Good morning, everybody. Thank you for joining us. I'm very happy to have with me up here on the dais, Michael Osanloo. Sorry we just had a conversation about the pronunciation, so I think I overcorrected. Michelle Hook from Portillo's. I'm sure many of you know Portillo's, but it's a fast casual restaurant that specializes in Chicago specialties, like Chicago-style hot dogs and Italian beef sandwiches, but also a more traditional limited service menu. We're going to have a wide-ranging discussion, because both Mike and Michelle bring a tremendous amount of history, both obviously at Portillo's, but the industry broadly. If you do have questions, please don't hesitate to raise your hand. I think we have a mic, or we'll have a mic circulating, and happy to have audience participation. With that, let me, let me jump in here, and let's start talking about the consumer and in particular, the consumer in the context of your trends. What we have seen over the past, let's call it four quarters, is that, you know, looked to me like and there was, you know, demand was very strong, and then maybe we as an industry hit a little bit of a softer spot in 2Q of last year, and then you've seen some steady improvement. I know you look at entry counts. I think the cadence sort of follows that for you. Like I said, it seems like a broader audience. I guess to what do you attribute that, you know, that cadence, if you will, because the macro environment doesn't feel like it's changed that much consumer sentiment, you know. Do you have any thoughts on that and how we should think about consumer demand going forward, given all the volatility? Well, first,thre thanks for having us here, Sarah. Oh, my pleasure. Thank you. I think the consumer is complicated, right? I think there's when you think about a consumer psyche, it's what's the next shoe to drop? What's the next shock? I actually think that for a period of time, for the last three, four quarters, it's been relatively... Yeah, the macroeconomic environment hasn't dramatically improved, but it hasn't gotten worse. There haven't been some big shocks, and I think consumers are very adaptable. I think the consumers said, "Okay, so now we're used to conflict in Ukraine, higher energy prices, you know, inflation at 7%, 8%." We're used to this now. I think that they started reacting to a new normal. The benefit for our industry is that as much as inflation has affected us, it's affected the CPG companies worse. Food away from home has not gone up nearly as much as food at home. Food away from home still tends to be something that human beings like to do. You like to go out. You like to go break bread with someone and interact. And the quality and the taste of food away from home continues to improve. You know, 20 years ago, fast casual didn't exist because the quality just wasn't there. I think the value propositions, the enthusiasm for going out, and I think getting adjusted to a little bit of a new norm has helped our industry, maybe more so than others. That's a good segue to my next question, which is, you know, I think the longer-term algorithm calls for low single-digit same-store sales. The implication, I think, to your point, you know, we're not usually banking on 7%-8%, you know, inflation and price increases. Right. Implicitly, the view, I think, is that transactions will be maybe flattish or slightly positive. How do we get there from here? Is it sort of we've reset now and grow from here? What's the sort of transaction driver go forward so that we can have that sort of low single digit? Yeah. Well, I'll talk about our company in specific because we're kind of two companies in one. When you think about Portillo's and we have committed to low single-digit comp, it's a combination of we have a very strong base in Chicagoland and the outlying suburbs, right? We're a mature company there. We've been there for 60 years. And Chicago is not a growing market. Population base is not growing. When we grow comp in Chicago, you're fighting tooth and nail. Right. Transactions are actually organically declining. W think we can be flattish on transactions, which means we're taking share. Yeah. We'll get two points of pricing on a regular basis. The Chicago market and the core Midwest will be positive low single digits. We expect better out of our investments along the Sun Belt, places like Florida, Texas, and Arizona, where they will open up at AUVs below what the Chicago market has. These markets have population growth, transaction growth. We think that those will be better comp and will continue to grow and be a really nice story for us. You know, Chicago is incredibly profitable for us, generates a ton of cash, and we're taking that cash and deploying it to high growth markets. Right. In terms of thinking about that traffic growth, because again, this