Executive Summary

Q3 2025 revenue was $181.4M (+1.8% YoY) and diluted EPS $0.02; revenue and SPGI EPS both beat consensus, but margins compressed sharply and comps were negative .
Adjusted EBITDA fell 23.4% YoY to $21.4M and Restaurant-Level Adj. EBITDA margin dropped 330 bps to 20.2%, reflecting commodity and labor inflation and non-comp unit deleverage .
Management reset FY25 targets: revenue $730–$733M, comps (-1%) to (-1.5%), RL Adj. EBITDA margin 21.0–21.5%, Adj. EBITDA $90–$94M; G&A trimmed to $76–$79M and new units cut to 8 .
Strategic pivot: slower development cadence, smaller-format unit economics, and intensified marketing/loyalty to drive transactions; Perks offers aided Q3 comps vs prior update .
Near-term stock reaction likely driven by the paradox of a headline beat vs. EPS/revenue consensus, but with weaker margins and lowered comp trajectory; catalysts include Georgia market entry and progress on prototype economics .

What Went Well and What Went Wrong

What Went Well

Perks loyalty drove upside: “We pulled some Portillo’s Perks levers... offers to the entire base had a really nice response” (Mike Miles) .
Development progress with first in-line, walk-up restaurant and entry into Georgia; total restaurants reached 99 post-quarter, targeting 8 openings in FY25 .
Pricing discipline and perceived value: pricing under “food away from home” CPI, aim to use targeted offers rather than broad price hikes (CFO) .

What Went Wrong

Same-restaurant sales declined (-0.8%) as transactions fell (-2.2%); mix down (-1.8%) despite +3.2% price, pressuring margins .
Commodity inflation (beef-led) and labor costs drove margin compression; RL Adj. EBITDA margin down to 20.2% from 23.5% YoY .
Non-comp units (particularly Texas infill) pressured overall margins; dead site costs ($3.3M) and Barnelli’s trade name impairment ($2.2M) weighed on results (partly adjusted) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$178.3	$188.5	$181.4
Diluted EPS (GAAP)	$0.11	$0.12	$0.02
Operating Income ($USD Millions)	$16.0	$17.5	$5.4
Net Income ($USD Millions)	$8.8	$10.0	$0.8
Adjusted EBITDA ($USD Millions)	$27.9	$30.1	$21.4
Adjusted EBITDA Margin (%)	15.7%	16.0%	11.8%
RL Adj. EBITDA ($USD Millions)	$41.9	$44.5	$36.7
RL Adj. EBITDA Margin (%)	23.5%	23.6%	20.2%
Same-Restaurant Sales (%)	-0.9%	+0.7%	-0.8%

Estimates Comparison (SPGI):

Metric	Consensus (Q3 2025)	Actual (Q3 2025)
Revenue ($USD)	$179,592,880*	$181,428,000*
Primary EPS ($USD)	$0.04*	$0.1423*

Values retrieved from S&P Global.

KPIs and Unit Metrics:

KPI	Q3 2024	Q2 2025	Q3 2025
Total Restaurants	88	94	98
AUV (12M, $USD Millions)	N/A	$8.7	$8.6
Transactions YoY change	N/A	-1.4%	-2.2%
Avg. Check YoY change	N/A	+2.1%	+1.4%
Price/Mix impact	N/A	+3.4% price, -1.3% mix	+3.2% price, -1.8% mix

Non-GAAP adjustments worth noting: strategic realignment costs ($4.406M), dead site costs ($3.3M), TRA remeasurement ($0.353M), and impairment charge ($2.2M) were adjusted in EBITDA reconciliation .

