. strong we when very So

Operator

line with from of Geiger Next UBS. question comes Dennis the

Dennis Geiger

week, channels anything the observations? back part guess, of if anything, I implications customer notable particularly curious, additional the to any those day there's either if anything Just seeing highlight on-premise of you're behaviors, interested be I'd the off on or delivery, if and day there

Michael Osanloo

say every third-party delivery There's steal I'm some choppiness. strong. channel, she partner's it's when as dynamic. choppy. are some elements elements here same of going some my I'd the within -- strong, there's says line not that There's to that very are

you sometimes average. for though, and On the find strong. channels consistent so us, elements, pretty not it's Dennis, X where across or is similar on strong, we're seeing daypart Some week a performance average, others

Dennis Geiger

Michael. helpful, Very

Michael Osanloo

Yes.

Dennis Geiger

One I helpful. could. if other, Very

scores. strength if as Just I seeing? latest what know you what there. but talked relates value it missed, I'm earlier, that know satisfaction but how scores the ahead value just means? think you're of you scores, again, we've to on I those And about solid update I but seeing more and looking scores, broadly kind not satisfaction real there. sure guest been some

Michael Osanloo

Yes.

very, think I leading a very kind And not behaviors them of indicator. right I be these trying I'm to that engaging they're for continue and the want with that they strong to us. they consciously I are the sure make our scores teams little to -- because when bit deemphasizing organization are a manage in score. accurate, drive

it overall be the accuracy, speed, to favor. a teams comes is if things in control smile to problem, remind when to like a satisfaction, So fast, the guests problem we the that resolve way that to has the those guest

so And good just being. be human a

of meaningful that signs to getting to I build to a our what it that. especially emphasize, signs we matter behavior think guest. changes, to message And that, some We're not that's in Dennis try to seeing I'm through. manufacture of speed, sorry, improvement when friendliness, We're seeing restaurants. comes things really scores. that And on is so And

to be brand. going discount on differentiate price not points. We're are ourselves a We to not going

to to as the quickly by exceptional way hot delicious fast. can. friendly. as That's going in We're environment. this execution. going to differentiate Portillo's going are be be succeeds get ourselves we food We to We're going you We're

Operator

Guggenheim Next question Gregory of comes from Francfort with the line Securities.

Gregory Francfort

I had X questions.

just follow-up that. as on first The maybe is a

those? now? guess store you're what metrics what changing managers maybe on? the were they And bonused I store So And the managers, are what are

Michael Osanloo

managers sales. sort of to the Roadhouse changing a they communicated steal incremental not the of it's way them they Portillo's the for Texas And profit are Store that, bonused to generate too proud at is old Greg. get We're percentage not company. concept, that great actually the on model, a

try sales. And ownership mindset. our managers, to So we it's an store based create on

And I to so want be. where that's it

had I'm possible. of create away that think metrics. focus the lots And we past, we've and little simplicity I and working got a on different trying we them much now cute to lot a in stripped as of as and

Gregory Francfort

it. Got

then maybe been wage and I And quarters year think Michelle, think inflation each you're -- labor quarter. have inflation for Okay. first on wage the the I of hours, saying I X.X% X just mean,

to you've you've that I might labor half? there that quite just managing be well. a what there be year. You're expected else the been the Is might in think been Is well? Is we still seeing in pickup mid-singles swings? second managing line churn for that And think trying that hours I'm missing? that

Michelle Hook

got yes, Yes. you right. No, Greg, that

into quarters, as our X it So do first expect QX up it We play period. time annual to in the the will rate tick X.X%. we increases. give was Those come

efficiencies deploy in little bit So to within look we into into we QX efficient QX. And how and very But manage tick restaurants. are focused look ways We our labor. for a for we we expect of to up continue labor on our right, you're kitchens.

grid hours And to we We're ideal was that years labor our purposefully, -- ago There our but situations so were according several numbers. weren't labor of those labor definitely you're seeing out to what hours. deploying those managing bear we ideal to says. in some where that those were labor managing

today, in sit we're that I As -- number feel spot. comfortable pretty we a is -- good utilization here that labor pretty

hit some Greg. X% But closer and low you the a of nail we that, what bit puts up in so that on just increases. the wage we us efficiencies to expect call to X% it, to rate continue see work range. And in the that's head. the tick by of the in end, that those to little really half on It's offset But kitchens back

Operator

Thank you. teleconference. today's concludes Instructions] Thank [Operator you. This

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

Portillo's (PTLO) 6 Aug 242024 Q2 Earnings call transcript