PTLO - Earnings call transcript Q4 2024

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Operator

Hello, and thank you for standing by. Welcome to the Fiscal Fourth Quarter 2024 Conference Call and Webcast. I would now like to turn the call over to Kyle Nelsen, Vice President of Investor Relations at Portillo's to begin. Thank you.

Kyle Nelsen

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

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

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

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

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

Michael Osanloo

Kyle. you, our you for everyone. Good Thank for call. year-end joining us morning, Thank

they into are results, special. day Now members. dive incredible the elevating brand, drive they hard team our take to and and thank bring our to coming Portillo's I I our restaurant energy to grateful do delivering Their and excellence in dedication do instrumental work, to a what before I'm makes our moment passion want recognize keeps unrivaled everything people Every that for to experience been guests, our back. Their has very success. commitment

quarter. fourth the for Now

with revenue $XXX.X through and was mix. with of margin fourth our for Total good continue of saw for excited are We untapped EBITDA to They million with was up million. role of a year Our we're at $XXX.X X% of Restaurant-level a exploring XX.X%. We a still $XXX.X the full-year quarter comp X.X%. more was driving of our adjusted lift full-year was a quarter business. were top there's comp QX, full momentum kiosks their addition for lot million same-restaurant in our sales than and line potential the and the million especially $XX.X revenue all restaurants. X.X%, and the negative kiosks, believe in

done muted carried job cash of in others what controlling January, has the solid similar restaurant Our to enabled industry. into also and headwinds, in to in strong team some G&A. a early traction our labor has the including from particularly of momentum, nice us We business. costs, but in heard drive flow February, weather industry you've This

of Looking we're excited year, ahead the really to rest the we're about executing. plans the

simply number our further number four, to deliver how Our we'll three, drive the operations, and X number of advertising Perks for usage unit increase key loyalty launch economics traffic-driving the Portillo's improve This improving Chicagoland program; strategies traffic, industry-leading and kiosk and brand functionality; in speed awareness; two, expansion our are: number margins one, of including shareholders. drive-thru. beyond better is

we compact by X,XXX, Restaurant build to more and feet importantly, focus that building Now opened strong returns. are our XX our the new, X,XXX approximately smaller footprint our restaurants square opening format. average restaurant of size with remains XXXX, Future to critical restaurants, on which course, cost efficient growth reduces In $X restaurants deliver from of of lowers new the million. This X a new over

towards in other restaurant our million. In the XX plan of scale new be XXXX more Future. open will we'll in will The in Restaurant to still million the XXXX majority to $X.X to balanced. new these which located suburb back XXXX we includes at Georgia, be the more in half end to first XXXX, restaurants, continue where This the and of opening of majority in but of pipeline Kennesaw. be being the strong we're awareness. optimistic our concentrated will all that with in will of to lead expect Atlanta in Texas, We the build Openings year, come the year $X.X the restaurants of

we with will an economics, new of more airport Future our develop formats and eye for to smaller well operating in even restaurant These restaurant locations. additional out XXXX X.X ahead, toward Looking restaurant walk-up as improving teams. an continue include model efficient a further as the including that Restaurant roll

on we our awareness in us advertising first know the untapped who to On Worth. focus January, large the on we in we're In find campaign ad working bringing capitalize launched market-wide the buzz to We're of to guests. iconic and Dallas-Fort potential experience us makes new Texas front, brand Portillo's The are, don't introducing and yet. ads a people of us. build to to energy audiences We're late who Portillo's what to telling visit. them encourage where

lift. experience past that drive gives meaningful Our marketing great outside will Chicago a us this campaign optimism

punch members habits in to digital lives specific on based program marketing launching next driving Portillo's goal and your hit intended buying program. is by to behaviors traffic This Perks the wallet Portillo's. million million on the we're July. uses across and drive a focused one-to-one X.X guest Perks X.X approach not is to engagement initially loyalty card program with We're Portillo's a typical targeted month. It Additionally, and to enrollment patterns. drive

where of customize Tony experience approach know business an keep guests coming needs the we offer has our the excellence this visits. we known, excitement. through and of the points-based drive frequency frequency, Chicagoland our we back, can menu That's can further. a and richness can visit focus can We why the items, might new to on continue suit new not of strengthen to restaurants. or we in elicit brand guests. To we across focus encouraging example, discounts can we're awareness badging. We Because COO, on is to new gamify delivering For incremental we in building our Darden, to our X-pronged trial a whereas well need offer markets, operational program, unrivaled

a This promise restaurant showing additional drive-thru time drive-thru First of by With an leaders AI-powered providing is target to efficiency. better seconds, is drive-thru to improving XX speed. insights optimize expanded real-time for tool we've reducing more our pilot camera our locations.

