Portillo's (PTLO) 3 Mar 232022 Q4 Earnings call transcript

Greetings, and welcome to Portillo's Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Barbara Noverini. Relations. Investor of Director Portillo's Please go ahead.

Osanloo, Good Thank the our the Company's and Executive Michael to Chief Financial everyone, fourth you, call and quarter Hook, is on operator. fiscal me XXXX welcome With Chief morning, earnings Michelle and President Officer. today Officer; call.

forward-looking to discussion do for statements be not these and Let future risks you guarantees update today's discussion part unless future performance me not required by unduly statements. refer forward-looking and that everyone include also not and the relied condition. of Portillo's to law, release press operating our today's We upon. financial results that These of undertake more earnings could impact remind should SEC and of will statements filings are detailed

the measures, is include earnings website to on you such adjusted as financial also We to adjusted which EBITDA an measures, our GAAP or measure. GAAP our for of measures level reconciliations remarks financial operating to alternative considered these non-GAAP non-GAAP morning, and available such not measure EBITDA. Any be this income or should as non-GAAP any as or restaurant Our measures of direct the liquidity income other our comparable release performance. issued net most financial GAAP

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

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

appreciate for you Barb. a first us traded yearend as We you, call. morning, a joining publicly everyone. Portillo's great year Thank full And good earnings our had company.

this off on for solid share recap but I'm we before quarter do, with financial our me value more start for to of fourth closed with 'XX. year, I results. XXXX a us, to to about synonymous true great and financial form; is brand what's preview you horizon quality a Our results let give the and we're excited two and

X%. sales quarter million. to XXXX, Same sales grew X.X% total $XXX.X In the increased of fourth restaurant

year Same-restaurant an of Restaurant fiscal We and year. for X.X% the $XXX.X increased $X.X million. year the with margin adjusted unit level XXXX, XX.X% million restaurant. average was to of X.X%. fiscal for grew the XX.X% For the quarter sales volume sales EBITDA total ended per

homes more over underlying discuss me go we drivers as certainly financial fans holiday lost little celebrations, for December week storm their of performance will let winter that for but People Portillo's Many long. never us results out XX, and we and the momentum of in Michelle very fans bit detail, into our but Now Elliott the a love keeps weather Portillo's. bring gatherings during year. closed of away

week earning sales you'll right in we've As since. back bounced strong provided the see a following and sales graph supplement, maintained

year-to-date Our and up entrees XXXX. transaction both sold in metrics are

price Again, creates compared that detail confidence moment, in gives our about good well. guest. from but is priced feel Now the also to that really it value strategy for pent-up going working the a us but give competitors where to Michelle is includes storm, some our we're demand and proposition laggard that you more we

our little first the reception on let express with what's received thrilled been open in deck In about in Colony through restaurant Arizona openings us Let's me how the The Kissimmee, sunshine Texas. that Gilbert, with pivot to of happening Tucson, nearly feels. Florida get of and 'XX we're talk and little Texas warmer good of Sunbelt. particular, a to we've the it's Arizona, and class where bit Recent at in

decades. been the one grand restaurant has been our This Chicago across the been January volumes the The restaurants number opened on opening XX, in matching seems have system. entire it's Colony of for Since that

the sales per has $XX,XXX grand The averaged opening. in Colony day Specifically, since

really we It's definitely Texas success us to good year, up so that as our please we Now restaurant feel further significantly set don't this per crazy a down, that's in that million that. and for continue will and annualizes to model underwriting expand. number, but exceed $XX expectations coming

outperformed everything We in everyone all restaurants new The up to This satisfaction validates time the disciplined we've restaurant took XXXX. its the we've early opened place have XX successful. for be since Colony the we In XX-day guest outcome first openings needed with of opened sure average days, success. set that what make that and along learned scores our the way, to this at restaurants well,

really good the in a of We're restaurants also other class 'XX. our read getting on

Our Schererville, its just Pete reach is in Portillo's has a St. All well all expectations. anniversary, and operating now. operating Juliet, over are Illinois, a exceeding has location performing been these our pickup quarter. and Indiana first history to restaurants about underwriting over year for of are

to the class We full continue expect of that for 'XX.

and both committed on the XXXX, the locations ahead, we're in nine new to on We're restaurants out of gate a with Arlington, Looking started we've We already and sides. Allen emphasis opening in work Sunbelt. recently announced next heavy in our Texas.

