Portillo's Inc.

Hello, and thank you for standing by. Welcome to the fiscal first quarter 2025 Portillo's conference call and webcast. I would now like to turn the call over to Kyle Nelson, Vice President, Investor Relations at Portillo's to begin. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our fiscal first quarter 2025 earnings call. You can find our 10-Q earnings press release and supplemental presentation on investors.portillos.com. With me on the call today is Michael Asanlu, President and Chief Executive Officer, and Michelle Hook, Chief Financial Officer. Any commentary made here about our 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 O'Sonlu, President and Chief Executive Officer of Portillo's. Thank you, Kyle. Good morning, everyone.

Thank you for joining us today. Before we get into the results, I want to first thank our dedicated team members. Their hard work and commitment to the Portillo's experience is what keeps us moving forward, no matter the challenges. Our first quarter was similar to most others in the restaurant industry. We started strong in January, then we faced some weather challenges in February. In March, we rebounded. Same restaurant sales increased 1.8%, with total revenue reaching $176.4 million for the quarter. Restaurant level adjusted EBITDA for Q1 was $36.7 million, with a margin of 20.8%. Despite declining consumer confidence, bad weather, and on-again, off-again tariffs, we performed well. Guests are still choosing Portillo's, And we've supported our restaurants with initiatives like the launch of our loyalty program called Portillo's Perks and our Dallas-Fort Worth advertising campaign. That said, we're not immune to the macro pressures. Our newest restaurants that opened in Q4 2024 experienced a slower start. In markets where we have strong brand awareness, we're more insulated against these types of macro pressures. But newer markets remain a little more vulnerable until they find their footing. As we move into Q2, we have carried good momentum from March into April, and our traffic driving strategies are intended to keep us on that path. Our four tactics are, first, advertising beyond Chicagoland to increase brand awareness. Second, the launch of our Portillo's Perks loyalty program. Third, continuous improvement in operations. And fourth, further optimizing our kiosks. Advertising in Dallas-Fort Worth has proven effective. Our Q1 campaign there combined traditional and digital media using crowdsourced content and a social media-inspired approach to showcase why Portillo's is, quote, iconic every time. This campaign increased brand awareness by about 10%, and drove high single-digit increase in sales for Dallas-Fort Worth restaurants. We're running a similar campaign right now in Phoenix. Second, our Portillo's Perks Loyalty Program launched near the end of Q1. Perks aims for a personalized, data-driven approach to loyalty based on guest behavior. In its first few weeks, we focused on driving enrollment with a free fry sign-up offer. We've also tested our first surprise and delight offers in Chicagoland and Dallas, offering either a free Italian beef sandwich or a free burger. We saw solid redemption and we're excited to build on this momentum. In Q2, we're continuing to test broader offers to all Perks members. In new markets, these offers are designed to drive trial and awareness. In existing markets, we're testing which offer types can drive incremental visits. As we build a data set around our most loyal fans, we will shift to more targeted offers in the back half of the year. To recap on perks, we rolled it out in early March with a focus on enrollment. In Q2, we'll continue driving enrollment while also testing broad offers to drive traffic. Then in Q3 and Q4, we'll leverage insights to deliver more targeted offers. We're excited about the future of our loyalty program and learning what it can do for us. Shifting now to operations. We've renewed our commitment to delivering an exceptional experience for every guest, every time. For every great restaurant brand, operations are the hallmark of success and the key to driving sustainable long-term traffic. So we're focused on hospitality, speed, and accuracy at every touchpoint. We continue to test camera vision technology to enhance drive-through speed, and we're evaluating its long-term potential. Our kiosks are performing well, and we've been working to further optimize their benefits. We've studied the top quartile of our restaurants with the highest kiosk performance and applied those insights across the other restaurants in our portfolio. This data-driven approach ensures that we continue to enhance the guest experience while maximizing the impact of our kiosks. We'll continue to monitor and refine their performance. We've also recently launched a small test of breakfast at five Chicagoland restaurants. While still in its first few weeks, early feedback has been positive. Guests are excited about freshly scrambled eggs, made-to-order breakfast sandwiches, and our rich chocolate cake donut, inspired, of course, by our famous chocolate cake. We'll continue to monitor the progress of this test throughout the summer and then provide updates as we move forward. Moving on to new restaurants, we still plan to open 12 this year. Ten of the 12 will be our new Restaurant of the Future 1.0 format, which is our 6,200 square foot concept. We'll also open one Portillo's pickup location in Plainfield, Illinois. That's the fourth of that format. And I'm excited to open our first in-line walk-up restaurant in Central Florida. It's a smaller box with no drive-thru, and it's intended for dense locations with lots of foot traffic. We're excited to see the unit economics of this new format and share the potential that that provides for us. We're confident in the foundations we've laid and the strategies we have in place. While economic uncertainty makes it hard to predict the rest of the year, we're a resilient brand, and we believe we have the right tools to succeed. With that, I'll hand it over to Michelle.