Thanks everyone for being here. My name is Brian Mullen. I'm the Restaurant and Food Distribution Analyst here at Piper Sandler. Very happy to have the team from Portillo's, CEO Michael Osanloo and CFO Michelle Hook. Thank you both for being here. Thanks, Brian. There was a release put out this morning. A lot in there. I would like to get to all of it, but just to start, just to address the revisions to the same-store sales outlook. It's obviously a tough restaurant environment for traffic right now. Just relative to when you reported in early August, have you seen a shift in the consumer? Have you seen it get incrementally tougher? Maybe there's something else behind this. Just open it up for you to comment. I'll let Michelle talk about the numbers. Let me talk about the purpose behind this, though, because I think we laid it out, but I want to be crystal clear. It's really important for us as a management team to focus in on traffic. There's no silver bullet to fixing traffic, but I want us to be maniacally focused on operational excellence, on making sure that we're executing flawlessly, that we're doing a good job communicating the quality and quantity of our product, and that we are taking a hard look at our value proposition. I think traffic is really important to us. We want to be driving traffic. I also think that this slowdown in order to reset our development is hugely important for us. It allows us to get to, you know, we'd like to get to a position where every restaurant that we're opening is something that we're really excited about. We're opening really well. Unit economics are hugely important. This gives us a chance to get more of our 2.0 kitchens into next year. To me, those two overarching themes have to be what we're focused on as a company: driving traffic, amazing unit economics. It does mean that, like, there's things that we aren't going to do. I think that's part of it. Now, yeah, there's a system-wide we've seen a tough last four or five weeks, and that's driven some of the comp revision. That's what you see in the guide where, you know, we're guiding to the comp we did in Q3, and then we lowered our guidance for the full year when you look at our comp. Just that softness on the top line is dragging down the other metrics. It's absolutely a change in trend. Look, we definitely attribute that to the macro. You know, it continues to be very heavy pricing and promotional. The facts remain that, you know, Portillo's competes with QSR, fast casual, casual dining. We've just seen that continued trend get worsened. As we go into the fourth quarter, that's the expectation, Brian, that we just see a continuation of the trends that we're currently seeing. We are lapping the rollout of our kiosks in the fourth quarter from last year. It just creates an additional headwind for us, for Portillo's, as we go into the fourth quarter. All of that is part of the recent updates that we gave to the guidance, as well as what Michael mentioned, which is lowering the number of units that we're going to open this year from 12 to 8. Keep in mind that we still have six, we'll still have six restaurants under construction in addition to the eight that we're opening. As we go into 2026, we're guiding to eight new restaurants opening, and six of those are under construction right now. We feel good about having those open during the first half of the year versus historically being back and loaded in terms of our opening cadence. Okay. Thank you both for that. In the release this morning, there was a guidance update, but it also reads, and it's a strategy update as well. There's some strategic stuff behind it. There have been some new additions to the board over the last 12 months. Some of them are some pretty accomplished executives. What's it been like working with them? Are you working in concert with them to put this together? Is that behind some of what's in there? That's a great question. Look, it's a blessing to have guys like Jack Hartung and Gene Lee on our board. I talk to them weekly. It's making me better, it's making the company better. They've been incredibly helpful on this whole reset process, and their fingerprints are all over it. Gene's an operator's operator. Jack understands unit economics like nobody else. They have been invaluable to me personally and to the company in repositioning us with this reset. Okay. Thank you. You talked about addressing value. I just wanted to ask about Chicagoland. That is still the majority of the business. It's the primary driver behind the same-store sales you report, a lot of your EBITDA dollars. How do you feel about the value proposition of the brand today in Chicagoland? Is it in a good place or does it need to improve to account for the competitive environment or anything that's happened in the last couple of years? Yeah, you know, value is a lot of things. It’s quality, it’s quantity, it’s the experience, and it is the absolute price point. I mean, you’ve got to be mindful that it’s all those things. We track it really carefully. Objectively, I could tell you that versus fast casual, we feel like our value is really good on all those metrics. The truth is that in Chicagoland, half our business is drive-through. We are