Second, engagement training guests within Tony our across to the deliver more That restaurant all elevating energy, to great. market the time leaders experience make a and and things on urgency hustling chain. fundamentals, teams that uniquely coaching members, the experience more and reinforcing our is moment, attentive, being and means with focused Portillo's accountability with team consistent and getting responding shoulder-to-shoulder in

continued they receive to Tony all high Third, he's remain plans have identified we us an ensuring off-premise even XXXX. unwavering success uphold what With order ordered these we're exactly operational is and the accuracy, up let by innovation efforts same over in focused across critical. greater an on channels. We're sales opportunity. excited we Ensuring driving for implementing confident focus guests processes will our in drive With standards is accuracy the for and excellence, it strengthen as aiming the place already and set and on hand Michelle. me results transactions. that, we're to

Michelle Hook

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

reminder, a XX-week quarter, a fiscal the fourth a XX-week quarter. fourth quarter was was of fiscal XXXX quarter As a basis, the of and XXXX from comparable year-on-year

a was week in reflecting additional of compared year. During $XXX.X due to fourth impacted XXXX. fourth million, revenue million to by the the quarter last negatively revenues operating of million or decrease Total were quarter, $X.X $XX.X X.X% an

XXrd fourth the versus in of impact the year. last quarter revenues week, grew the X.X% Excluding

an fourth in revenue X.X%, was which drove not X.X% $XXX,XXX The not certain prices by sales revenues stack at driven approximate partially prices, Comp of same-restaurant in X.X% by attributable price of basis partially X.X%. We mix. approximately increase from transactions. check roll fourth a our average last check increased on X-year an in in higher fourth In product first Our now overall quarter. Same-restaurant XXXX to increase we growth was price X.X% The in million approximately growth price Since the Restaurants for our did base a the by quarter keeping the in price revenue offset had quarter. up by growth implemented X.X%, a increase was XXXX, and the sales increase X.X%. menu January decrease the is raise non-comp increase our X.X%. offset quarter, effective driven January comparable in during sales increase. average quarter in restaurant same-restaurant was restaurants growth. $X.X in year off, a we contributed

of We June also and to adjustments we'll throughout the last in and year, pricing made March assess continue pricing year.

to Our guests. a goal we strong ensure provide value is to our continue to proposition

by we As of growth we the opening to to look our growth X%. comp with restaurants, the range driven sales be new modest of flat combined to XXXX, to in continue expect revenue

of During the the our we Houston quarter targeted open will of XX in restaurants new X first market. XXXX,

half of some but has our momentum. evolve of improve softness entered we speed as of of the January driving we markets with goal we in program, like in Perks kiosk and As half improvement weather the adoption, in the in Michael drive-thru. our outer with traction, into the Coming the anticipated launch tempered brand our February's first year challenges strong our increased awareness Portillo's early mentioned, XXXX, latter

to products. Food, of to increases increase commodity costs and increase the packaging fourth the costs. XX.X% our moving a in XXXX as the fourth partially prices. to our average by offset This due fourth In was of dairy our in experienced in in Now we quarter X.X% XXXX. from decreased quarter the chicken in a on and decrease check, XX.X% quarter, percentage produce, beverage revenues of

labor quarter in estimating offset are quarter our investments driven of was rates the coming to annual Hourly by compensation, decrease of fourth as in of of commodity This We XXXX. increases. most to the with inflation XX.X% a variable-based significant the and rate pressures fourth partially from including were the revenues in average quarter from decreased to fourth members, our team beef. Labor X% up incremental support XXXX XX.X% percentage lower in the check in XXXX by of X% XXXX. X.X% increase

quarter labor and XXXX. Other increased X% the by repair expense. expense, a in offset the compared estimating are to which primarily and expenses was operating quarter inflation increase X% by opening in driven XXXX, $X.X XXXX fourth to or fourth maintenance of of an of in in decrease the insurance million restaurants X% of new We

