Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Portillos Inc (NASDAQ:PTLO) reported a 0.4% increase in same restaurant sales for the fourth quarter.
• The company successfully implemented kiosks across all restaurants, contributing to a comp lift of more than 1%.
• Portillos Inc (NASDAQ:PTLO) plans to open 12 new restaurants in 2025, focusing on the 'restaurant of the future' format, which reduces build costs significantly.
• The launch of the Portillo's Perks loyalty program aims to drive traffic and engagement, with a target of 1.5 to 1.7 million members by July.
• The company is expanding its advertising efforts beyond Chicagoland, particularly in Texas, to increase brand awareness and drive sales.

Negative Points

• Portillos Inc (NASDAQ:PTLO) experienced a 1.7% decrease in total revenue for the fourth quarter compared to the previous year, impacted by an additional operating week in 2023.
• Same restaurant sales for the full year were down 0.6%, indicating challenges in maintaining consistent growth.
• The company faces industry headwinds, including weather impacts, which muted early momentum in 2025.
• Drive-through speed has decreased by 45 seconds compared to pre-COVID times, affecting customer satisfaction and throughput.
• Commodity inflation, particularly in beef, is expected to be a significant pressure in 2025, with estimated inflation of 3 to 5%.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with PTLO.

Q: Can you quantify the weather impact on your performance and should we expect the first quarter to be below full-year guidance? A: We haven't quantified the weather impact yet, but we are confident in achieving our full-year guidance of 0 to 2% growth. We expect the momentum from our loyalty program and advertising to take effect as we progress through the year. - Michelle Hook, CFO

Q: What impact does improving drive-through speed have on throughput and traffic? A: Every thirty seconds of improved throughput in the drive-through equates to a 1% increase in comparable sales. The test is going well, and we plan to expand it quickly, expecting full impact by the back half of the year. - Michael Osanlo, CEO

Q: How is the "restaurant of the future" prototype performing in terms of sales and margins? A: The prototype is performing well, similar to traditional formats. We are excited about the potential for operational efficiencies due to its smaller size, which reduces labor and utility needs. - Michael Osanlo, CEO

Q: Are you considering streamlining the menu in more mature locations based on the test in Houston? A: Currently, we view it as a new market strategy. We are not planning to streamline the menu in mature markets like Chicago, as it could upset loyal customers. - Michael Osanlo, CEO

Q: How is the new loyalty program different from traditional app-based approaches? A: Our app-less loyalty program resides in digital wallets, allowing for personalized, real-time communication with customers. This approach avoids app fatigue and enables targeted offers based on customer behavior. - Michael Osanlo, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.