competing against QSR, and the world is changing. Do I feel good about our value? I do. Our burgers are a third of a pound. Our fries, you know, some people are getting momentum by saying that their fries are cooked in beef tallow. Ours have always been cooked in beef tallow. I don’t know if we’re doing as good a job as we can in shouting that via marketing. I’m excited to have a new Chief Marketing Officer joining us to make sure that the quality and the quantity of what we do is being heard. I think you have to be mindful of the fact that prices, absolute price point also matters. Across QSR, it’s coming down. I think we have to look ourselves hard in the mirror and say, great on quality, great on quantity, but is the absolute price point where we want to be? We have to take a hard look at that. Okay. Thank you. One of the goals from the release this morning was simplifying operations. Yeah. That includes the discontinuation of breakfast. I'd guess that's not the only thing you're doing. Right. What maybe do you have in mind on the simplifying operations part of that? I'm very proud of the team. You know, there's a tendency when things aren't going perfectly well, there's sometimes a tendency to try to do more. I think that focusing and doing fewer things exceptionally well is really right up our power alley. Those things are, you know, like I've said, we want to drive traffic. We want amazing unit economics. When you focus, it also means you don't do other things. I appreciate you calling out breakfast because it's near and dear to my heart. I love our breakfast offering. It's been amazing. It has actually gone well. We needed the learnings because we're going to have breakfast when we open in the Dallas-Fort Worth Airport early next year. We have to have a breakfast offering. We've learned a lot that we will quickly deploy there. It's also to me undeniable that it's taking away our attention from driving traffic at lunch and dinner, which pays all the bills at Portillo's. Michelle and I both feel very strongly that we need to every day earn the right to grow by having a very strong foundation. Driving traffic in the core at lunch and dinner is the foundation that we want to build off of. We've stopped breakfast. Michelle, keep me at this, 18 to 20 other projects that we've eliminated internally. I've asked the team to keep looking at other stuff. If it's not driving transactions, and if it's not driving to improve our unit economics, then we have to ask ourselves, why are we doing it? Okay. Back to the development part of this, which you referenced, Michelle, it's going to be now, it's eight units this year, eight units next year. Just mechanically, what was behind the changes? Are some pushing into next year? You're going to open the ones that are in construction, and maybe that's it. Related to all that, just talk about how the 2026 pipeline, what you are going to do, or if it's beyond that, will be different and what you've learned and how that applies. Yeah, no, I think it's, as I mentioned earlier, Brian, we're definitely shifting restaurants that are already under construction into 2026. I think it's exactly what Michael said. We have to make sure that the unit economics of what we're opening are there. If you look at historically, so the class of 2024, so the 10 restaurants in that class, we've said have gotten off to a slow start, underperforming expectations, but they're also doing over $4 million as a class. The issue with that is it costs $6.8 million on average for that class of restaurants to build. Now, the eight that we're opening in 2025, we're currently in a range of $5.2 million to $5.5 million to build those restaurants. You saw in the release this morning that the eight in 2026, we're targeting less than $5 million for that class. Getting that in the best shape possible is of the utmost importance and getting the four-wall economics and the return profile in the spot that we want it to be. The other thing that we have to remember too is our 2.0, so our Restaurant of the Future 2.0 kitchens. Part of this is allowing us to get those into play in the class of 2026 and then as we move forward, because that just unlocks a whole world for us that we didn't have before in terms of what we're building. What I love too is what else we put in the release, which is our goal and our plan is to be free cash flow positive in 2026 and beyond. That is absolutely achievable given what we put in the release this morning. All those things allow us to get back to what we believe is a reasonable cadence. When the foundation, again, I get back to what Michael said, which is if our transactions are not in our core and our existing markets are not on solid ground, then you have to question the right to grow. We have to get that on solid ground too. We know this brand is portable. We know it travels well. We feel really good about the numbers we put out this morning. Yeah. The one thing I would build on that Michelle said, and I don't want to lose sight of this, is we built our first inline restaurant this year at The Villages just north of Orlando. I'm comfortable that it's going to be below $4 million build. We'll see how far below. It's been open for a month. That's