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

percentage million a occupancy year. Restaurant-level compared The fourth XXXX. operating million in of quarter week decreased to quarter adjusted X.X% negatively fourth was in As of to $X.X prior comparison the the the EBITDA to additional increased XXXX. by expenses the of revenues, impacted X.X% due $XX.X

quarter fourth quarter basis XX of points in increased XXXX. EBITDA impact to week, EBITDA versus versus the margins in XX.X% in last XXXX XXrd year. the fourth the fourth X.X% adjusted restaurant-level XX.X% of of quarter Excluding grew Restaurant-level adjusted the the

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

and Our the $XX.X lower general driven in revenue million of administrative XX% million partially The from of XXth XXXX $X.X expenses advertising the XX.X% million. was XXXX. and compensation, by XXXX, decrease million $X.X by or the an by quarter $XX.X revenue offset of expense fourth in or fourth equity-based increase to of week variable-based decreased quarter primarily in of in

as We well strategic our approach. as will to continue disciplined investment in remain but invest in initiatives, we'll in XXXX advertising other

to in We quarter to XXXX be to were XXXX. of in flat compared of fourth $XX G&A fourth million expenses quarter the XXXX. Pre-opening are estimating $XX between expenses million the

quarter of million this $XX operating X.X%. XXXX. week in impacted quarter led estimating XXXX. All due of the are in million XXXX, XXXX range million of million quarter the a the negatively to in the to comparison The in $XX.X fourth of of $XX the be fourth pre-opening fourth versus $X.X of to was additional decrease million We in $XX.X EBITDA by expenses adjusted to

quarter $X revolver more by extra increased additional the facility credit of January decrease interest week, the $XXX lowered revolver the interest rate interest our XX a gives facility. On fourth credit last impact strategy line, by under new fourth driven from other by fourth borrowings basis and $X.X reduced partially This will loans was year. Below million we $XXX on term to in a million versus XX, grew XXXX. of approximately million in loan quarter rate, of offset The support the on was effective new million strategic decrease EBITDA the from lower X.X% million Excluding us growth mature to the quarter EBITDA initiatives. the of XXXX, been our and The adjusted term flexibility XX, This $XXX the January to agreement the debt points. agreement $XXX our XXXX. from million. financial has on expense

costs which million, our borrowings from loan to and approximately January. used was amendment includes the part in outstanding are transferred of facility our our debt credit loan today, of pay As revolver under $XX $XX term as million over facility that

rate the tax X.X% an Our was XXXX. of $X.X of the effective X.X% was fourth revolver of and on XXXX. Income expense the quarter XXXX, from term $X.X million interest versus for loan increase fourth million in quarter

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

the was increase company's Our our in an Portillo's primarily for effective The rate rate increase XX.X% year versus in was the tax in tax in OpCo. effective ownership income by XXXX. interest driven XX.X%

Our $XX.X tax rate quarter operations equity-based exercised as in Class year-over-year million as to ownership and with future are effective increased ended XX.X% the fluctuate equity by A year-to-date. will from $XX and cash. We awards vest. Cash million increases

your restaurant for openings are time, well with with year our believe back to that, to our balance beyond. Thank turn new I'll growth and and support sheet positioned continue you in it this Michael. We we to that

Michael Osanloo

driving restaurants and remain our spend. our We Michelle. in capital Thanks, economics committed world-class lightening to

Our focus in every expanding operation, technology and is we margins delivers invest, accelerating dollar or restaurant new on revenue, builds, that strong ensuring returns. whether

are the With durable deployment grow marketing With after XXXX. to can development traffic guest a a to we a drivers approach strengthening loyalty excellence, on This emphasis deliver an you. leverage we of is will building while how experience. efficiency, to quarter. the disciplined our on sharpened quarter we we'll and and profitably revamped Thank approach focus continue operational that program,

Operator

concludes That remarks. our you. formal Thank

from first interest Sharon always, the [Operator your Blair. with thank question Portillo's. Zackfia for William As Instructions] you of line in comes The

Sharon Zackfia

Michelle. question, clarifying one just guess I

fair had below full weather it be you've to -- if year-to-date, just guidance. to maybe we the expect is year the the tell late way quantify February? is weather through to any think impact Or the first should there quarter On us