As we openings in normal the XX half development still back life our the cycle, continue navigate restaurant loaded. to be new will

to four restaurant we're -- openings quarters. better balance the our already XX planning across However, across the

members, We're Portillo's continue fans guests new level unrivalled to by and committed creating providing taking we're for our delicious and an care long-time the our bring 'XX. food we already our on focused to despite personal restaurant across team margins of for three value we remain experiences at our improving flurry both for core shareholders, healthy delivering openings unbeatable and of As the in to value. nation, constituents. our work growth We're restaurant

that, it me hand With let Michelle. over to

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

of eight offering. let of the secondary Class fourth stock quarter Portillo's sale in that equity XXXX and price approximately XXXX. our share. acquired me million per common subsequently address sponsored the to our from IPO Before A XXXX the an firm $XX.XX at we used primarily offering of completed purchase shares We our November private shares results, We in financial discuss proceeds

holdings private-equity IPOs, action. will team sponsors one their Portello's the portion in ownership monetize their for from purpose of of reduce another shares simple to offering. their the Portillo's. No limited is over capital expected of and management partners. The common transaction in This backed allowed In time returning a sold them course to

completed in end have common QX two from shares our of shares secondary offerings shareholder the amount which our liquidity total the base. of XXXX, Since Class and A we've increased between outstanding to shift, remains to stock, Class A collectively shares A XXXX, XX% Class ratio the of We but publicly-traded transactions of existing publicly-traded transactions these same. increased to not diversified of Class diluted shareholders. PTLO the total privately-held only share the total have B These shares Note that been outstanding. cause and our count XX.X%

the XXXX, top we of quarter, fourth results to saw turning our Now strong where line growth.

compared fourth quarter, reflecting restaurants $XXX.X X% to same the were fourth revenues five beginning million XXXX. the restaurant the last combined with sales million $XX year, new since increase of increase of the by of driven During quarter in or up opening X.X% of an

sales by impact The The primarily items X.X% an offset a approximate decrease by third sold check the partially delivery of average driven certain from a change average of by in and was in was prices, in same check restaurant per driven increase lower higher was This increase transaction. recording in increase X.X% offset menu transactions. X.X% X% X% by an the party pricing.

of winter quarter XX of storm estimate our had in points trends least impact that restaurant through disrupted XXXX. fiscal We same week on significantly until the Elliot, last the the experienced quarter. negative a at sales our sales quarter the fourth We positive growth basis storm during of

period grew restaurant restaurant our total estimate to range revenue sales the X% grow restaurant growth to trends range improvements same growth of XX% seen XX% XX% X.X% of quarter XX.X% and in XXXX. of of period the to currently our anticipate we fiscal sales in XXXX, fiscal sales the first as to We in be XXXX. sales in XXXX, to of Subsequent to second fourth same we our our first be the quarter for of have and same in

We fourth and half three quarter. openings expect this of class restaurants four year quarter nine of the the to open third in with the to remainder back in new targeted in the the XXXX in

our XXXX most at This XX.X% the and XX.X% by average as in driven fourth especially of let's was XX% increase XXXX. Now, chicken. excluding in beef of quarter Cost sold, percentage commodities, a goods increased from across increase look to largely the in cost. of quarter of revenues amortization depreciation fourth and

impacted check, and commodity for inflation full resulting the Additionally, X.X%, digit party sold from were negatively was increases we estimated by mid-single year. our our in the offset in inflation recording our expect third cost delivery by the ease partially of overall in XXXX, will goods commodity change pricing. These currently increase average

As expect, the over and high would it down will course year. the of start taper you

sequential a QX of XX.X%. of quarters. will was up QX be past improvement XXXX XXXX reference, and QX XXXX from XX.X% For of was these up

increases XXXX to average in the to Now and team offset XX.X% by including of labor. based These compensation remain competitive investments primarily as The rewards quarter in in quarter XXXX providing support a and variable Labor XX.X% team increase XXXX hourly to investments percentage total increased were in continued anticipate fourth a check was by the expense. members. let's We increases incremental increase for largely QX in rate our of efficiencies. fourth members, committed of our higher an and operational XXXX. made making driven package at our look revenues from wage

restaurant of as expenses. was were as $X XXXX well a in maintenance and the primarily flat expenses increased sales. of Occupancy and as repairs increases XXXX, openings quarter by expenses operating Other in million driven new XX% or percent fourth which XXXX, in

of quarter X.X% Restaurant XXXX EBITDA XXXX. adjusted in primarily The the fourth As costs the continued level in level the driven margins the fourth labor to quarter result commodity of $XX XXXX. above, a and of margins lesser XX.X% was decreased quarter EBITDA fourth level decrease of increased XX.X% million in were versus a extent, point the basis restaurant restaurant by to XXX investments. of impact adjusted in

quarter in increase price offset year-to-date. higher expenses fourth approximately XXXX price the quarter X.X% We partially X.X% prices and and X.X% during resulted X.X% menu menu through X.X% an in the effective of XXXX raised efficiencies. the second during operational increases of XXXX. in and quarter quarter first fourth the of of actions XXXX, of These We

increase menu restore net combat X% During inflationary mid-January as we of to XXXX, to continue pressures we reflect did increase pricing price our margins. cost a and

QX in million. XXXX million, of transaction overall the expenses people by decreases XX% were increases offset $X.X $X.X in million decreased equity-based XXXX. Our by expenses quarter. the and QX $X.X in our QX decreased fees compensation contributed of The option to in also G&A XX.X% to and business. in decreases compensation and XXXX related IPO-related These partially payments $XX.X holder of million Variable-based in million of absence from $XX.X expenses

