[Management View]
Portillo's management emphasized a strategic reset, focusing on slowing development in 2025 and 2026 to improve unit economics and operational execution. The company aims to prioritize customer experience and operational excellence, leveraging its unique menu and hospitality to drive growth.

[Outlook]
Portillo's plans to open eight new restaurants in 2026, with further expansion in 2027 targeting new markets. The company forecasts fiscal 2025 adjusted EBITDA margins between 21%-21.5%, reflecting ongoing margin pressures. No additional pricing actions are anticipated for the remainder of the year.

[Financial Performance]
Portillo's reported a 1.8% increase in revenue for Q3 2025, driven by non-comparable restaurants, while same restaurant sales declined by 0.8%. Adjusted EBITDA decreased by 23.4% compared to the prior year, with commodity and labor costs cited as margin headwinds.

[Q&A Highlights]
Question 1: Could you speak to marketing efficacy in the quarter and future strategy, especially with Denise joining in September?
Answer: Marketing investments are focused on driving trial and awareness in newer markets like Dallas and Houston. Campaigns are ongoing in Chicagoland to reinforce brand value. The company believes these investments will yield good returns now and in the future.

Question 2: How do you view your value perception among guests given pricing trends?
Answer: Portillo's pricing is below the industry average for food away from home. The company is mindful of inflationary pressures but aims to drive traffic without additional pricing actions this quarter.

Question 3: Can you elaborate on development plans for 2026 and beyond?
Answer: Eight restaurants are planned for 2026, with some already underway. Expansion in 2027 will focus on new markets, avoiding oversaturation in existing ones like Dallas and Houston.

Question 4: What are your early thoughts on commodity and labor costs for next year?
Answer: Beef costs remain a significant pressure, with no easing expected. Labor costs are at the lower end of the forecasted range, with average hourly rates above $17.

Question 5: What enabled better comp performance than expected in Q3?
Answer: The Perks program stimulated visits and engaged customers, contributing to improved comp performance. Offers to the customer base received positive responses.

Question 6: Can you provide insights into consumer behavior shifts?
Answer: The Perks program helped mitigate pressures, with notable impacts from promotional offers. Consumer behavior remains fluid, with ongoing industry challenges.

Question 7: Have you seen any changes in consumer cohorts like Hispanic or younger demographics?
Answer: No significant changes were observed in specific consumer cohorts. Drive-through channel pressures were more pronounced in Q3.

Question 8: How is the focused marketing effort in Texas progressing?
Answer: Efforts in Texas include sampling events and market-wide offers to drive trial. The company is developing a cohesive marketing message for new markets, led by the new CMO.

[Sentiment Analysis]
Analysts expressed concerns about marketing efficacy and commodity costs, while management maintained a confident tone regarding strategic resets and market expansion plans.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 |
|-------------------------------|---------|---------|
| Revenue | $181.4M | $178.2M |
| Same Restaurant Sales Decline | -0.8% | N/A |
| Adjusted EBITDA | $21.4M | $27.9M |
| Restaurant-Level EBITDA Margin| 20.2% | 23.5% |

[Risks and Concerns]
Key risks include commodity inflation, particularly beef costs, and labor expenses. The strategic reset aims to address overexpansion and underperforming new stores.

[Final Takeaway]
Portillo's Q3 2025 earnings call highlighted a strategic reset to improve unit economics and operational execution. While revenue growth was modest, driven by non-comparable restaurants, same restaurant sales faced declines. Management remains focused on enhancing customer experience and expanding into new markets, with disciplined pricing actions and marketing investments. Despite ongoing margin pressures, the company is optimistic about its growth potential and ability to create long-term shareholder value.