past year and we'll get to sort of channel shift and all the other dynamics. The past year, entree count has been sort of flattish, but transaction growth I think has been, you know, modestly negative. Yeah. I guess two things. One is should we be thinking about entree growth? Two- Yeah. How do we get from negative to flat or to positive? That's I guess the crux of sort of are we, are we reset lower because there have been so many adjustments in what related to COVID and now we grow from here. I think you've caught on to the point. I wanna emphasize something about entree growth. I think it's important for companies like us to look at entree growth because channel mix clouds the story, right? You know, I've explained this, that like when you have two people, two friends that go and dine in at your restaurant, they typically each are ordering for themselves, that counts as two checks, two people. If those same two people went through the drive-thru, it's usually one person paying, and it's one check, one bill. Then if they did, you know, if they did third-party delivery, come back, send it back to the office, it might be one check, but like five people. When you look at transaction count, it's really check count, and it can be misleading when channel mixes are shifting so radically, and they have been. I think channel mix is starting to stabilize. At that point, then I think you just go back to look at transactions traditionally. Now, we have had very positive trends on both actually transaction and check, sorry, sandwich count and transaction count over the last six, nine months. In fact, we announced this at our earnings. We are positive year to date on both transactions and on sandwich count. We think that the consumer, at least with our brand, is voting with their feet, and we feel really good about where our value proposition is. We made, you know, we got some heat for it. We made very purposeful investments in the consumer in 2022. We did not raise prices as aggressively as almost any of our peers. We invested in the consumer. That value proposition is paying back now. Right. In the form of a better transaction growth. Yeah. Right. I guess maybe just to put a finer point on that, relative to your underlying trends, the strength year to date, does it surprise you, or it sounds like you view it as a continuation? I think for outside observers, it felt like the step change higher in January, February. If I think about the underlying volumes, is that maybe less accurate characterization? It's much more consistent with trend. I think it is a trend. I'm, I don't know if I'm old school or an analytic guy, but I pay attention to what I think are the underlying drivers of our business, right? Anybody, I can look at sales any given week and say, "Hey, we did great." I look at things that are leading indicators, like our OSAT scores, our value perception. I see what guests are telling us. They're telling us, you know, our overall satisfaction scores, our value perception, our speed of service metrics, these are really important in our industry. Those all reached multiyear highs in the third and fourth quarter of 2022. I love when I see that because that means I'm gonna have a good 2023, right? No one... If people are saying, "Hey, this is the best..." By the way, back half of 2022 wasn't an easy time to please guests, right? The bar is really high. They're very demanding. When I see those things, it gives me a lot of confidence looking forward. You know, conversely, when I don't see those things, I fret, and we deal with them. I think the leading indicators for our business have been very strong now for the last six- nine months, and we watch them assiduously, and we make sure that we're giving guests a great experience. You do the right things, the sales come. Right. Right. I think those are the data that as an outside observer, we can't always see. Yeah. You're tracking the guest intention and the guest perception, which is so critical. I guess one dynamic, and we talked a little bit about this in terms of mix shift that we've seen, is that off-premise sales have not, you know, they've remained higher. They're not at peak COVID, but they're well above pre-pandemic levels. Yeah. I guess maybe talk a little bit about to what you attribute that, and also what does that mean in terms of, you know, as you think about going forward, whether it's your, whether it's how you build your restaurants or how you staff or... Yeah. you know, whatever kind of changes to the operating model you might need. Yeah. It's, I confess to be a little confused. The person ordering through the third-party app off-premise remains stubbornly price inelastic. Mm-hmm. You can't charge them enough for them to say no more. I just don't get that. Except I see my daughter ordering from, like, Starbucks, like, $20 worth