Michelle Hook

Sharon. Yes, -- haven't We're the not quantified impact. weather

weather starting and into, warmer we're sit we some here I the get As in Midwest. today, Chicagoland to think, here just

go, we Our came the month trends, of a January, February stronger. out Sharon. has have as whole we impacted. to still said been in gate We

year, So really it's have to that knowing full we're definitively, But going be stage to X% we're X% that confident we hard say at this the to the that. in range. for

advertising strength in we But I of say this momentum the have loyalty So can at with took as I least at definitively believe underlying of the as we comfortable that as trends, as will that business. what we with take we're that's the said, QX. the effect Dallas moment. out And the well hold come

Sharon Zackfia

did I speed. a question have drive-thru then about the And

throughput XX seconds it can recoup, that to any you that through is -- successful? be rule of test out terms of does you're that of is the there for system quickly factor So pretty if drive-thru? of you seeking get traffic incremental kind kind the And this of there rest rolling thumb on gating what to is to the or in across continues any

Michael Osanloo

really We're yes. drive-thru the Sharon, excited speed. about

drive-thru of in equivalent rule As the comp. improved is a seconds X thumb, every throughput to point of XX of

to expand permitting the my a deployed straightforward very There's -- full well little as is bit that. expectation if us the impact like into back issues, you for a of the will always and test it and we little quickly relatively get But as is possible. has half will continues a So deploy that of run the going It's test have things been, year. well. this it as for as

Operator

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

David Tarantino

offer seeing you performance. of know look margins you're in early, and helpful. I kind Future insight what on in would the be particular, could at initial prototype, sales elaborate could you it's but if the you wondering And was I the any of Restaurant as

Michael Osanloo

-- no feel, like It really traditional traffic, Here's Portillo's that like say of and execute, say. the -- really experience. and a thrilled. I'd restaurant. to what there's provides we're feels the ability between difference prototype. more I'd a operate It's revenue, terms no in It a good there's

So we're really excited by that.

to us I emboldened think it's aggressive X.X. more with be

is iteration. plenty bit of that and we get we -- can little the the feel we think still Restaurant out feel in I more space a even built capital Future and like like some next still so restaurants we efficient the that that can the it's there's take of

behind referring you -- I a there's question, were David. think question your

We do that evaluating. pushed some efficiency But yet the still less less of early, utility incremental needle have Future. usage. Restaurant it's we efficiencies, for smaller a expect plan and for given the there's not on we're operational need restaurant, generate to in It's the and labor, there's given energy given and need

once So we we're feel very with we'll excited that on and by reveal what's going comfortable. that,

David Tarantino

menu streamlined in the Michael, I new Great. think, locations. of you've the some And

So could might exercise that the of what what you comment from you're that be? benefits on and seeing

Michael Osanloo

it's question. Yes, great a

with have the our Houston, and of a guests somewhere sausage So took Polish XX% only the on tail, SKUs tends streamlined feedback it as and P There's our test Street, noted, the we mix. XX% -- We are been out. to conducted that our the things a And sausage. from in low negative between you Maxwell menu. be were Italian

actually we've impact those great the been no rest with But into fan there's tail. quickly Houston So the some favor. to back added of

we're really so that. And excited about

I'm it It's costs. supply kitchen. aid And and to throughput. the chain As aid an imagine, you to streamlines It's it reduces can in chain supply complexity sure an accuracy.

stuff It of to X.X have frankly the So just when enabler think don't and does important you your achieving equipment. help freezers, you that Restaurant some kitchen Future it we is also in something we unlocked and to your store there. an that reduce coolers much have

there forward. I carefully. excited think -- And that we're an So by there's very very unlock going for We're we've been it. watching us

David Tarantino

what of you're those over about but of you menu a locations thinking some in maybe are here, I seeing more my your limit streamlining result locations? elsewhere, might the as go mature in

Michael Osanloo

We're try not to back to a Chicago it from beer for going not our think -- now, take of going to thinking new like as away go strategy. we're markets I guests. we're

that in cause think our I would restaurant. riots

Operator

question from line Jefferies. Next of comes the with Barish Andy

Andrew Barish

Just a clarification.

include to contribution. Darren was Am I ICR X not X the kiosk I remembering from the remembering does think correctly? that that

Michelle Hook

kiosk No, of the weren't going to out cetera, include QX, as Andy, include we That's modeling the does the because contribution. into et generally, in front lot significant to but kiosk in part such have are we loyalty, the the start go the does is, What that a strategies as said it of we estimate. lift. lifts year roll