XXXX million $XX of of make to spend XXXX. of quarter and openings to year restaurant to expenses from and X.X% was early to XXXX in G&A million our fiscal the timing to This continue will the activities million. full in Pre-opening related will $XX be increase $X.X in location fourth that planned of 'XX We XXXX. X% the investments in fourth the in increased of at fiscal end quarter the geographic estimate and range due

expect additional open restaurants we expenses of covers $X million $X.X half class year. be XXXX, and second between We XX expect to in to the which nine four to restaurants during of pre-opening the million the

million of of million in XXXX, this fourth expense EBITDA partially expense an the XXXX, offset term million by the quarter quarter lien decrease lien was a of million to on $X.X increase of lien additional term was first of in $XX.X Below EBITDA $XX.X quarter of interest increased 'XX our term loan in led increase lower All loan XX.X%. our loan. million an our quarter $X the from versus and driven of This of the outstanding line, first to the adjusted fourth interest by $X.X fourth by primarily fourth payoff the due XXXX. under rate, borrowings interest second

end first of the effective the of on XX.X%. loan fourth was As lien interest the term the quarter, rate

facility, on million term $XXX under proceeds On facility. hand, along and previous term repay February revolver with and we to first loan transaction-related the used new $XXX The debt XX, million announced loan outstanding five year, new into cash loan that under revolver lien a expenses. term entered our we were and

credit term pursue expense annual that debt to $X.X compared XXXX reduced At million points. with prevailing additional rates, by expect interest growth approximately financial lower debt the agreement been the strategic facilities. approximately XXX these we and other rate all-in our new on At initiatives. has will in previous our provides rates, strategy our be as basis This interest flexibility

of tax $X.X and Income was $X.X year. tax quarter in income fourth million expense the benefit of million for the XXXX an

the was for rate X.X% year Our versus XXXX. effective tax XX.X% in

future as exercised as and effective fluctuate are tax will invest. equity-based equity awards Our A increases, rate Class ownership

the deployed $X.X refinancing million ended million quarter, off repaid and hand new to Subsequent fees transaction-related to of the on facility. outstanding of $XX.X existing in revolver million pay our cash. cash the loan connection under term quarter and we We with with in approximately the $X borrowings

Going capital plus to forward, $XX to balance $XX expenditures cash operating we between our will cash be XXXX, million continued million. using growth. support our our estimating we be are In to flow

delivering We remain healthy line beyond. in committed to line XXXX bottom top and and growth

More long importantly, this we're morning. term confident our was release provided in our that outlook earnings in

Thank that, back to with I'll Michael. And you your for it time. turn

Thanks, Michelle.

our industry, unrivaled in kept this and on working. team We all in thank I our persevered And for to Before we team focus XXXX. year their and the challenging restaurant members guests. questions, our our open Portillo's experience a because matters, for is hard want during it's we for work what of for members

satisfaction in guest highest the they've years. Our continue three to be scores been

choosing Consumers are Portillo's.

healthy delicious team comp Our at to creating delivering we're and we're show great by value our We're already those point. continue experiences, members that creating work restaurant for Thank In sales creating shareholder promises. delivering great guests improving a food by keep We're for value you. and XXXX, price We'll value on focused constituents. level balancing three needs our trajectory our margins. of through core the on our

With we line for open that operator, the can questions?

Please Bank Our proceed. Sara question instructions] of from first Senatore [Operator is America. with

expect the on outlook and labor the if and you specifically, dig any I that. margin improve give you're us kind know continued Maybe talk into price I piece how through menu wanted the to guidance. you of you also can and to looking talked about sort of cost to sort actually investments. of more have just much specifically,

industry your the wage in digit been has double My in in sense pretty that the XXXX. been line range much had inflation with

perhaps broadly to maybe So to trying Yeah, a wage it the you the talk outlook could more and just XXXX? to understand to we you wage margin start I'm to got that of of ahead that. cycle particular. expect complexion sort stay Is maybe wages? later Should the wages Is curve? see another in of raising in in

Good Sarah. Yeah. morning,

start the that our think, the look -- at lagged metrics, our look turn me count at look power. look guests. when Let our satisfaction pricing good and traffic we don't pricing to last we're year And we scores, providing we it's over scores, Michelle. we when feel On at competition. pricing, when trends, underlying lost our really, I'll guest untapped sandwich we that we at about anyone that have hopefully it speed we And I of metrics, service not value really think when

on And appropriate pricing this I'll talk much about then And we're and catch to feel so The pricing. as very, pack gift I'll to specifically in right I'm a to make going how our we great Michelle we overall terms price to we for not that keeps experience thing to tell an we up very going year, like team labor have us say of are that giving that and have but the worked it's hard members. environment a power great let one organization is and on labor. providing the for you sure

our of getting competitors gap the And in bigger. is versus we turnover rest our that hourly see actually