of coffee that costs $10. I'm like, "What are you doing? You would be surprised how many executives I talk to point to their kids. Yeah. Their kids are price insensitive to say the least. I nipped that in the bud the minute I saw that nonsense. I'm like, "It's five blocks away. Go walk." I think that there is a segment of our society that is highly price inelastic and greatly values the somebody bring it to me dynamic. I would have guessed that the growth in that would have stopped. It has not stopped. It's still a very healthy channel for us. It still grows dramatically, and God bless them. I'm not sure I get it. Whether or not I get it, I think it's important then to think about how do you design and build your restaurants for a stronger off-premise business. We have been working on that in multiple ways. I'm gonna let Michelle talk about this because she's leading. We have a project we call, Restaurant of the Future, which is what the new Portillo's restaurants are gonna look like. It's not gonna happen this year, but hopefully it affects the class of 24 or 25. I'll let Michelle talk about how we wanna be omnichannel and have it all. I think when you think about Portillo's, to Michael's point, we are multi-channel. We have double drive-thrus in all of our restaurants, and we have the capabilities for third-party delivery. We do pickup where you can order on our app, pick up in the restaurant, and then we have a robust dine-in business as well. We're sort of QSR+. We're fast casual with QSR elements. The way that we think about the Restaurant of the Future is, you know, going where the consumer is going, which is we've seen more off-prem business. Before COVID, we were about 50% dine-in, and right now we're about 35%-40%. It's dine-in has bounced back, but not to pre-COVID levels, and we don't expect to get back to that. Our restaurants today we're building about 7,800 sq ft today. How do we get that more in line with, again, the off-prem business. I think there's opportunities as we look at that Restaurant of the Future to shrink the footprint a little bit further, Sarahh, as we look at, again, more robust off-prem business, but still have the experiential nature of a Portillo's and not losing that aspect of it. And then again, providing the way the customer wants to order from us and, you know, we're there to service that business. Think about, like, restaurants as, you know, you have those third-party delivery folks coming into your restaurant, having dedicated doors, right? Where they know where they're coming in, and they're not going through the restaurant and looking around, "Where do I go? Where do I go?" Having that dedicated entrance for them, having dedicated space for those pickup shelves for the consumer who wants to order online and come in, making it easier for our team members, right? As they're making the food and looking at those efficiencies in the kitchen, I think are important too because as they're making the food, right, they're gonna have to deal with putting it on the shelves, dealing with the drive-throughs, dealing with the consumer inside. We're used to all that today. How do you design a kitchen as well that is efficient for our team members to work in? I think is important too, because when you think about the labor, right? We'll probably get into that. It's not easy to staff restaurants, right? I think everyone's talking about the labor environment. Portillo's, we're able to staff our restaurants. We've never closed, because of staffing. We've never had to shutter channels, et cetera, but it's a challenge. Mm-hmm. How do we think about a Restaurant of the Future that maybe doesn't require as much labor because we can get more efficient in how we work in the kitchen? That's actually. Yes, you're right. I am gonna grill you on Pardon the pun, on margins and costs. I do wanna ask about that because one of the things about off-premise is that you lose the gatekeeper in the cashier, right? Like, you have infinite, basically, order points because everybody can- Yeah. How do you manage that? Like, the burstiness or, you know, and what are you doing? Can you still actually reduce labor if you have the, you know, what strikes me as a much more, kind of, you know, hard to predict demand flow? How are you handling that? Yeah. Well, there are opportunities. Now, Portillo's, right, You see our AUVs on here. Yeah. I think they're on there. Are they, Michael? Yeah. $8.5 Million. Well, we average $8.5 million AUVs. Mm-hmm. Portillo's are busy. We're busy all the time. Yeah. The demand flow is easy. The demand flow is easy because it's busy all the time. It's always high. It's always happening. There's always people in our restaurants. Of course, you have your peak periods. Right. during lunch and dinner. You know, for us to understand that demand flow is we do