a game changer for us. It's an inline restaurant. It doesn't have a drive-through. The build cost is getting to the point where, you know, we would like to exceed a one-to-one ratio of revenue to build cost. Our goal is to, you know, we have a long-term, very aspirational goal, but in the nearer term, we'd like to get to a four-year payback on these restaurants. The Villages looks like it can do that. That's super exciting to me because we have not historically targeted inline locations. With what we're seeing at The Villages and the learnings that we have on a smaller kitchen, still an experiential dining room, still want like a Portillo's feel, lots of fun tchotchke. By all accounts, we've done that. It's an interesting opportunity that we need to consider. Can we weave in more inline locations? Can we do dense urban restaurants, more airports, college campuses? I think that's something that we're in early stages of unlocking. Okay. Michelle, you referenced the release reference, the build cost for 2026 with what you now are going to open is sub $5 million. Yeah. Correct. With how you see things today, would you expect that that number would move potentially lower beyond next year? I'd like to separate that between maybe Restaurant of the Future work. It could be smaller. That's going to make it right or a smaller format like The Villages. It could be the way you finance it, which has been topical over the last month. Let's divide that one. You handle the financing. I love what we're doing with Restaurant of the Future 2.0. I love these new inlines. I think it's very reasonable for us to be continuously improving that and looking at a Restaurant of the Future 3.0. I would not be surprised if we could get a little smarter on total capital per restaurant. Get to, I don't know how much smaller the box gets, but I think we can get more compact in the kitchen and save money on kitchen equipment. I do envision a 3.0, et cetera. That's one way of getting to lower CapEx per build. You're right that there's a financing option. I'll let Michelle, Michelle's been deep into that. Yeah. I think all of those play into the equation. First and foremost, we just have to spend less on building new restaurants. As you know, Brian, we generally lease the land and we pay to build the building and put in the equipment. Is there a financial model where, again, it's not one size fits all. The guiding principle for Portillo's is find the best site, and that's where you want to build a restaurant. Is there a scenario where for certain restaurants you can go and get financing for the actual building, and then we can lease the building, sort of like a sale-leaseback scenario, and then you're putting capital into the ground just for the equipment? Yes, there are those scenarios. All those things we're exploring to lower the capital burden on Portillo's and present what we believe can be industry-leading cash-on-cash returns. We're exploring all of that. To answer your question, could it go lower than $5 million? It could go lower than $5 million when we do all those things and execute on all those things. Understood. I wanted to ask on the airport location coming to Dallas next year, in the end, how did you get comfortable turning the brand over to a third party to operate? I think it's going to do great for what that's worth, but curious how you got all the way there. I love your question because I'm going to correct you. We're operating it. That's hugely important to us internally. It is a billboard restaurant. As you're coming into Terminal 2 at DFW, you're going to see Portillo's. We have a bunch of restaurants. We are very purposeful in wanting to operate it ourselves. We are the majority owner, and we are the operator of that restaurant because I want to make sure you get a Portillo's experience because, you know, it's either your entry into the Dallas market or your exit into the Dallas market. We want that first taste or last taste to be amazing. Part of the guardrails we've created for ourselves is we want to be the primary owner of those properties, and we want to operate them. We've cracked the code. We've got an amazing partner at DFW, and we will continue to look for other opportunities like that. Great. You alluded to it a little earlier, but I wanted to ask about the Chief Marketing Officer role that you recently made a hire. Yeah. Maybe tell us a little bit about Denise, what she brings to the table, what you really see her role as, and what she's going to be focused on as she gets going? Super, super excited. She's got everything that I think you could want in a marketing officer. She's got great pedigree. She's trained at great brands, including places like PepsiCo. She's been CMO multiple times now. Her most recent stint at Marco’s Pizza, I think she's done some amazing work there. I love the grittiness that she brings. She grew up working at her family's Greek diner in the Cleveland suburbs. I love that. I love, I love she understands this business and understands the restaurant business and hospitality with a level of grit and personal involvement that is unique. I loved her from the interview because she asked me a couple of really tough questions about our marketing