XX increased. gap service on have we And XX anywhere our with teams So management to versus gap other a point also from companies. point has our restaurant limited turnover turnover on

cost this The hard turnover and right, soft to hugely hard measure. There's and easy is is relatively So, associated costs to industry. you know, with. important costs

measure. is Soft bit little a harder to cost

that lower we're of the member investments in pay terms that for generates more which making themselves satisfaction, in turn think turnover, than better team experiences. I guest

X%-ish pricing in add I then we'll there at and Michael's the with increase what then we'll a would the we quarter first margins in around the price in on in and be the be put we saying out QX, pricing just of to lapping the 'XX, with that X% terms of took mid-May.

we action. you'd the approach. falls as not our we're X.X% no that going about in fluid if Michael and We're if pricing with But what how to with So labor the out landscape remain already at to we've price price flexible announced increase anything took environment. as to continue see the as got be off, because said, to committing both January well beyond plays we commodities

to mentioned make prepared investments expect on my we do I labor. to the continue -- on in remarks,

it, year. the in bit half you our that in look come you 'XX, at when a back down we inflation think started of mentioned the saw labor digit double to I inflation

rate I in those labor down labor to as quarter. we numbers, as, up at we to 'XX. make continued some that X% well lay about the in So as expect investments come in fourth do we but inflation were to the expect start of

to on like Okay. couldn’t you just point price think take to it. I'm broadly cover sorry, you put inflation. -- a cover finer It sounds

as expansion, is thinking transactions might we into or else there on be about, go positive leverage think something should about So we margin that that?

Yes, and we pressures inflationary as mechanism do to using Sara, we've absolutely, think discussed combating about that. prices always

So we've in the we'll is course think other continue of about thing to of operational And regard. 'XX. the our efficiencies over then that talked that it

we then, that within help it's in as We're trends the things mentioned good there the our been from but his determined the to at we're entree and well to some of do year Michael seeing profile. on. remainder going standpoint be to that on, restaurants positive early be looking And additional has as early count expectation the to transactions remarks, this I know our date. it's but can is, margin year,

with Zackfia Sharon Blair. William from is question next proceed. Our Please

mentioned be room year it inflation. on off to curious good talk of and would could if quarter first as the but in be than than the lower drop quarter, about goes morning. it's to lot lower I going I'm you there's fourth commodity you sequentially know Hi, XX.X%. a the

give about are us you can did missed play year but progresses? you you on And basket blocked? kind I it, know don't to talk expect how of of commodities I So, that's percent where you of if the kind as the out your

out, we Yeah, Sharon don't to left year of expect is, the a year you be it qX. there's I XX.X% play in lot know, obviously saw to the but

fall I a I sequential I that to said, or sudden you a even digits off get and into imagine, a either don't us mid-single but expect single do as range that is cliff expect all As improvement, of digits. can

on based today expect hedge what would is quarter, XX. XX, year over we for that about in, know full But what have locked quarter I about We're positions. we improvement that have we locked do a third again, at in the some

know, that buys do we on B we the generally flats those where you that. on most positions As of forward is take

And in so have for we that pretty qX. locked

over pressure year. item, We've a have that you course that proteins then remaining and expect easing on the the in beef taken know, in more said continue of as pork to and But that working some be to of positions items the on chicken some most see line on our expect But the basket as the those we're particular the year again other of quarters back today. half do through in we trend. I

know to again, get update continue a So we that's you out what as But more we'll year information. lot of left to today. play and we

any like imagine there's just a question that what cannibalize Those that of of those I'm some understanding, it's quick got colony. you've of that something some be pressure. if kind And still, location. take that. jaw-dropping the might might the at to a that pretty honeymoon, idea then I that in accelerate off guess pipeline opening volumes team member I familiar, that? of can't are volumes. given location of for some a on even not does but Thanks

lot -- fantastic. talented probably we've are you we our have like management Thank been we we and eye-popping have in and an think there experienced, Portillo's amazing over-invested these first, And like team's right, job. -- and numbers because you're they're learned team the have I down doing a has

that proud very very, So we're team. of

this, We We in restaurants in to Texas. another four range year, kind for, restaurants end in had this five of of five I publicly four the by and think Texas. that to range planned said 'XX be we want to

be more So two and, build if we year. few in surprised we've announced Texas more a don't this

need Colony and settle I cannibalizing think will don't think to The about quite down yet. we I again think

that to an that's that's is going down. in I restaurant settle think for iconic us It location. fantastic flagship a a restaurant

beef closer And succeed a a Do like market people weeks us have to in, to lot They the typical But, of works it's so to my eat in the six, of you Sharon. think of Chicago restaurant. answer questions seem in it I I'll restaurant will Italian you that than asking like in really beef a expectations only is bread tell does, beef great people that our resounding lot. And, out you feel state Texas? that like a and Texas. yes. you'll what We, Texas? No but, core performs eight a sandwiches about, surprise, do think is it well

question from proceed. Tarantino next with is Baird. Please Our David

morning. Good Hi.

