Portillo’s second quarter results were met with a significant negative market reaction, as revenue growth came in below Wall Street estimates despite a modest year-on-year gain. Management attributed the underperformance primarily to softer sales in newly opened Texas locations, which failed to ramp up as quickly as anticipated and weighed on overall results. CEO Michael Osanloo noted, “Our noncomp restaurants in Texas have gotten off to a slower start and continue to pressure overall top line revenue performance.” The company also pointed to flat transaction growth and signs of consumer trade-down within core menu categories, indicating broader economic pressures impacting guest spending patterns.
Is now the time to buy PTLO? Find out in our full research report (it’s free).
Portillo's (PTLO) Q2 CY2025 Highlights:
- Revenue: $188.5 million vs analyst estimates of $196 million (3.6% year-on-year growth, 3.9% miss)
- Adjusted EPS: $0.13 vs analyst estimates of $0.12 (16.5% beat)
- Adjusted EBITDA: $30.06 million vs analyst estimates of $29.36 million (16% margin, 2.4% beat)
- Operating Margin: 9.3%, in line with the same quarter last year
- Locations: 94 at quarter end, up from 86 in the same quarter last year
- Same-Store Sales were flat year on year (-0.6% in the same quarter last year)
- Market Capitalization: $570.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Portillo's’s Q2 Earnings Call
- Sharon Zackfia (William Blair) asked about the negative menu mix despite increased kiosk usage. CFO Michelle Hook explained that while kiosks lift items per transaction, guests are trading down to smaller portions due to economic pressures.
- Christopher O'Cull (Stifel) questioned the rationale for continued unit openings given new store underperformance and increased borrowings. CEO Michael Osanloo stated that expansion is being pursued prudently, with a focus on markets where scale leads to stronger awareness and returns.
- Gregory Francfort (Guggenheim Partners) probed Texas performance versus other Sunbelt states and commodity cost outlook. Osanloo acknowledged heightened competition in Texas, while Hook detailed proactive hedging on beef and continued labor cost discipline.
- Sara Senatore (Bank of America) asked about the impact of smaller, in-line formats on margins and returns. Osanloo and Hook described anticipated lower build costs and improved labor efficiency, offset by potentially higher occupancy expenses, but expect improved cash-on-cash returns.
- Brian Mullan (Piper Sandler) inquired about breakfast testing and menu simplification. Osanloo said breakfast is incrementally positive in Chicago, with continued evaluation, and noted learnings from limited menu tests in Houston leading to some product reintroductions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of traffic recovery and sales ramp at new Texas and Sunbelt locations, (2) the operational impact and guest adoption of AI-powered drive-thru and expanded kiosks, and (3) the effectiveness of marketing and loyalty initiatives in driving repeat business and higher average checks. Execution on build cost reductions and the rollout of new store formats will also be important milestones.
Portillo's currently trades at $7.98, down from $9.50 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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