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| Statement |
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| And you can expect it to be another strong year of growth for us |
| Our improvement in restaurant-level adjusted EBITDA margins is on top of opening a record level of new restaurants in 2023, which all have a lower margin profile to starts |
| We have a very strong brand |
| To address your question on Q1 of this year, absolutely we are not immune to the impacts that the industry have seen on weather, as well as how the consumer is feeling as we look at not just performance in January, but performance and February, but I'll come back to we feel really good about the health of the business to Michael's point, and regardless of how that choppy the comp maybe in Q1 not just for us, but the rest of the industry, we feel really good about the health of the business the trends that we were seeing outside of a weather impact in January |
| This improvement was the result of our ongoing efforts to deploy strategic pricing actions, elevate guest experiences and implement operational efficiencies |
| Restaurant-level adjusted EBITDA grew 42.7% to $46 million and restaurant-level adjusted EBITDA margins expanded by 310 basis points to 24.3% |
| I'm extremely happy with the results coming out of our growth markets in particular |
| That's -- I mean we're really happy with that |
| Restaurant-level adjusted EBITDA grew 24.7% to $165 million and for the full year, we expanded restaurant-level margins by 170 basis points to 24.3% |
| And importantly, we grew operating cash flow by 24.4% to a record level for Portillo's |
| But yes, we have a very strong emphasis internally on speed of service even to the point where -- look, we know exactly what our service times are in the drive-thru, a 32nd improvement in service time in the drive-thru represents a 1% comp, when we're pack that is incremental and the incrementality of that revenue flows through remarkably well |
| It was pretty broad-based and we feel really good about that |
| We believe the best way to drive revenue and traffic in a sustainable fashion is to give our guests the outstanding experience we're known for and they've come to expect |
| The result was strong revenue and margin performance, multiyear highs in overall guest satisfaction, and a current Net Promoter Score of nearly 70, outperforming most of our peers |
| Restaurant-level adjusted EBITDA margins were 24.3% in the fourth quarter of 2023 versus 21.2% in the fourth quarter of 2022, a strong improvement of 310 basis points quarter-over-quarter |
| But we had a very, very positive trends across all of our markets for the fourth quarter |
| This was primarily driven by solid revenue growth across the existing base of restaurants, the record number of new restaurant openings in 2023 and margin expansion |
| We excelled in dine-in, our drive thrus were hummin, pickup and delivery orders were flying off the shelves, and we did a great job growing our catering business |
| We also strengthened our ability to handle large-scale catering events |
| The overarching theme there is that these investments are driving strong catering sales and will help us to continue to grow this channel |
| But I'll point to what Michael said which is we're very happy about the performance, particularly when you look at those outer markets you called out Fort Worth and Claremont |
| But our operational teams are phenomenal in terms of just continuing to look for ways that we can become more efficient as we have these new kitchens coming online |
| One is, I think the catering theme is part of a broader theme for us which is we are incredibly proud of our multichannel capabilities and it's important to us that we are masters at flexing each one of those channels |
| We are confident in the strength of our brand, our operational execution and look forward to continuing to deliver on our long-term outlook that was provided in our earnings release this morning |
| And I'm excited for what this means |
| We ended the year with positive traffic and multiyear highs in guest satisfaction |
| Portillo's already generates more than $650,000 in salad sales per restaurant, per year, with our beloved Chopped Salad is the best seller |
| So, you'll see it across the P&L in terms of revenue, but you also see it in margin improvement and that's that they're both super exciting things |
| In Q4, we saw strong top line revenue growth |
| And we were and we're excited about its potential for Portillo's, as we continue to grow |
| Statement |
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| You have all seen choppy performance during the first quarter due to winter weather and consumer headwinds in our industry |
| In terms of your restaurant level margin question, when we look at the portfolio and bringing in 12 new restaurants into the base this year plus the 9 plus that we're going to open this year, we do expect to see some margin degradation from those restaurants |
| And so I think that whole mall has been a bit depressed |
| And I think frankly we underestimated how many people would walk up and order food |
| Margins may be down a little bit on – new units are a little bit below the 12 to 15, but clearly kind of distilling it down to adjusted EBITDA growth in the low double digits |
| Like -- and it doesn't, I'm not telling you anything that's state secrets, but like trying to advertise during an election cycle is really tough spend |
| But having said that, it was an outweighted |
| Remember, we had a little bit of weather impacts as we approach that heavy catering season for us in Q4 last year |
| So, that's of course not sustainable |
| Our effective tax rate for the fourth quarter of 2023 was negative 3.8% driven by a change in our valuation allowance |
| There were nowhere near when we were at our best, and it's always a balancing act when you focus purely on speed there's a tendency to perform less well on accuracy on all these other things that really matter |
| We are not immune to that, but we don't expect that to derail the rest of our year |
| So that we can come combat some of that margin pressures that we see from the new units as well as getting to scale as quickly as possible |
| I think we have perhaps pushed accuracy and friendliness to the detraction of speed a little bit |
| And Michelle, gave a little dissertation on the impact of scale in Arizona, when we went from two to four and the -- just the demonstrable margin improvement that we had |
| Labor as a percentage of revenues decreased to 25.4% in the fourth quarter of 2023 from 26.5% in the fourth quarter of 2022 |
| Interest expense was $6.9 million in the fourth quarter of 2023 a decrease of $1.4 million from the fourth quarter of 2022 |
| Alan has been a little bit slower |
| Now there will be years when unexpected things happen in any given quarter and years when we outperform |
| And so we do expect to see those restaurants impact restaurant level margins as we approach this year |
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