Just count you would fourth you I don't the be first mentioned growth the that quarter. a count growth, helpful. about question number, the entree entree if had think

we for we in, quarter, storm. negative the excluded the the it been the of storm, quarter, the excluding but impact It negative David, in quarter. flat, would've Yeah, if was it would've was the flat. the impact of All for was been

you do it's it you demand early the in so was consumer Do Texas new for was of great. I type And related product? elaborate the data more or on guess kind think if related just why days. your on for you observations collection think just to then, that Okay, I Michael, back you you picked, in performance, wondering strong the your unit of the could especially based think it's to site more on circling your location, or

as leading I of I being you indicator the sandwiches popular, but guess for know beef forward? you are mentioned what's a this market your the rest go the on thought

because bit to going a There's who've mark David. Furniture Those developed location you are retailers the undeniably a designed It a fantastic a area. we said. thrilled little great and development. a very a question, world-class a everything give have just you of and with answer be I'm very, is Nebraska we're to it's partnering cop-out Shields. location well folks in that there, there's Great

It's Frisco. complex So mile next It's away buildings to in right office business a a from of that's truth. undeniable all Frisco. the an in

it's great. So

Now energy, and we manager of team energy marketing tours a the manager down invested We and for excitement, beef crew and We down fantastic there XX% to overinvested that a said, general Portillo's management money time, fantastic demand. generate multi-unit Texas. in two our chiefs sent bus to some with experience. extent have there, and down

volumes, make stack sure deck the can etcetera. we So, these handle that we to

despite We am gotten. the little response are, we've that, by a all overwhelmed surprised and that I

either can restaurant or that think Texas hit for be miss I companies.

you If do sense your great. of well, really, with you butt if approach can be a humility you it you work off, and

going you're mail just stub be great, assume toe. in you might you it your to try in to If

training humility. deal looking We'll are folks to We beautiful to approaching Texas in team a our ready to continue great restaurant overinvest expansion for team our go and are and and going when to management with of the members. We're ready open We're the of it's go. locations. A-plus

to we and we'll think continue, lot did we lot of continue just so, And right a as right. of things I things get a

But, Texas. my well. is it And that is for a look, of doing really hope Florida's expect can what so precursor we

feel for the newest fantastic. Sunbelt. us Arizona working we've restaurant is flywheel just in We got Tucson, like Our in the

a I one financial whether it's right guess I Got Texas. one that's relative would your costs am more helpful. a Is to cost market? I costs -- it. it's you then construction typical That's guess on labor how characterize Is And cost model? to lower or operate is my it impression lower quick Texas, in, but market that

labor. are out would in for high paying We're elements location. is in well. there greatness certain Texas, I -- really We're expect we're relatively great a of our make to our that say priced team. but first restaurant it easier, paying We're There work

So think Chicago, don't I margins. the coming it would tell that out of as with you gate of like

right. All very it. much. Got Thank you

proceed. Our Harbour Morgan with next from question is Stanley. Brian Please

then some than Michael, do expected To coming just in on, or the of you think you perhaps new think quite but of other just the a we not half for you Texas, of have made, as kind the margins of openings that we and performance first they not. about the impact margin also of few point year maybe second new where directionally are better will the about the quarter, those locations, And as units comment how well?

a draw -- in a team new would to about we we really conclusions Yeah, me I'm out. answer, the more. question when open couple a of give restaurant But of opening hesitant be I a in have restaurant, philosophical helping the sort part let any to I'm new keep it's going the margin little the to, you bit first of and because -- quarters Michelle going let give you mind,

chase guests running very now, We the all it's help. And over-invest you to provide it's really you're or important important in you're going to experience need can when You new on experience, market, a hands we volumes in away you're to restaurant, a deck great a provide people fantastic time. a long at right? When you're -- at right first that management. have to for

So frankly first coming the the we even couple care gate quarters. over-invest, of the margin about don't and I for out

crew it the enticing will satisfaction from get right over standpoint, on of and think operating like What from the works there's fast. point stabilize when the an guest that reach going in right the a improve. we restaurants, the members to will then footing, And away this inflection we year, the six It course around. is really past, restaurant well get then margins. it about And restaurants comes margin to stick for talked us, Michelle's on eight our

important a margin us is once that relatively quickly to that decided to to so scale going to it to for start material seeing And us, get we've market's work improvement.