Andrew Barish

accuracy focus, and and tougher, from has was Okay. anything the by know to But drive-thru $X that. like things on And promotions impacted there big then anything QSR I -- and been a that's little a more channel the you order obviously, read Or off-premise channel? operational is focus? of really seen Have the improvements weakest and channel that stem the of kind some of can start to bit in there? these tide drive-thru weakness still

Michelle Hook

as with a definitely, the reason as we've definitely And we accuracy continue in of more competitive in more general, dissatisfied. number that that just we're QSR Andy. guests channels, think Yes, channel think bit say, of drive-thru. the overall softness more seeing is We When state about, business why you little that's the lower see, and talked as order pressured. the the income in one that are channel But we consumer. about to

category or your have dine-in drive-thru number So speaking, channels standpoint, look when generally drive-thru. But reason, lower OSAT we accuracy, but speed alone restaurant we channels. in generally in continue those, what focus scores just need from in not our we're on be scores or off-premise general, customer to and satisfaction at this a to the than speaking, would the two is then

in to guest channels on as then look we those we restaurant focusing have those it's delivery and on guest specifically channels, the whether off-premise up at So satisfaction or recovery. in channels, those focus picking

make recover have appropriately. make we to when make them that know we which we're guest when we mistakes, to accuracy, do So we we mistakes, that treat sure that about and going talk order

So that's a focus.

Michael Osanloo

doable mean, those It I a will for said to relatively make of correct I happy. guests it's and becomes correct we increasingly to third-party in the it's room. even way, think the that drive-thru we're mistake that need the very we straightforward notice. and another that's Andy, when mistake guests challenging for make to to correct difficult fewer because higher, dining the why are for make It's third-party in the mistakes has the And to bar be delivery. us, because delivery acknowledging kind

Andrew Barish

beef commodity just point? X% then finally And of Helpful. this up on to how Michelle, your at is inflation, X% locked much

Michelle Hook

Yes.

the the XX% full On we Andy, flats, have about year. for locked

Andrew Barish

And anything expect? we that through just the spread kind is it shape-wise year? Or out of inflation evenly Okay. should

Michelle Hook

Yes.

this As it's we the think stage, about at looking over course of the inflation year, pretty Andy. even

what in more a into maybe not I terms more bit the But into little would of QX as versus extremely quarters. easing pressures little bit seeing little it's then least at think QX. a -- a QX, get but we bit in and pressures, rollercoaster-ish, I other say, we're

Operator

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

Brian Harbour

helped traffic mix know kind you're by pricing, then sort for sorry sales this sort assumptions And in don't I pieces. I was bit is ask if you know -- pricing whatnot. of I but guide this, directionally, Could on a of for directionally kiosks. that mentioned same-store the feel guess and fade or that? it of you the is more thinking mix would The just year, this if of different this presumably, comment a what big you had the focus just But year. I'll like kind

Michelle Hook

Yes, Brian.

for is obviously, price take fluid very to But pricing, continue be to going So we us. this to expected year. obviously,

year. traffic pricing little traffic and the mix half the that that with have as this over implies guide we gate again, the into year, this improving indicated, But the That's expected to half guide we we and that for of the of traffic of a mix improving what course we year. get year to with the out expected the with year. we the negative come entered negative trends, implies back back of As positive as positive bit

Brian Harbour

Yes.

Okay.

of that and that? doing what little the this other year, full Can I Texas about plans you're in just for timing Sounds kind good. the and guess bit you that looks talk advertising of a like

Michael Osanloo

for on And directly in -- have we at of increasing Yes. to for look awareness just awareness, restaurants. us. us it's We're there's material when great DFW versus the our opportunity ahead correlates awareness. in a Arizona, In the I a awareness example, really Texas, opportunity -- sales

about. we outdoor, is marketing closest announcing pointing this TV, large Portillo's itself on busy campaign on very where which -- when on and community that They're done know the There's done it it's done works conveniently outer that out in we on The Texas were what Arizona. that's are We've Minneapolis, we're is past is are billboards. in we located and We've our in So penetrating Chicago. it We've well. really the highways, open. the Indianapolis. it when to it TV markets, multiple times in

there's is which and social media And lot using material to the a dynamic campaign, a so crowd-sourced a is TV I of media of traditional current which wonderful best TV. think get of on media, social from

on It's air will and how we we few of definitely about felt quarter. optimistic we're it. out a the the end report been it just on towards So weeks, about the

Operator

questions? you your done Harbour, are with Mr.

