Despite Its “Mustard Only” Tradition, Chicago-based Hotdog Slinger Portillo’s Needs to ‘Ketchup’ On Revenues

The fast casual restaurant owner and operator, Portillo’s Inc. (PTLO) who is known for its Chicago favorite foods that include hotdogs and Italian beef sandwiches, announced Q3 financials that posted EPS of $0.11 vs FactSet $0.06 but missed on revenues citing $178.3M vs FactSet 182.1M. Despite revenues increasing by 6.9% from the prior year, shares declined from the revenue miss by 4% but have since recovered to only a 1% decrease.

On the conference call, the company highlighted its strategic focus on operational efficiency, new unit growth, and protecting the brand’s positioning, while navigating near-term headwinds in the industry. Management discussed the progress on the company’s loyalty program, which they plan to announce early next year and discussed the continued improvements they are making to drive-thru operations and overall operational efficiency. Portillo’s plans to reduce the size of new restaurant builds, while maintaining the Portillo’s experience and operational capacity and is confident in their ability to achieve their targeted cash-on-cash returns on these smaller restaurant formats. Portillo’s maintained its commitment to protecting margins and profitability rather than engaging in discounting, even as the competitive environment becomes more promotional.

The company’s Q3 comparable sales performance being challenged by the broader industry discounting and promotional environment, which led to its revised full-year guidance. Additionally, management cited uncertainty around the potential impact of the macro environment and competitive landscape on the company’s Q4 performance, as reflected in the cautious outlook.