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Portillo's Inc. (PTLO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $188.5M (+3.6% y/y) with same-restaurant sales +0.7%; diluted EPS was $0.12 and Adjusted EBITDA was $30.1M, while Restaurant-Level Adjusted EBITDA margin compressed 90 bps y/y to 23.6% .
  • Versus S&P Global consensus, revenue missed ($195.8M est.) and Primary EPS was modestly ahead ($0.115 est.), while EBITDA trailed; management cut FY25 revenue growth guidance from 10–12% to 5–7% and lowered Adjusted EBITDA growth to flat–low single digits . Values retrieved from S&P Global*.
  • Sequentially, transactions improved 170 bps vs Q1 but remained negative; commodity inflation moderated to +1.9% in Q2 (vs +3.4% in Q1), with beef pressure expected to intensify in H2; Texas new unit ramps and a delayed Stafford opening drove the revenue guidance cut .
  • Strategic catalysts: aggressive field marketing and loyalty (Portillo’s Perks ~1.9M members), kiosk adoption (>33% in-restaurant usage), AI-enabled drive-thru rollout, and materially lower build costs ($5.2–$5.5M “RoTF 1.0” vs ~$6.8M for class of ‘24) .

What Went Well and What Went Wrong

What Went Well

  • Restaurant-level execution supported margins: Restaurant-Level Adjusted EBITDA was $44.5M (23.6% margin) and Adjusted EBITDA was $30.1M (+0.7% y/y) despite traffic headwinds .
  • Loyalty, tech, and marketing engagement: Perks topped ~1.9M members, kiosk usage exceeded 33% with average check/mix benefits, and AI-powered drive-thru tests shaved minutes off times; “These four initiatives are building a stronger foundation for transaction growth” .
  • Build-cost reduction: New “RoTF 1.0” prototypes tracked at $5.2–$5.5M per unit, over $1M lower than class of ‘24; inline formats and future “2.0” kitchens target further capital and OpEx savings with attractive cash-on-cash returns .

What Went Wrong

  • Revenue miss and guidance cut: Q2 revenue missed consensus; FY25 revenue growth lowered to 5–7% and Adjusted EBITDA growth to flat–low single digits, driven by slower Texas ramps and Stafford permitting delays .
  • Margin compression: Restaurant-level margin fell 90 bps y/y to 23.6% on higher other operating expenses (+60 bps) and modest commodity/labor inflation, partially offset by pricing/mix .
  • Mix pressure from trade-down: Despite kiosk-driven attachment, guests traded down (e.g., large to small fries), offsetting mix benefits; transactions remained negative (-1.4%) though improved sequentially by 170 bps .

Financial Results

MetricQ2 2024Q1 2025Q2 2025 Actual
Revenue ($USD Millions)$181.862 $176.437 $188.456
Diluted EPS ($USD)$0.10 $0.05 $0.12
Operating Income ($USD Millions)$18.115 $10.381 $17.531
Adjusted EBITDA ($USD Millions)$29.866 $21.209 $30.064
Restaurant-Level Adjusted EBITDA ($USD Millions)$44.569 $36.656 $44.481
Adjusted EBITDA Margin (%)16.4% 12.0% 16.0%
Restaurant-Level Adjusted EBITDA Margin (%)24.5% 20.8% 23.6%
Same-Restaurant Sales Change (%)(0.6%) 1.8% 0.7%
Transactions (% y/y)N/A(3.1%) (1.4%)
Average Check (% y/y)N/A4.9% 2.1%

Revenue breakdown (Q2 2025):

ComponentQ2 2024 ($MM)Q2 2025 ($MM)y/y Change ($MM)y/y Change (%)
Same-restaurant sales (75 restaurants)$162.559 $163.627 $1.068 0.7%
Not yet in comp base (opened FY24, 10)$2.834 $10.486 $7.652 270.0%
Not yet in comp base (opened FY23, 8)$13.773 $12.206 ($1.567) (11.4%)
Other (direct shipping, non-traditional)$2.696 $2.137 ($0.559) (20.7%)
Total Revenues, net$181.862 $188.456 $6.594 3.6%

KPIs:

KPIQ2 2024Q1 2025Q2 2025
Total Restaurants86 94 94
AUV (12M basis, $MM)N/A $8.7 $8.7
Same-Restaurant Sales Change (%)(0.6%) 1.8% 0.7%

Versus S&P Global consensus (Q2 2025):

MetricConsensusActual
Revenue ($USD Millions)$195.828*$188.456
Primary EPS ($USD)$0.115*$0.134*
EBITDA ($USD Millions)$29.361*$24.286*

Values retrieved from S&P Global*.