Brian Harbour

Yes.

Operator

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

Brian Mullan

you wondering or I'm update non-traditional ready update you got you any think development. on format. move see that more Where opened Or forward with could the iteration those? fully in way format a or rapid like you last to stand? you does on two only I another you've Do to do before question year. need go? format. on that A the drive-thru if feel us one that Just

Michael Osanloo

been We've format. Yes. the so open great I we're is getting It's on close got in one a Park, awfully far. Orland Chicago. very did with That it kitchen of happy -- think the suburb it. in Future a And of Restaurant we which Southeast

being, smaller, growing incremental those. aggressive making sense thoughtfully a It's those occasion. concept not compact But lot for they And this -- saturation that -- but at we being it point, have with great. of and so it's So where fine-tuning much is more density think, places it, super a kitchen. an it, I make we're in

we're looking locations location. There building are for we at brand markets I was overcook but the to So at in couple a it, pickup-only in-line feel have want Chicagoland them year. justify awareness and know, scale and we're sure. a this -- keep to where airport actively don't going locations we of we I don't point to other looking And

But And or so certainty am we'll those. more excited walk-up a with a location, communicate that a denser -- think a around have I busy more walk-up. downtown population to location as location of do a of we

So to we're excited those. of try one

Brian Mullan

about then is a loyalty, decision. And question Maybe the Okay. on talk which new.

think went loyalty an program. I with app-less you

and best there how option background that Portillo's about more we the versus think seeing. why we maybe app-based traditional was might should to any Just be this for more approach a used

color So understand. on be great would to just any that

Michael Osanloo

Yes.

a in think invested something would the advisors research approaching interested they're consumer bit of everything not another the to couple restaurant-based consumers opening every told us app and that apps. I that And we in yet fatigue. that just suggest and of as are doing, app down usage that is that typical pattern consolidates

try against convenient to program Google a your Apple to manner. not loyalty that. An in and it Wallet, don't we're one-on-one Wallet to or compete -- app-less communicate want you sits to So very your us we in allows

an use what sits program for something, So want to It you offers if you're there. ticket, Pay the a you tells looking going airline have. in concert Apple you for and ticket,

want you you proactively. to we to allow or us can to, communicate If us

favorite if So know geofenced. it's can your joint, you're you and you burgers an how I going if into I burger I time great offer real our second remind send are can

of the it do restaurant assembled us all -- pieces picked we've are think best one-to-one the the that it's a something is allows we unique. of doing management to relationship and great So companies that And truly and special what pieces, customer level unique.

Operator

Inc. Next question with Salera comes the Jim from of Stephens, line

James Salera

is digits. going points. at down guys, the of on maybe of the it, heard traffic we've I just digits the XX industry is And for you like down kind pricing and low-single QSR if traffic least mix your expectations traffic down to XXX maybe for kind the drill growth XXXX. down QSR for call basis Because wanted implies high it math I low commentary, mid-single envelope back to with in to be commentary positive to do of like,

if on the less know forecast guys you the be your don't industry. if be you I or so industry Any traffic more color maybe would to anticipate conservative And than a helpful. have on that

Michael Osanloo

there's fact year ended that negative last I we acknowledgment think an QX X.X% of just down traffic. the on

And program, not so out we're with about talked operational switch year, traffic we've overnight. that to rolling you're flip those. will doing, But marketing especially the the we improvements. I believe that mean this with some momentum with loyalty have going we

first not the it's going the negative especially from some So weather positive of quarter, go you're like with to in X.X% to in February.

to saying improve to of us that some to So We is gets the what is pricing. course And traffic excited to the X% expect want get what the mix on I the -- positive We're improvement some momentum to Jim, be on with to X%. course one mix year improvements, to don't that same-store of X% no over steadily you the pricing, what modest algorithm sales we're X% over the wants and think, but about to year. modest pricing. it's on aggressive traffic