understand it. Yeah. We've been operating restaurants, as Michael mentioned, for 60 years. How we schedule that labor, how we manage that labor is actually pretty surgical. We have a robust labor scheduling tool that we utilize, where we look at the demand within a specific restaurant. We can schedule our labor by shift, obviously, and by, you know, making sure we have coverage during those peak periods. How do we, as we're talking about, get to a point where we don't need as much labor, right? I think looking at just efficiencies in the kitchen, the equipment that we're operating with, I think there's some things we can do there that we're looking at in Restaurant of the Future with, you know, a lot of people talk about ordering platforms, too. I don't believe in, you know, putting kiosks in restaurants. I think the smartphone is a kiosk. Mm-hmm. How do we use that to do maybe some QR codes at the table... Mm-hmm. -where people can order? I think those type of channels will help with the labor, as we move into, again, that Restaurant of the Future. I think there's a number of things that we can do. Yeah. You know, one simple thing. Last year, we went from very distinct POS using it on the outside versus the inside. We have inside order takers, and we're not like, you know, our drive-throughs are not like what you might think of in typical QSR. You know, you drive up, you squawk into a box, go to a window, pay, go to another window, collect your food. That's not how ours work. You have menu boards. Two people come out, and the person takes your order, collects payment right there. As you move forward in line, a runner comes out, runs your food to you, and then you can pop out of line when you get your food. It's a very different model than typical QSR. We used to have two different POS systems for outside and inside. Both those POS systems, they're antiquated. Just that is the only way to describe them. They're antiquated. If you wanted, you know, if you wanted an Ever Dog, which is a Hot Dog with everything on it, you had to add, which is insane. Right. Because it's a popular sell. Standard order. Right. Yeah. We refreshed the POS systems inside and outside. We aligned them around one common language. Ever Dog, there's literally a picture of a hot dog with an E. Hit that button, you're good. You wanna take something away, you can take stuff away easier. It dramatically reduced the amount of time that we need to train people at front cash and at outside. The other nice thing that it did is if you're super busy outside, you can move a cashier outside. They're already trained on how to do it. If you're slow outside, the weather is bad, but you're bumping inside, you move a person inside. It's save time, save training, better accuracy, and it created labor flexibility. There's still a raft of opportunities like that for us because, you know, on one hand, we're a 60-year-old brand, but we've been run professionally for like three, four years. Right. Right. Which is, you know, nice place to be in the sense of you have the brand equity and all of the familiarity. Yeah. The 60 years brings with you. That's right. You have a lot of opportunity. You have all the opportunity that 60 years of entrepreneurism brings you. Right. Right. You're in a sweet spot, if you will. I do wanna just quickly talk about in this context, you talked about drive-through. I know you have a drive-through only location in Joliet. Yeah. I think this format is more about infill markets. Yeah. You know, capturing that as opposed to new markets. Maybe you can talk about sort of the balance of non-traditional versus traditional. I think definitely leading towards the latter. Right. You know, give us a sense of kind of what the footprint looks like. Yeah. I hesitate to say this because there's restaurant companies that say, "Well, we're a technology company," makes me chuckle. We are an experiential restaurant company, right? I want people to experience Portillo's. Dick Portillo, when I first, like, came on board, I was visiting restaurants with him. You know, there's a genius to the way he thought about Portillo's. One of his, one of the things that he said to me, it really stuck with me, is when you come into a Portillo's, it appeals to all of your senses. Mm-hmm. There's something to that. When you come into our restaurant, there's a ton of stuff going on visually. Like, it's silly, but we have these LED stars in the ceiling that twinkle. It catches your eye. It's a beautiful restaurant. It's tricked out with all kinds of stuff. There's sounds. It's a loud restaurant, but that creates a sense of energy. You can smell a lot of stuff cooking, and I love the smell when you go. My mouth, it's a Pavlovian response. I start salivating. All those things are really, really important, and I want people to establish their love