Yeah, to Brian; absolutely and Michael's just I think right. add to on that

class of the for margins sort how in that's grow As class bucketing 'XX it flattish starts the about, right 'XX, these. then you the or the year in slight in we're a high class and that class talked to one of and profile for of to two, even When is, of teens, typical about we year three. improvement restaurants, profile year talk

Scale does out. pointed matter as Michael

and But prepared that's Michael to think what despite the Portillo's, in we when that is 'XX improving profile in get think had talked that as know, in we're we're purposefully do we to restaurant committed because to looking because margin we about to openings important that So as the to and you mentioned 'XX, the degradation his we've margin scale. in so of that laggard of price be going approach I 'XX, overall remarks, despite openings. continue about our

Okay, still you. Separately, strong and to are still there do on continued on just quite then over those maybe maybe How a delivery quarter you do you talk and on be year Have delivery? basis basis. also a food quarter maybe seeing year thank new in units? over just see what party third about that

question. Yeah, great

So growing. just keeps the delivery third on we're it God because doing bless people like, party

It's so The for performing And well performing probably continues grow. us. for channel well it's to us.

and even into in party So of through third we're seeing the delivery the quarter. fourth continued 'XX growth course

is definitely So happening. that

the is of units, overwhelm metering part I a a and mean new question that tell latter about by me restaurant Your the good last your let we're -- so that. don't thoughtful because what very about new you very question channel we

first gate out fantastic blazing, year, it but came restaurant had had fantastic Orlando Our first a of a year. the

to did not overwhelm that team. want We

a purpose delivery and channel. third recently, pick not another catering little over channel, turned did year, only on we after a or we've a bit up So have party added added on,

on, stress is have The digital pickup in, have and to it turned it's does not on, pressure does create now have and not turned We third now and volumes. So create because Colony exclusively mix. doing right now. the party drive got dine that's on excess channel not more catering. crazy want does such don't Right purpose ordering whole through, it's

restaurant for is very, sort channel us, a new and over for once of restaurants, the which is the a outreach So a normal volumes. that's that time the stabilizes handle can expand new

proceed. Geiger Dennis Please Our with next UBS. question from is

you I on wanted congrats it to year trending of other and update what you other as how to openings. some touch Is for you're then on supply this and any build thinking sort you Thank maybe and relative expectation ask year? to Michael, of any relates on permitting of chain just and costs, kind 'XX? I the in recent openings The how that's any strength there morning could guys, there Colony about if kind other and this guess targeted and first in this good and year the saw for delays of

heard other in every you've Yeah, on etcetera. administrative think, to be but company, new from this get there normal long with sure a governments, restaurant certain through I'm takes timing how seems look, I processes to it

this more for for significantly in all permitting, built time we've so, And stuff.

to, a getting The things do. we've with we're better, we We've scale we're under We of built, pretty That's feel got got we we're got restaurants we've about good to first that become getting are national built three scale to smarter, company. where our time construction general control, getting what faster. that the contractors.

And we have so are open. I a pragmatic things are that that -- good in think going have and and lot I that feel learned to feel planful we when more we we good

It I why half is, loaded. is in be it Dennis, 'XX half back the to honestly, back a loaded perfect would so want never it's setting.

bright remainder third what open restaurants 'XX the for like. have, should We is XX% expectation much should by. quarter, open great I front then are of half us, is in be quarter. my the XX%, looks the one in so and and in And is the That's and perfect 'XX think closer maybe perfect to fourth the

how won't. it has I don't know not half I describe about loaded it And terms bit. this costs, I that back It don't will, neither it then nor of in construction is 'XX, here than has, but would to prefer, tapered a more So earth I back much hasn't and we're would if, of of it in there. it far great know we're as how much I don't talked come We've know before.

have What for set. still financial we're that committed that we means to targets is, hitting us very because the

would've So the is We're spending think we're that are higher. to in numbers that are the restaurants we because I it also some approving build money far only being of means and much thoughtful how cost exceed going our past build looked Michelle the at very we about too restaurants.

future. We've the talked restaurant of about the

we'll more that generate start want. to have building restaurants in the think the of that are volumes the smaller, class and I versatile we size 'XX, ability plus

a great think I so for And we've lower thoughtful still two we're more ways. build experience got this to and how in a building, those cat to building. in guests, but cost skin want We've got frugal a be

be that anything like gorgeous cheaper, to revenue still we lower for it's cost for the got don't returns. still greatly our word engaging that of we're up that and inviting, to all have restaurants thoughtful for I aspirations the a Michelle, be will achieve signing so the

we're committed at returns and restaurants. the No, cash cash to what new he on all, when that's approve we we've out it there laid look said we

as any the color delivery if other there. from commentary I'm though touch across you. there you've behaviors seen there's one to strength changing channel customers helpful just far Very anything Thank metrics, curious helpful one, on and else recently utilization, on etcetera. as what

a shift to undeniable. 'XX, that XXXX, if back the restaurant like has was channels in inside. sales Like of were all XX% There were delivery XXXX, X%. our go you is inside the XX% structural

the Drive-throughs XX%. remain they're Now roughly same.