Michelle Hook

obviously, be are going Michael not just would created to quarters add I all on, to what equally. Yes. said,

year year. of get and that in to some we, throughout But trend as implement the seen see with improvement that into traffic positive didn't strategies, half expect then as -- so driving again, back impacts expect we we these of the And obviously and the exit we we've February. the the year

into and that believe the obviously an indicator Jim, So be that we think But business. industry, headwinds the the the acknowledge, the the QX for what more I that think guide industry conservative I that's built as think is But don't the to see year. what -- you want to in consumer want in are of what And of a is we anticipated. feeling. fundamentals in others some the we bit than I our of we trends little creates well

James Salera

shifting in place Okay. Great. not location what market, open we And it's little of and thoughts I expect think up? but comp on flagship Colony as there about we maybe Or quarter be in similar see should -- Dallas? the to gears that the kind that's you kind that now, is know, bit, is I another maybe thinking Any should any opening assume good the the, on we a enter just what store? And new a to obviously, Atlanta. should in about thoughts of new

Michael Osanloo

think it's in of our year. back with our in XXXX, openings now the think half pipeline the the of that earlier I -- of back restaurant it's for the I I year. are Unfortunately, referenced most half right

to when that's going to do, -- I do seem first-in-market to with pent-up be demand We totally guess hazard restaurant. it's can't of a lot So have honest even what a you. Kennesaw's to

very, very to we're it the predict. and does obviously obviously we're are hope that -- So by excited well, difficult just we not but volumes it

Operator

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

Christopher O'Cull

what And you when apologize determine to frequency I be. do this, any what area? missed I'm offers or new I have curious program the Michael, if expect Chicago kind the in to then you of effective? drive just most could but using be those programs to start loyalty tested may And

Michael Osanloo

out now. members of I to you I of March. don't friends it said mode haven't beginning launch at missed in of we in the to But and with test launch in be We're it -- but team because rolling it's It's full right friends. expect sort think soft our actually it,

And so using we and then to it start et out cetera. frequency, impact is roll my in as drive expectation start a traffic, you it seeing positive will QX

doing, be to that. whole a planning me share things but we premature for So all a little host that of it have we're on Chris, would

Operator

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

Gregory Francfort

is store and questions. enter I looking curve like the just My there? how is, comping maybe your us maturity in X on new as QX maybe stores you update base Michael, performance had Texas what the and are they first can those store

Michael Osanloo

more would market. I the restaurants a mature performing in more say Texas like it's much Yes. are newest in --

achieving sort now strategy quickly brand we our has Worth of that And -- actively market Dallas-Fort density scale. in shout our can have good X We like effective. We been very of we have have the feel feel think like we I we world. to restaurants. and

volume picks first expect it ones had and the a market mature modest But where pace, but the So came down. in first -- then where are the what with enormous starts up consistent couple saw there. then curves more relatively from we a these off much more it recent you that at extraordinary

ones. more of ramp a more a recent there's the So of on less curve,

Michelle Hook

on the Just entering what's in as a comp base Texas. that's this reminder year

which comp the QX, first-in-market Then that enters more Allen. in in next base enter And comp QX, in our is only then enters the comp is which base So base until the the Colony, QX. doesn't have we one one the Arlington.

So just what restaurants, what's reminder for the as entering the cadence of a comp Texas this the base those that's year, X. is

Gregory Francfort

strategy Colorado any the to Dallas, to going to you're and I square good leases. or the other had I a or to boxes, that you be sign go into as helpful. That's bigger boxes? example? is guess, maybe Are pacing was, X,XXX of be question starting the Georgia, kind those versus going then And the as foot just changes And

Michael Osanloo

of you size XX to as Restaurant the smaller the do we're anywhere this new know from as a box, the what much year as so place months. that box, to, as well of Future. is we can it we're everything And is already building that get calling process restaurant On in months be the XX

actively we're so XXXX. now. permitting doing And in That's the of we're what class for

of so And we cycle. be as Future of -- to today. a permitting say see "go" function restaurant, why and on before that just mid-XXXX that's still we're going the construction X.X It's you Restaurant

X.X. which Future et format with everything that XXXX Restaurant foot X,XXX or will of costs, So of in the in build be the X.X either Restaurant Future, Everything lower XXXX is the is square cetera.

conscious the return to very a comfortable restaurants a we're that these to cost, restaurants. cash-on-cash the get do not We're to note, so that One building do, what these too, we're but Portillo's there. do lower restaurants We're way. volumes you'll building thing by And important blend smaller of can should lower-sized is of the on and these restaurants volumes.