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Unit GrowthFY 202512 new units 12 new units Maintained
Same-Restaurant SalesFY 20251% to 3% 1% to 3% Maintained
Revenue GrowthFY 202510% to 12% 5% to 7% Lowered
Commodity InflationFY 20253% to 5% 3% to 5% Maintained
Labor InflationFY 20253% to 4% 3% to 4% Maintained
Restaurant-Level Adjusted EBITDA MarginFY 202522.5% to 23% 22.5% to 23% Maintained
G&A ExpensesFY 2025$80–$82M $78–$80M Lowered (cost)
Pre-opening ExpensesFY 2025$11–$12M $11–$12M Maintained
Adjusted EBITDA GrowthFY 20255% to 8% Flat to Low single-digits Lowered
Capital ExpendituresFY 2025$97–$100M $97–$100M Maintained

Drivers: Slower class of 2024 ramps in Texas and Stafford opening delays reduced operating weeks; G&A trimmed while maintaining margin targets .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesFocus on operational improvements and kiosk usage (Q1) AI drive-thru test expanding; time reductions; kiosk usage >33% with check/mix benefits Scaling; positive
Supply chain/commoditiesCommodity inflation +3.4% (Q1) Commodity inflation +1.9% in Q2; beef pressure to intensify in H2; ~90% beef flats hedged; >70% basket locked Near-term pressure; risk managed
Tariffs/macro/trafficQ1 same-restaurant +1.8% with pricing/mix; transactions -3.1% Transactions -1.4% but +170 bps sequential; trade-down impacting mix (regular vs large) Sequentially improving; value-sensitive
Product performance/innovationBreakfast tests launched in early Q2 (announced Q1) Breakfast performing incremental in Chicago; menu innovation and “secret menu” via Perks pipeline Positive test; broader 2026 potential
Regional trends (Texas/Sunbelt)Planned expansion into Atlanta; continued Texas focus (Q1) Texas ramps slower; marketing re-accelerated; Atlanta opening in fall; Arizona strong Texas maturing; awareness push
Regulatory/legalNo material new updates citedStafford permitting delays impacted timing Timing risk realized

Management Commentary

  • “We continue to manage the flow through... delivering restaurant level adjusted EBITDA of $44.5M with a margin of 23.6%... our non comp restaurants in Texas have gotten off to a slower start... We’re testing new ideas, growing our loyalty and tech platforms and reducing build costs” — Michael Osanloo .
  • “We remain on track to open 12 restaurants in 2025... projected net cost average of $5.2M to $5.5M per restaurant... 2026 pipeline... multiple 2.0’s and non-traditional formats” — Michael Osanloo .
  • “We expect total revenue growth to now be 5% to 7%... G&A $78–$80M... Adjusted EBITDA growth flat to low single digits” — Michelle Hook .
  • “Kiosk adoption... frictionless; loyalty near 1.9M members since March; we’ll use Perks surgically to drive acquisition and frequency” — Michael Osanloo .

Q&A Highlights

  • Texas ramp and density: Management acknowledged being “a little ahead of demand” in Dallas; rebalanced with sustained marketing and grassroots to build awareness; Arizona/Florida show the model at scale .
  • Commodities and hedging: Beef inflation heaviest in Q3–Q4; ~90% beef flats hedged and >70% commodity basket locked to de-risk COGS .
  • Unit economics: Build costs down >$1M per unit; inline formats can be sub-$4M capex with attractive ROIs; 2.0 kitchens expected to lower labor/energy needs .
  • Drive-thru speed and AI: Cameras/monitors plus AI ordering cut minutes off; plan to conclude test in Q3 and begin deployment in Q4/2026 .
  • Loyalty and breakfast: Perks ~1.9M members (rare loyalty per restaurant density); breakfast tests are incremental with no lunch/dinner cannibalization; ongoing evaluation through year-end .

Estimates Context

  • Q2 2025: Revenue missed ($188.5M vs $195.8M*), Primary EPS modest beat ($0.134* actual vs $0.115* est.), EBITDA missed ($24.3M* vs $29.4M*). Values retrieved from S&P Global*.
  • Implication: Street likely lowers FY25 revenue and EBITDA trajectories given guidance cut and Texas ramp pacing; EPS variance reflects metric definitions (Primary EPS vs diluted) and non-GAAP items . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Near-term: Expect continued traffic sensitivity and mix trade-down; watch Q3 beef inflation and Texas comp trajectory; revenue/EBITDA estimate resets likely post guide cut .
  • Execution levers: Loyalty scale, kiosk adoption, and AI drive-thru are tangible transaction catalysts into 2026; monitor deployment pace and measured impact on speed/frequency .
  • Unit economics: Build-cost discipline and new formats (inline, airport, 2.0 kitchens) support strong cash-on-cash returns despite margin optics; 2026 pipeline diversity is a tailwind .
  • Region development: Arizona/Florida performing well; Texas requires sustained marketing and awareness density; Atlanta opening is a proving ground for the “new market playbook” .
  • Margin outlook: Restaurant-level margin guide (22.5%–23%) reaffirmed, but other operating expenses and beef costs keep pressure in H2; hedging and pricing discipline mitigate risks .
  • Capital and liquidity: Revolver usage to fund growth with goal of no net new borrowings into 2026; monitor cash from operations and capex cadence vs opening timing .
  • Stock catalysts: Evidence of sequential transactions improvement, AI/kiosk ROI data points, Atlanta opening performance, and 2.0 build-cost proof points; sustained Texas comp recovery would be a key sentiment inflection .
Note: All quantitative figures from company documents include citations. S&P Global consensus/actual values are marked with * and sourced from S&P Global.