how just so back and a And it that question much from? does restaurant, of of coming where inside come that it's keeps the

order a and pick price different So delivery you to to elasticity are if etcetera, and and the than third drive-through those defies sort materially fees be everyone's party robust very price or continues go points aware and of think up it the There's, delivery all continues continues to add that restaurant. and up, through you grow any that from on in I tip the things but us. consumer

surprised up I guessing, more, here that's So structural picked I dine-in think I'm hasn't be Dennis, that that could stay. to change would that still be just is been a it but

it, Michael. Thank you. Appreciate

with question Jefferies. next Please is from proceed. Our Barish Andy

everyone. morning good Hey,

productivity wanted know two efficiency I improvement from that perspective. on just an the operational dig over a around for we then does you're in more this And a on kitchen annually your working XXXX just Is as think this half, an bit new roll and secondly, work some year last, drive business? the about of opportunity margin year's something that good to know design. should years. How into a Just restaurants discussion, I little to more into you the build? guys done have kind

hear Yeah. Andy. you. Good morning, to from Good

I'd to improve. always operator, to means get a and what better here's a you're be company and say. great So, that and that trying aspire We be great

lot year legacy, with things a brand we can XX-plus great we're get operationally. While a of there's a at that old better

And to Portillo's is around so I a a while. be think improvement operational a going thing that's for quite

last -- we had efficiencies efficiencies fantastic fantastic year. had And, we

We're to I think will job did that. becoming efficient. and continue really think I of doing that more dynamic a good things enable

one of is alluded to Michelle Step the with the investments Up So, program. we labor that what call

Andy my you all done certain we train, if beef can cross the hotdogs is maker, hourly wage, can call make So, to that's he's a and station at rock-star he's getting learn and table. to go but you how

staffing pay of broiler station that the new work station that around utilization. you flexibility learn, and we every you creating for can learn, terms And every You in new and company and you're turn you more.

give figuring out gift second in that's that's is details to deploy that year. that half the all the goal program we're and our of a to the of the and Step going Up So

and It a how think bit a we do XX, the little pain of we a good on redo that. reference to we've restaurant, a Kitchen but we got You requires which idea a really it. little saw significant where bit to CapEx of tested savings

the We we our then year. a ongoing at an there, And productivity to carefully XX levels, metric. labor towards between It's day can learnings lot That that opportunity the to restaurants at be high little some for and lot will of, and by XX there savings. we have the by the some restaurants we're and generate at XX look that productivity bottom part, we're applying of basis, retrofit look retrofitting, quartile items for spread less Kitchen there's top in area to a at We going for hour. target this restaurants we Chicago And day, There's should on look to there's are productive. ridiculously and that perform restaurants a quartile. productivity there. -- a

cross-trained, that want well. multi-year who are lot So I happy, that's care members, team predicated a work, to but on eager also improve You really of think right? and taking room productive we journey, team when your of it's and it's have works great a to members everything

there and to NROs you expense up things Very XQ, XX%? Michael, moved color. else other Michelle, real that a in I wondering with well sales imagine or kind is on about anything just that just high what probably was the it mentioned in pretty of helpful. run is and of XX% were specifically operating and But new so. good quick really Yeah, the utilities as like rate if packaging catering paper that. at and this

some only had out called I thing in layer that, The again, of year-over-year repairs restaurants, in be terms going the that which I But Outside other that you up called would we to Andy, catch what catch of to on expense think going QX. and in I some on the that QX. and we when new my I you're Yeah, maintenance out have again, I but would obviously is what that remarks. restaurant. you I'm to right, would maintenance call up did for repairs that new call in an a into future on rate, in that's run outlier out of some get it not numbers, be there,

next question Our with Chris Please from is O'Cull proceed. Stifel.

count to should be thinking and start Yeah, growth how openings. as good given comparisons quarter, in comp store first the on or recent the trajectory we morning impressive. congrats normalize? about traffic Michelle, the entree Very

out called we've to date. I think transaction growth Chris, year Michael seen that positive

we others to particularly and that continue a two the that's from So or first that, right? 'XX per we even throughout Which see of transaction. I've negative as mix, before, talked looked see we about year, thing to periods. the The half that items was to through and you the attachment is is, in continue impact this back

My expectation this to to turn through immediately like is environment. don't continue I that expect as recessionary around live we

as that into well come we seeing 'XX. still as we're So

to do expect that be you guess, more despite are expand this what than drag, drivers year. store year sounds think improvement? year you to new I it going like than then And the of last Other new, margin Okay. this primary pricing,

to the environment X% we're have January. lever, going pricing's then mentioned to We're in we Yeah, again, I in forward. There's to see looks, going again, and aligned to looking primary as a is in was I what continue Kitchen else we terms and the would look the put how program, that exactly that pull about Andy be definitely Michael lever. moving efficiency which to at And nothing XX but when talking on to Chris, I he Michael that said as our per labor our our of restaurant. we just we're metric hour, measure items our just that point up then step at improvements looking the in

some going we we're but make those to can there? be be the things, are lever. pricing improvements So primary two looking the So would

this what 'XX? you investments relative you said there's a and some up you as to follow made just to be when start year. us lap the are you in those of planned to the investments remind for And labor question, magnitude labor that think I expected Can investments timing to