affair with Portillo's by going into the restaurant and eating at the restaurant. Our fries are the best fries in the world, but even the best fries in the world, if they spend 20 minutes commuting, die. I want them to eat the food in the restaurant. We want beautiful restaurants. We want to engage people. We want you to bring your kids in, so that your kids can go, "Wow, look at this thing. There's a Toyota truck hanging from the ceiling." When you've got an established relationship with our brand, then we wanna make the brand pervasive and easy to access. That's when it makes sense to have fill-ins. Fill-in, the drive-through only makes a ton of sense in Chicago. Ton of sense in Chicago. Don't be surprised if we build more drive-through only models in Chicago. People know us. They know how to use us, and so that works. I think you think about where will you saturate next and where does it make sense? Honestly, I think Arizona would be the next market for us. Mm-hmm. We've been in the valley now for a decade. We're building restaurant six right now. We'll have seven and eight next year. I think you can start thinking about some infills in Arizona because those people also know our brand. Right. I'm gonna come back to that, sort of, you know, how you know where your, the demand is and your, and your, drive ship. Yeah. Before I do, I promised you I would talk to you about margins, so I'm gonna do that. One of the things that sort of as I was thinking about this drive-through model, it's actually, you know, not more labor intensive. There are more people involved than historically was the case, right? It used to be exactly what you said. You talk into a speaker box and maybe you do payment. Right. Maybe even that same person might give you the food or somebody else. Whereas now you're actually ordering with somebody, and they're running the food to you. In some sense, it's almost, you know, surprising how much more interaction you have than, you know, than a traditional. I guess there are two things I'm getting at. One is, to what extent is there sort of an interactive component of that that is important? Because you talked about, you know, the Portillo's experience. Two, you know, getting back to this sort of question, how should we think about the balance between technology and labor? Because, as you said, it's been a really hard market to hire. Yeah. I'll start and then let Michelle build. Here's the thing. There's a lot of companies that are moving more towards technological solutions, kiosks and front order, things like that. That's awesome. I love competing against them. You can become a glorified food kiosk, and we'll still be a restaurant because human beings still want to interact with... Most do. You'll definitely find people who don't want to interact with, but most do. I love when you order at front cash with a Portillo's person because what they'll say to you. If you order a beef sandwich, they're gonna say, "Would you like sweet or hot peppers on that? Mm-hmm. They help you curate the meal. If you don't order it, they'll say, "By the way, have you ever tried our chocolate cake? We make homemade chocolate, literally homemade chocolate cake every day in-house. Yeah. It's insanely good. Yes. Right? It is. That's- Yeah. That is a curated dining experience. That still matters. I think that, having human beings who are doing things like that, who are helping you, is awesome. Our drive-throughs are ridiculously fast. I mean, keep in mind, our we're doing $4 million just on the drive-through side of our business, okay? That's people flying through there. The reason you can do that is because you have human beings steering traffic. You got your food, you just pop out right ov er there, sir, get out of the lane. It's a win for consumers, it's a win for our team members. There's people who enjoy being outgoing and engaging. I think we have a model that works really, really well, and it's a little bit unique, and I'm okay with that. Right. Right. To your point, you know, unique can be good. It's a differentiator. Yeah. You think having somebody, you know, front cash or whomever say, "Would you like to try our chocolate cake?" Versus, you know, a machine that's gonna try to upsell you. You think there's a qualitative difference between hearing it from? Yes. -person and- One is a consultative sale because it's somebody who's helping you solve a problem. Right. Anybody who's been a consultant, you know, you gotta find a problem before you can sell something. Right. The other one is just a machine redirecting you to some algorithm on how other people order. Right. I see. Okay. I think we can do both though, Sarahh. Right? Because as Michael mentioned, people do like to interact with other people, but those that don't, I think the opportunity is there to do that upselling in other