Portillo's Inc.

and welcome to the Portillo's third quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kyle Nelson, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our fiscal third quarter 2024 earnings call. You can find our 10Q earnings press release and supplemental presentation on investors.portillos.com. With me on the call today is Michael O'Sonlu, President and Chief Executive Officer, and Michelle Hook, Chief Financial Officer. Any commentary made here about future results and business conditions are forward-looking statements, which are based on management's current expectations and are not guarantees of future performance. We do not update these forward-looking statements unless required by law. Our 10-K identifies 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, which are not an alternative to GAAP measures. Reconciliations of these non-GAAP measures to their most comparable GAAP counterparts are included in this morning's posted materials. Finally, after we deliver our prepared remarks, we will open the lines for your questions. Now, let me turn the call over to Michael Osunlu, President and Chief Executive Officer at Portillo's. Thank you, Kyle.

Good morning, everyone, and thank you for joining today's call. We grew the top line by 7% as we continued expanding in Texas and the Sun Belt. We sustained margins, and our earnings engine remains strong. But like others in the industry, we're up against macroeconomic headwinds, and the price wars in quick service, fast casual, and even casual dining are very real Q3 comp sales growth was challenged by this rampant discounting and Portillo's doesn't play the discount game we compete on great everyday pricing for our craveable food and abundant portions and we know this approach will benefit us in the medium and long term we also know every time we've invested in advertising we've seen a benefit to traffic this was again evident in our recent Chicagoland advertising campaign But the noise created by the restaurant price wars and the election season reduced the overall positive impact. As a result, this campaign didn't achieve the same incrementality we saw in Q4 of last year. Based on everything we've observed, we now expect full year comp sales to be approximately negative 1%. While challenged on the top line, I'm very proud of how our team is protecting margins and driving cash flow. They did a great job of controlling labor and food costs to achieve 23.5% restaurant level margins. And I'm especially proud of how we've managed G&A to achieve adjusted EBITDA growth. Our adjusted EBITDA of 27.9 million reaffirms that we know how to pull the right levers to protect the bottom line. But we also know we need to reverse the negative comp sales trend and drive momentum in our business. And the path forward always comes back to our strategic pillars. First, let's talk about how we're innovating and amplifying the Portillo's experience through technology. Last quarter, we announced a pilot program for kiosks. We deployed and tested them in two restaurants in August. Now, this test was a resounding success with minimal upfront costs and immediate guest adoption. We were so pleased with the results that we quickly expanded the program And as of today, we now have kiosks deployed in all of our restaurants, and we'll get that benefit going forward. I love making Portillo's more frictionless. It's undeniable that our guests love using the kiosks. At the same time, it's undeniable we have guests who love ordering with our front cashiers. No matter how guests want to interact with Portillo's, we're meeting them where they want. It's early. but we're already seeing similar benefits from kiosks as other brands have experienced. As we continue to learn and grow with them, we aim to enhance these benefits even further. We expect to be able to quantify the kiosk impact early next year. Also next year, we'll pulse advertising in Dallas-Fort Worth as we scale up. The ad campaigns will educate and reintroduce even more guests to Portillo's. Previous ad campaigns and new markets have all driven meaningful traffic lifts, and we're confident Dallas will respond similarly. Our second strategic pillar focuses on building restaurants with industry-leading returns. I'm excited to share that last month, we opened our first Houston-area restaurant in Richmond, Texas. This marks a significant milestone as we expand further into Texas in the Sun Belt. The reception in Houston has been incredible. Richmond sales are in line with what we observed two years ago in The Colony, our first Dallas area restaurant. It's clear guests are just as excited to see us in Houston as they were in Dallas. And we remain on track to open 10 restaurants this year. We have an exciting pipeline next year that will grow our restaurant count by 12 to 15%. It's equally exciting is how we're refining our development model. We've already made strides to reduce the size of our restaurants. Later this quarter, our first two Restaurant of the Future builds at 6,200 square feet will open in Texas. These smaller, more efficient restaurants will still look beautiful and maintain their local flair, but they will be 1,500 square feet smaller. We expect them to come in at the low end of our net construction cost range of 5.2 to 5.5 million, and we will be using this prototype for all of our 2025 bills. As we continue to expand, our priority remains finding great locations where new restaurants can thrive. To further optimize our cash on cash returns, we'll explore different building and real estate structures. We'll continue to take square footage out of our restaurants. We'll seek increased tenant allowances on our leases And we'll explore build-a-suit and reverse-build-a-suit opportunities. Ultimately, we build great restaurants in the best locations for Portillo's while bolstering our returns. Our other strategic pillars remain just as crucial, running world-class restaurants with great people and continuing to refine operations to support long-term success. We're committed to developing our teams, strengthening operations, and creating memorable guest experiences that differentiate us in the crowded restaurant landscape. That's how we win. Despite the top-line challenges we encountered this quarter, I want to reiterate that we control the levers that matter most. We know how to weather difficult periods while staying focused on profitability. We will not compromise our long-term health for short-term benefit, and we're confident in the actions we're taking to address current trends. We're excited about the future, whether it's the benefit of kiosks, our real estate momentum, or the improvements we're making to our restaurant operations. There's still work to do, no question, but I remain confident we're on the right path. In this tumultuous environment, we're still generating cash flow, we're still funding all of our own growth, and we're still in a strong financial position. Our team is focused, energized, and ready to drive the business forward. Thank you. And with that, I'll turn it over to Michelle to walk through the financials in more detail.