Portillo’s Q1'25 Earnings: Modest Growth, Loyalty Push, & New Market Challenges
- Hardik Shah
- 2 days ago
- 3 min read
TL;DR
Revenue up 6.4% driven by new restaurants and modest same-restaurant sales growth (+1.8%).
Margins pressured, with adjusted EBITDA down 2.6% despite stable restaurant-level EBITDA.
Loyalty, new formats, and marketing outside Chicagoland are key to growth, but new markets remain a challenge.
Business Overview
Portillo’s Inc. (NASDAQ: PTLO) operates over 90 restaurants across 10 states, serving Chicago-style hot dogs, Italian beef sandwiches, burgers, and more. The chain leverages its growing national presence to expand beyond its Chicagoland roots, with aggressive plans in Texas, Arizona, and Georgia. The company introduced the Portillo’s Perks loyalty program in Q1 2025 to boost customer retention and digital engagement.
Portillo's Earnings - Q1'25 Highlights (vs. Q1'24):
Building on momentum from Q4 — when Portillo’s emphasized expansion and brand awareness as growth pillars (see our Q4 recap) — the company continues to lean on loyalty programs, new formats, and targeted marketing to drive performance in 2025.
Total Revenue: $176.4 million (+6.4%)
Same-Restaurant Sales: +1.8% (driven by 4.9% higher average check, offset by 3.1% lower traffic)
Operating Income: $10.4 million (+2.8%)
Net Income: $4.0 million (-25.3%), impacted by higher taxes
Restaurant-Level Adjusted EBITDA: $36.7 million (+0.8%)
Adjusted EBITDA: $21.2 million (-2.6%)
Margin pressure came from higher labor (26.6% of revenue, +50 bps) and commodity costs (34.6% of revenue, +30 bps), partially offset by menu price increases (1.5% in Jan, 1% in Apr) and efficiencies.
Forward Guidance
Revenue growth trimmed to 10-12% (from 11-12%) citing slower starts in new markets.
Same-restaurant sales guidance raised to +1–3% (from flat–2%) based on pricing and loyalty-driven traffic expectations.
Adjusted EBITDA growth expected at 5-8%, slightly down from prior 6-8% guidance.
Operational Performance
Traffic challenges continue: While check growth helped comps, transaction declines weighed on sales.
New markets underperforming: New restaurants, especially in Houston, lag due to low brand awareness. CEO Michael Osanloo noted, “Everything that we see in Houston suggests that these businesses are going to be fine... they just came out of the gate a little slower than we hoped”.
Dallas advertising success: Q1 ad campaigns in Dallas drove ~10% increase in brand awareness and high-single-digit sales lifts.
Perks Loyalty Program: Early results are promising with “solid redemption rates” and expectations to drive incremental traffic as the program matures through Q3 and Q4.
Kiosk usage growing: Adoption hit ~30%, contributing positively to mix (+0.5%) and expected to lift performance throughout the year.
Market Insights
Tariff and commodity risks manageable: Beef remains the largest pressure point, but the company is “largely managing tariffs” according to management.
Macro uncertainty persists: Weather, tariffs, and consumer sentiment weigh on visibility.
Competition in QSR remains intense, especially in drive-thru and value segments, though Portillo’s sees improving guest satisfaction and problem resolution, positioning it well for traffic recapture.
Strategic Initiatives
Loyalty and digital engagement: Portillo’s Perks launched with a focus on broad offers and will shift to targeted one-to-one marketing later this year. CEO Osanloo said it’s “the most exciting thing we’re doing as an organization right now”.
Breakfast trial: Testing in five Chicagoland restaurants showing “positive early feedback” with plans to assess summer performance before scaling.
New formats: Plans include:
12 new restaurants in 2025, mostly the new “Restaurant of the Future 1.0” 6,200 sq ft format.
First walk-up only location planned for Central Florida to test dense market economics.
Ongoing marketing pulse: After Dallas and Phoenix, more new markets will see targeted advertising campaigns tied into the Perks program.
Capital Allocation
Cash balance of $12.9 million with $320 million net debt.
CapEx plans unchanged at $97–$100 million for FY2025, primarily for new units.
The Bottom Line
Portillo’s delivered solid top-line growth in Q1 2025 despite softer new unit performance and macro challenges. Management remains confident in its traffic-driving playbook — loyalty, targeted advertising, operational excellence, and new formats. However, new market softness and cost pressures warrant careful watching.
As CEO Osanloo emphasized, "We're confident in the foundations we've laid and the strategies we have in place," but execution in newer markets will be critical to hitting full-year targets.
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