formats. One of the things we invested in in 22 was installing digital menu boards in all of our restaurants, both in the drive-thru and in the dine-in experience. We can upsell on that. Yeah. We can, you know, feature, we do some LTOs with shakes and desserts. We can do that. Yeah. If we wanna upsell a certain product, we can do that. We do have a format to do that in talking about technology and how we weave that in. That is another method we can do that if you so choose. Right. to not interact. Right. Right, with a human being. I think having that option is what makes the Portillo's experience different and unique, and why people do want to come and dine in our restaurants. We've seen, as I mentioned, dine-in bounce back, not quite to 50%, but it's bounced back. I think it can go a little bit further. Michael and I believe that can be largely incremental to the brand. Yeah. as people continue to wanna come into restaurants. Right. Okay. That makes sense. Sitting here as a New Yorker, I'm one of those people who doesn't wanna talk to anybody. Yeah. Just in case. Right. In the event that- I get that. Yes. Yes. Saw that. Okay. On the, on the margin piece, I wanted to sort of talk about this, you know, kind of the economic model, and I think new, you know, new units have come in at higher volumes and the Sun Belt in particular has been, you know, very attractive. Can we, can we talk about, you know, kind of how to think about margins? 'Cause last year, you know, was sort of, I would say, an investment year in terms of people. Yeah. That's right. Going forward, you've been a price laggard. How do we think about, you know, the sort of traffic versus incremental price as a way to sort of get the margins maybe back to a more normal? I mean, Michael and I are both committed to growing margins in 2023 versus 2022. We purposefully made investments in 2022 because we didn't want to do long-term damage to this brand, and we wanted to make sure we balanced price taking with not at the expense of significantly reducing our traffic. As we move into 2023, absolutely. Even though we have 13 new restaurants coming online, four as part of the class of 2022 and then nine as part of the class of 2023 into our portfolio. Despite that, we still believe we can grow margins, and we're gonna continue to use the pricing lever. We've already announced we've taken 2% more pricing in mid-January. As we look into the future, Michael and I will continue to look at the landscape and pull the pricing lever as necessary as we have to continue to offset inflationary costs in the business with both food and labor. I think those will be mid-single digits this year on those two high input costs for us. We need to offset that, but I think catch up a little bit on some of the pricing that allows us to grow the margins, and that's what we're committed to this year. Right. Laggard, I wanna clarify something. Laggard doesn't mean we won't take pricing. Right. Laggard just means I believe that the cross-elasticity effect of pricing is typically worse than the direct elasticity effect. Like, after everybody else has taken their pricing and shocked the system, then it's time to take pricing. Actually, it's a good question. You know, it's a good point about cross-elasticity, but I guess in that context, how are you thinking about relative value, right? You know, everybody, if everybody took, and this is obviously a stylized view, but 10 points of price last year and you took less, or they took, in some cases, mid-teens and you took less, and now your gap narrows a little bit. You're not worried about that. You know, we'll see. Yeah. We'll see whether others actually hold the line on price. If that were the case, you'd still be about a value, but perhaps slightly less so or the gap would be slightly narrower. When you're thinking about value, are you looking at, you know, increases year-over-year or are you like actually measuring, you know, what can I get for my money and I'm looking at a broad, you know, kind of group of whether it's food at home or? Yeah. you know, other fast casual fast food? Maybe how is your sort of approach to relative value maybe? Yeah. Right. it's honestly pretty, I wouldn't say complicated. Let's say thorough. It's thorough. we absolutely track pricing year-over-year, us versus them. We track the most popular bundle that we sell versus their most popular bundle for a series of different restaurant companies. we know that right now our most popular bundle, beef sandwich, peppers, fries and a drink, is anywhere from $1-$7 or $8 cheaper than the people we typically compete with. we say just on prices of what you get for the money, we're in a really good spot. I think when you're making these decisions, you also need to look at what are your guests telling you about your value proposition, about how