Portillo's Inc.

Hello and thank you for standing by. Welcome to Portillo's Fiscal First Quarter 2023 Conference Call and Webcast. I would now like to turn the call over to Barbara Novorini, Director of Investor Relations at Portillo's, to begin.

Thank you, Operator. Good morning, everyone, and welcome to our Fiscal First Quarter 2023 Earnings Call. You can read through the results we announced this morning in our earnings press release and supplemental presentation at investors.portillos.com. With me on the call today is Michael Osanlu, President and Chief Executive Officer, and Michelle Hook, Chief Financial Officer. Let's begin with a reminder that any commentary made during this call about our future financial results and business conditions constitute forward-looking statements, which are based on management's current business and market expectations, and are not guarantees of future performance. We do not undertake to update these forward-looking statements unless required by law. Our annual report on Form 10-K and our Form 10-Q both include discussions of risk factors that may cause our actual results to vary materially from these forward-looking statements. Today's earnings call will make reference to non-GAAP financial measures. Any non-GAAP financial measure should not be considered as an alternative to GAAP measures. We direct you to the materials we released this morning for the reconciliations of these non-GAAP measures to the most comparable GAAP measures. Finally, after we deliver our prepared remarks, we will open the lines for your questions. Now, let me turn the call over to Michael Osanlou, President and Chief Executive Officer.

Thank you, Barb, and good morning, everyone. We appreciate you joining for our first quarter 2023 earnings call. I'm very happy with our first quarter performance. We grew total sales by 16% and grew a restaurant level adjusted EBITDA by 24.4%. We also achieved restaurant level margins of 22.3%, which reflects both sequential and year over year improvement. And I'm especially proud that we were able to do this even as we added seven new restaurants, which tend to be margin dilutive since Q1, 2022. Michelle will review our quarterly financial results in more detail later, but first let me describe why I think we are well positioned to sustain this positive momentum. First, the decision to invest in our guests throughout 2022 has given us some comp and traffic tailwind for 2023. In the first quarter, same restaurant sales grew 9.1%, our transaction count was positive, and our entree count remained flat. But more importantly, we've sustained multi-year highs in key operational metrics like speed of service, accuracy, and overall guest satisfaction. These leading indicators give us confidence that our performance is sustainable. Empowering our team members to prioritize the guest experience helps drive guest satisfaction. This in turn leads to higher traffic and throughput and improved margins. And when we're operationally on point and our guests are satisfied, we believe that creates pricing power. We anticipate staying the course with our price laggard strategy in 2023, taking price only when necessary to combat higher commodity prices, ongoing wage inflation, and other investments in our team members. Keep in mind, in an environment with persistently low consumer sentiment, we're up in total sales, up in comp, up in traffic, and we've improved our restaurant level margin. Even as the economy continues to be uncertain, Portillo's has been thriving. Moving on to development. Gilbert, Arizona is open and the Class of 22 is complete. Although early, we're thrilled to see that the Class of 22 is already exceeding its underwriting expectations. Portillo's is a brand that travels. And if the lines at the Colony in Texas, which are moving quickly, aren't proof enough, then pay a visit to Cherville, Indiana or Tucson or Gilbert, Arizona where our teams are working hard to feed hungry Portillo's fans. It gives us great confidence in the longer-term ability of our national expansion strategy to generate attractive returns for our investors. We remain committed to opening nine new restaurants in 2023, and we've already announced the locations for six of them. We have exciting plans to build up the Dallas-Fort Worth area this year, including restaurants in Allen and Arlington. And we recently announced our Queen Creek, Arizona location, which brings the Arizona market to seven restaurants. You've also likely seen the announcement that we will open three Chicagoland restaurants later this year. This includes traditional restaurants in Algonquin and Cicero, as well as our second Portillo's pickup location in Rosemont, Illinois, a suburb of Chicago that borders O'Hare Airport. This is a fantastic location. that will benefit from both airport and entertainment traffic. This will be the second location to offer drive-through and pickup, no dining room. And as happy as we are with the performance of our first Portillo's pickup in Joliet, we've learned a ton over the past year about how to make that format and the operations of it even more efficient. We continue to believe that traditional restaurants are the primary means for our growth, but as an infill strategy, Portillo's pickup locations have the potential to drive standard size restaurant revenue and margin dollars through a lower cost bill. By the way, our ability to self fund our development is an advantage in this environment. We're not dependent on the capital markets to finance our expansion and our restaurants generate cash flow immediately. Even if credit conditions continue to tighten and interest rates remain elevated, Our cash flow gives us tremendous financial flexibility to achieve our growth. So while we're happy with our recent performance, it's important to remain focused on laying a solid foundation that delivers value for our three core constituents, our team members, our guests, and our investors. We offer our team members exciting opportunities to grow with us as we expand across the nation. They, in turn, take great care of our guests by delivering delicious food at an unbeatable value. This, in turn, enables us to deliver a superior economic profile that generates healthy returns for our investors over both the near and long-term horizon. With that, let me hand it off to Michelle to share a few more details of the quarter.