We -- we of round to haven't made as our into exactly put we're fully. place going increases year program, restaurants. QX, determined mentioned, Step of the Chris, in don't for example. last beginning put Up in QX, decisions when been labor And we in the Yeah, place Michael the a haven't

of so increases going in we're when on lap TBD start 'XX. do but you'll some that's And to to those this year what

decisions. We those all haven't made

Our with Please next question is from proceed. Gregory Guggenheim. Francfort

industry about the I the and the think whole I had of just have trends a bit really one a but industry's sales have little easier for number thanks comparisons, strong the question. Hey, topper a particularly XQ, seeing comparisons. bit to start is you you little you're pickup, may and Can talk recent guys think January

there a about thoughts that maybe is talk Thanks. anything that you're regionally dynamic you consumer as and So or seeing just strength whole? on the can

Yeah, identifies a that on, in I little January demand missed we think December out week I some pent just honestly that of, think was last of back, a that so that. from would so chart supplemental the bit kind -- at Greg here's, bounce I up clearly think I a that there's

if we It's -- market. we momentum that, neutralize in we're you traffic a way, as mix trends to sandwich as like, it, our broad feel and I way broad it's the trends. think individual It's really channel I our but even feel in seeing would straightforward the little is describe based tell our the more good Now, business. really as seeing bit both well any more to the momentum We count about begins are good stabilize, And by traffic business. not about probably you based. that.

the but I sound broken seen of speed know guest like last record, a months, improving for consistently nine I service value satisfaction we've scores. scores, scores, perception

value two working. our great that They're our us So price strategy I great guests. they're laggard performance they find We're attribute value, our first step for is telling that the months providing us. satisfied up in with to

three comes Our and it We've our, of working. strategy's bit I We 'XX, on revenue little guests in year highs this. guest beginning little to of now 'XX. generating at when said performance bit think our satisfaction beta lagged invested our pricing. that are We've the at I and a guess a that scores is in

more drove as cross-functional a heard guess Thanks this certain of little restaurants and put get to of past on of of Step they and And kind of back capabilities hadn't than workers before you new mean from? that. you Just, for as level then of came of any Thanks. kind different a a kind cross-functionality to And genesis follow of where to the thoughts worker. you're the what the just you design like trying a going kind up add I workers? this are any Is I a a your level? that in idea were less just, of restaurant today question just in Up program. at the of on that? doing paying I anything bit the

pay pay -- it's concept a honestly in I rooted for performance, think play. it's for of

want we actually to people, that it's our people actually And keep to things, we ask them keep happier. people, thing you like team They they're new the So them when learning different to that undeniable is happy. first being want when members you want things. you what do great want may, are able motivated,

was because trained. stations, members do shifts. we We team restaurant be great us genesis of a the our we have important different It's that. within it's to some happy. cross And stations them to that way so of this want to probably able other them to keep than restaurant. want many truthfully, our We rewarding multiple want So multiple work companies more

really create are more high actually happy excited because team We who engaged, and members we and productivity. excited can be can happy a efficiently very learning there. they're our guests dynamic. team growing. can we because So win-win members We to can happy, staff because they're And getting our are create quality make super labor get investors

wins So it's us. of kind for of like hat it's trick a

[Operator next instructions] Please our question And is Mullan with from Bank. Brian Deutsche proceed.

or look and a ratio then, debt after Question sheet. down getting the you that a you. pay Michelle, to could to over Hey, the to view range CapEx mind for for time And the there want on you'd the start thank if deleverage capital in the team the or keep in over rear return on you net Just to inclined a the leverage be mirror, time. should optimal? just business? think balance be is requirement on needed you'd fund the to whether of growth I'm bit priorities at that refinancing philosophically, wondering done. with Congrats inclined target is you touch we more

free yeah, the more cash from the questions great mirror. definitely Brian, Yeah, rear and that bit have a in up we're to view and excited refinancing

during we think to all Investor saw out As where our it go. the going Day, I CapEx is you laid

vast etcetera. going the in that And restaurants our cash investments we're investments into make technology, then and be to continue the new to existing is other majority going to like to fund of so, restaurants put build things

that call, about revolver. that, to already menu pay excess that down things. digital Outside those extent We've on mentioned of I talked the the boards, of cash started have type we'd to we

million revolver. paid couple $X to the a I'd that that off had paid of down. like million on days we outstanding get We So ago. $XX

we're so revolver. million outstanding at on And $XX the

comfortable Outside the I rest best of If Michael of all and open in our down or leadership paying so sense deployer a has dialing and makes that, team primary avenues. is and shareholders, best would would return with up that's will I fantastic then other am that the It growth, capital. be do investment. the we we are interest the whatever whether that's to avenues of that and the obviously because debt

lever Yeah, and have feel head. do we everything answer in in grow. just, the and ratio? But sorry my I I targeted a targeted leverage on not mentioned continue can question have comfortable Brian, service do I a ratio invest to debt, didn't we very that I your just

This the will today's We of end conclude session. have question-and-answer conference. reached our

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