Guidance Changes

Metric	Period	Previous Guidance (Q2 2025)	Current Guidance (Q3 2025)	Change
New Units	FY 2025	12 new units	8 new units	Lowered
Same-Restaurant Sales	FY 2025	+1% to +3%	(-1%) to (-1.5%)	Lowered
Revenue	FY 2025	+5% to +7% vs. prior year	$730–$733M	Reformulated (lower midpoint)
Commodity Inflation	FY 2025	3% to 5%	3% to 5%	Maintained
Labor Inflation	FY 2025	3% to 4%	3% to 4%	Maintained
RL Adj. EBITDA Margin	FY 2025	22.5% to 23%	21.0% to 21.5%	Lowered
G&A	FY 2025	$78–$80M	$76–$79M	Lowered
Pre-opening Expenses	FY 2025	$11–$12M	~ $9M	Lowered
Adjusted EBITDA	FY 2025	Flat to low single-digit growth	$90–$94M	Reformulated (lower vs prior algorithm)
Capex	FY 2025	$97–$100M	$97–$100M	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Loyalty (Perks)	Launched in March; strong sign-ups; used for BOGO/free offers; targeting 1.9M+ members and surgical 1:1 marketing	Perks promotions (Dollar Hot Dog Week, 50% Cheeseburger Week) helped comps; plan to scale offers	Positive engagement; expanding usage
Texas awareness & marketing	Dallas campaigns drove awareness and sales; Houston slower starts; adding field marketers and grassroots	Intensified offers and sampling; cohesive new-market messaging under new CMO	Active, still ramping
Development cadence & formats	12 openings planned; ROTF 1.0 build cost down to ~$5.2–$5.5M; testing in-line/airport formats	Reset growth: fewer openings (8); deploying smaller formats for $4–$5M revenue/unit	Slower, more measured growth
Drive-thru speed & AI	Camera-vision/AI pilot to improve speed and accuracy; kiosk adoption ~33%	Continued focus; drive-thru channel pressure vs other channels	Operational improvement ongoing
Commodity & labor inflation	Beef-led inflation; ~90% hedged beef in 2025; labor ~3%	Commodity +6.3% in Q3; continued beef pressure into 2026; labor ~3.3%	Inflation headwinds persist
Menu/innovation	Breakfast test in Chicago; kiosk-driven mix lift	Secret menu LTOs via Perks; continued mix/trade-down observed	Targeted innovation, watch mix

Management Commentary

“Portillo’s took a number of steps to reset our growth model... proceeding at a more measured pace in new markets while pursuing better unit economics.” — Mike Miles (Chairman & Interim CEO) .
“We will design and build new Portillo’s that can succeed at today’s new market initial volumes... smaller-format restaurant that can deliver good unit economics at $4–$5 million of sales.” — Mike Miles .
“Same restaurant sales decline was attributable to a 2.2% decrease in transactions, partially offset by an increase in average check of 1.4%... commodity prices up 6.3%.” — Michelle Hook (CFO) .
“Following CEO transition costs... we have adjusted our G&A target for 2025... updated estimate $76–$79 million.” — Michelle Hook .
“Perks program... immediate response; helpful for lapsed guest activation and trying new menu items.” — Mike Miles .

Q&A Highlights

Marketing efficacy and value proposition: campaigns in Dallas/Houston and core Chicagoland; pricing indexed under FAH CPI; cautious on further pricing .
Development outlook: eight openings in 2026 already in flight; more gradual growth in 2027 with broader market expansion (Atlanta second opening) .
Cost outlook: no near-term easing in beef; labor inflation ~3% YTD, average hourly >$17, no minimum wage pay .
Comp cadence: Perks offers supported July/September; September seasonally pressured; Q4 lap is tougher; no quarter-to-date comp disclosed .
New-market messaging: building cohesive positioning beyond Chicago expats under new CMO; broad offers plus sampling to drive trial .

Estimates Context

Revenue beat: $181.43M actual vs $179.59M consensus → bold beat; EPS (Primary) $0.142 vs $0.04 consensus → bold beat; 7 estimates for both metrics*.
FY 2025 SPGI revenue consensus ~$730.41M aligns with company’s revised $730–$733M range*.
With margins lower and comps down, analysts likely revise margin assumptions and comp trajectory downward while maintaining revenue in guidance range.