satisfied are they with you and your speed of service, because those are all parts of the value that you provide them. All three of those metrics, value proposition, speed of service, overall satisfaction, are at multi-year highs for us. That what the guest is getting from us at that price point is about as good as it's ever been, which tells us that we have, we have room to price. Right. If they're telling you know, you might be below everybody else on pricing, but if your guest satisfaction scores aren't good, if they're telling you your value scores aren't good, you actually don't have any power to price. Right. Right. Right. The, To your point, the guest will determine- Yeah. the value. That makes sense. Secondly, on margins, you know, you talked about mid-single digit, which would be, you know, still up, but much less. Some nice disinflation. It seemed to me last year that labor was... Predictable is probably the wrong word, but we kind of saw a trend with labor, whereas the commodities just there was a tremendous amount of volatility. How are you thinking about this year? You know, mid-single digits is your best estimate. As you look at the commodities market, you know, are you seeing anything that surprises you? Are you still anticipating volatility? Maybe talk about also where you're locked and, you know, how much visibility you have. Yeah. I mean, look, we don't know what's gonna happen, as we sit here today, we think that some things have started to stabilize. For us, beef is about 35% of our total basket, when you add in chicken and pork, those proteins make up about 50%, all three of those in totality. As those move, that's gonna have an outweighted impact on our basket. I think we all know, you know, what happened in beef last year. We saw some highs. It started to come down in the back half of the year. It remains okay right now, I think that could be pressured in the back half of the year. I think chicken and pork have largely come down from highs of last year, that's been a good sign for us. That's balancing some of the increases on beef I think we'll see this year. Then french fries for us, which is about 7%-8% of our basket, we're seeing pretty significant increases on that this year. When you blend those together, Sarahh, I think we'll see some deflation, I believe, on chicken and pork, but offset by fries and the beef costs is how we get to mid-single digits. Again, last year, I didn't think when the year started we'd be at 15% commodity inflation. The world just kind of fell apart. I don't see that happening this year. I think it's stabilized a bit. On the labor front, we were up about 11% on hourly rates last year. I think it's a reasonable mid-single digits this year, knowing that we still have investments that we wanna make in our team members. But we've, over the course of the last two years, made significant investments in our team members and in labor. I think that'll largely stabilize as well this year. Right. still be up. You know, Michael, you've mentioned sort of a surgical approach. When I think about pricing, you know, presumably it's not you take the same price increase across all menu items. You're sort of. Yeah. How, how does that look? You know, are there certain SKUs you wanna protect? You talked about the bundle. You know, I guess how. Maybe talk about your approach to pricing. It is, you know, look, we try to be very thoughtful. We have some very popular baskets. You're not pricing everything in the basket ever. Beef sandwich, fries, and a soft drink, you're not pricing sandwiches, fries, drinks. You might price sandwiches, you might price sides, you might price drinks. You might say, "I'm just pricing off-premise channel. Mm-hmm. I might just price catering. We take a very surgical look to the pricing, and You know, when we price, we compare. What do our fries cost versus everybody else's fries? How good of a deal is our fries? How good is our portion versus theirs? How about our sandwiches? Where do we stack up? When we price, we also... You know, Michelle and I have said this, that we like to price in small chunks. We don't take big chunks of pricing. We take small chunks. I'd rather take multiple small bites of pricing than a couple of big bites. There's, I guess, less sticker shock... Yeah. to the, yeah, to the customer. Yeah, that makes sense. I wonder you thought you'd mention like, you know, the how much food you get. When I first went to Portillo's, that was what was so surprising is just the sheer volume. Well, we're Midwesterners, Sarahh. I know. We like to eat. I know. I remember thinking, "Oh, surely, you know, this is gonna cost me, like, my whole per diem that Bank of America gives me." It was like $25. Yeah. It was crazy. To your point about Midwestern, let me use that as a sort of stepping stone. Yeah. You know, the question