Gregory Francfort

term. increase or from changes space how that? Worth to or that Dallas-Fort maybe longer entered maybe white marketing then And terms Any potentially follow-up of you in like on the a pacing And anything just, just strategy. Michael,

Michael Osanloo

-- scale in efficiently us very then years to years. X an it that is allows us Like -- some XX it Texas efficient love of getting I get sort We're better to goal our in What of Arizona part because level that I achieve took to is to awareness awareness. reasonable. in market and to increasing start

we so to just get driver a steady, increasing and which And us comp we're durable and with dramatically can out stabilize speed transaction people that become so of the the business know these markets.

Greg. So getting to I like quickly, scale

important I for very think us. it's

You without well. marketing doesn't got it follow with work to to awareness, but the really other build aggressive on one

Operator

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

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

want you Do take question. it? a have to We

Michael Osanloo

is it? Who

Operator

Piccione Stanley. It's [ from Ray ] Morgan

Michael Osanloo

Sure, yes.

Unknown Analyst

the And way go before things. suburbs window colder is question you're What the Just it's drive-thru I fundamental area the the real the other there's each the My close making to end window drive-thru the Like Not more side talking cold comments the way greatest to some with not the noticed to in world, some the focused delivered. I when of the it's the food that answer that. through the Chicago the of drive-thru. the in on open, do is you the food. very -- kids in and but are drive-thru, to gets when that stands are changes today? it weather, situated, as

improved, in long of a a long now. I would -- man, to are, if Secondly, of has be there's lot pre-COVID not because I as I fast, just line an line COVID, look a when go that's the that bit I'd was of business And noticed efficient, drive business lot it's through, time period. more And missed those through were And being lines still kind the an little there goes at really as like feel lines look intangible but was the myself, the pre-COVID, fast intangible. to oh, at coming it thinking drive-thru used long through man, the I during that looking coming and that's but the get I'd Chick-fil-A line, through. mean, how saying,

excited. line that and the when long saying, of look holy cow, you're line, it it how through in go you fast. You is. lot and you're that's get like, a goes then business you're And And

but You're you're it's return an goes a And intangible nuance, it. that when to be business, could money. today? question. that you're drive-thru things be hugely school to it's are part that think are real are I And old that longer no of improve of residual a a the line important. basic, guess, it such of slow, excited it. That as lot fundamental doing is the part to the What add business to lot stands up going of you But missing I a guys excited

Michael Osanloo

that respond you. of to better be So you just things to an some let conversation, offline Ray, meet This nice but in me might the said. quickly

slower, that I on last gotten of XX slower the on that calls the emphasis reclaiming seconds. we seconds X have than pre-COVID. XX one we've and We're why acknowledged think X it's or about we're

different actually gained why seconds. that in with minute. the we XX a XXX% were get We We've agree XX acknowledge of So seconds a you. It's initiatives number We that. back. to have drive-thru

talking initiatives that you when kids experience hoping about idiosyncratic one-off have a seconds get chit and chatting back. I'm We XX open to stuff. you're other active that the and had windows being

restaurant at at if a acceptable and at not can you certainly that were you is So normal Portillo's. us know Portillo's because a what maybe offline, let is not

are restaurants, are and food the that air with guests. may In open teams They that windows using coach we up you door have shut how and because an or our that's is food out. only that not and actually sensor, we're facilitating a meant automatic. side all that doing heat newer to in motion inside, may seen open the with keeps we're curtain So can it to any passing those certainly when and you're

hear out it more you with So figure some your it and with have wrong Portillo's. about like local experience. to what sounds went experience Happy

Unknown Analyst

happy Generally, no, with is I Portillo's. that It's food just, I'm everything. know drive-thru key to The so fantastic. is the very

just I -- So

Michael Osanloo

our We drive-thrus. agree. I love Yes,

Unknown Analyst

said not I quite needs was, to would I but seconds And an it Yes. it better than have about where XX you it's improvement. funny It's because say noticed be. XX%

Michael Osanloo

were. it And agree -- better not needs but with goal get does you to was, be I to need our than It XXX%. where is only we it ever

Operator

teleconference. Thank today's you. This concludes

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

Portillo's (PTLO) 25 Feb 252024 Q4 Earnings call transcript