always comes up about portability of the brand. Yeah. I think it's, you know, at this point, you know, your volumes in new markets are very high. Yeah. How do you think about this sort of 600+ target? Yeah. -in the context of, you know, there are only so many Chicago expatriates, I guess. Yeah, yeah. that we can, you know. We know that some of your biggest markets, I think Arizona, you mentioned, you know, there's some of that culture that gets carried with you. How do we think about the portability of the brand? In the existing markets where you are very successful, is that enough of a market, you know, a TAM for the total count that you're thinking about? I gotta tell you, I think it's the most exciting element of the Portillo's story, right? Like, I kinda feel like I bet my career on the portability of Portillo's. Right. Like, there's a lot of places I could have gone to, but I'm here because I think that I'm privileged to lead a sleeping giant, and I think Portillo's is gonna be portable. I've recruited a team that's like-minded in that sense. I get this question all the time. I think underlying that question is that, Hey, your food is kind of different, right? It's not very typical. An Italian Beef sandwich, it's not Italian, it's Italian Beef sandwich or a hot dog. What's so different about your food and will people eat it? I'll tell you my favorite proof point is, you know, our average restaurants in Midwest in Chicago land does $10 million. We now have $9- $10 million restaurants in Arizona and Florida. We opened at The Colony in Texas, which is just past Frisco, north side of DFW. Since it opened, and it opened in early January, it's been the number one restaurant in our system. It's averaging $48,000 a day which would trend it to be a $17+ million restaurant. Don't, I mean, don't model that number. Don't bank on that. You know what it is gonna do? It's gonna smoke our underwriting expectations. Right. You know, people say, "Well, why do you think The Colony is doing so well?" I'm like," 'Cause people like beef and bread in Texas." It's not that complicated. It's a really good sandwich. It's selling a ton of Italian Beef, and we're getting phenomenal feedback, and it's been a home run of an opening. We're gonna open a boatload of restaurants in Texas, in Florida, in Arizona. We'll go to Georgia. We'll go to these other states. I think that it's a very conservative 600 restaurants as our TAM. I think that I'm very comfortable that our food is enjoyed, loved, and eaten. The volumes we're doing at The Colony, it's not ex-Chicagoans who have found their way there. It's locals, right? You can't sustain that kind of a bit. You certainly get a lot of ex-Chicagoans. The first couple of days are excited. It's a nostalgic thing. It's a taste of home. They're not driving 17 million trend. Right. Right. I think it's. I would. Then I challenge people like, look, if it's a fair question. Can you guys truly be a nationwide restaurant chain? Very fair question because we're iconic, we're unique, no one does what we do. The logical corollary to that is, if I can prove to you that we're gonna be nationwide, we should get the fattest multiple in the restaurant industry because we're iconic, we're unique, and no one does what we do. Right. No, that I think you mentioned people in Texas like beef and bread. People everywhere like beef and bread. People like beef and bread. It's delicious combo. Yeah. It's gonna work everywhere. Yeah. I think that's right. I'm just gonna see if there are any questions from, I think, from the audience. In our last, I guess, 24 seconds. Yeah. Maybe I'll ask Michelle, as we think about, you know, to Mike's point about, you know, flowing through underwriting expectations, sort of how should we think about going forward, you know, sort of what the hurdle is, and to the extent that there's probably upside, where is it gonna come from? Yeah, I think, you know, we continue to think about, our targets as a class of restaurants, Sarah. Yeah. When we talk about classes, you know, we are gonna have restaurants that are gonna be home runs in the class, like The Colony. We're gonna have restaurants that are gonna be at the rates we thought they were gonna be at. Our targets still remain that by year three, we want the class of restaurants to do $6 million and 22% margins. That'll deliver 25% cash on cash return. Yeah. That remains our targets. Michael and I wanna build as many home run restaurants as we can, and him and I are very competitive people. We are not happy with those numbers that I stated to you. Our goal is to continue to outperform those numbers and continue to build restaurants that are gonna perform above our underwriting expectations. I think investors would be happy to hear that. Yes. Yes. Okay. Well, thank you so much for joining us. Thank you. Thanks. Yeah.