position, what is the truth of Portillo's that I could not answer. That was a bucket of cold water in my face that this is a person who's going to help push our thinking, evolve who we are, help communicate to consumers what the truthiness of Portillo's is. She's a, you know, she lives in Chicago. This is a local thing for her. She's a Portillo's fan. It feels like a match made in heaven. That's great. Sticking to the marketing, you know, on the last call, you talked about increasing efforts to grow the brand awareness in Texas. I mean, you had a great start and maybe some of them aren't doing what you thought now, but that does not mean the brand doesn't work in Texas. What are you doing in Texas to kind of grow the brand awareness? Yeah. No, thank you for saying that. I think that, you know, I want to first start your question with the stress and anxiety that we feel about the revenue trajectory in Texas. Truthfully, it's less about the revenue, more about the CapEx that we put in. Like if we had, if the restaurants that we had built cost, you know, like less than $5 million, we'd be much more relaxed about the trajectory and let the restaurants grow their way to success and be amazing. It is a little bit of short-term pain because there's just a lot of capital associated with it. That said, we now have dedicated field marketing in both Houston and Dallas. That's hugely important. Field marketing builds that grassroots momentum. We have a mobile food truck that's parked in Texas for the back half of 2025 and most of 2026. We're sampling food at Texas high school football games. We're doing fundraisers at our restaurants. We've got our general managers and our multi-unit people meeting with the board of chambers, you know, everybody who's somebody in these communities to build up that local field. We also are supporting this with some digital marketing, outdoor marketing, and a few selective TV ads. We are taking very seriously the idea of building awareness in these markets. I love building awareness by putting food in people's mouths. That's probably the number one way we're doing it, and we're using field marketing to do that. I'm sure Denise will have better ideas than what we're doing now when we hand her the keys. Understood. Kind of continuing on that thought process, refining the new market playbook. I just want to, are you still going to Atlanta next year with this update? If you are, just applying the learnings from Texas, how are you going to go into Atlanta and build that market? We're going to Atlanta this year. It's all right. We're going to a great little suburb northwest of Atlanta called Kennesaw. I think some of the lessons learned from the Houston and Texas in general development is we are being appropriately smart and aggressive in pre-marketing Atlanta. We're working very closely with our beverage partner, Coca-Cola, who's obviously a world-class marketer to activate in Atlanta. We're doing all of the same things I just talked about in Houston and Dallas in terms of sampling high school football events, local school. We're doing all of that in Atlanta. We're working with influencers and digital. The other thing, to be fair, that we're doing in Atlanta is we are purposely taking a, let's say, a more deliberate path on development. I think one of the things that we probably did in Texas is we did build a little bit faster than demand. There are pros and cons, but I think net-net, we learned that that was too much. In Atlanta, we're building in Kennesaw, tentatively targeting a second Atlanta restaurant in six to nine months that will be 45 minutes away from Kennesaw, and then potentially the third location in 2027. We're taking a much more deliberate path in penetrating that market, making sure that demand can keep up with supply. Right? As we build restaurants, we want to make sure that we're stimulating demand and that the restaurants stay appropriately busy. We're not going to rush it. Understood. The Portillo’s Perks program, you did a great job signing up members when it started. What have you earned with it? Are you happy? Does it, is it going to play a role in the business going forward? I know you have a new Chief Marketing Officer, so how she plays into that. Yeah, I think we're over 2 million Perks members as we sit here today, and we continue to drive people into the funnel. We view Perks as a tool in our toolkit. I think we're learning. I'm excited about the potential to have the data as we start to mine the data to determine, you know, what's the frequency of a guest, what does that look like in our core markets versus our newer and emerging markets. All those things we're learning, we've run some promotional offers on that platform that has driven the outcomes that we want to drive. I think you'll see more usage of the Perks platform in 2026. Yeah, and we're excited about it. It's a tool in our toolkit that we're going to be able to use and deploy in the future. Great. Kiosk was the deployment that was accelerated last year. You've shared stats along the way. Just sitting, it's been about a year since you accelerated, or at least announced you're going to accelerate it. Are you happy with it? Did those play a role? Was it a good decision? What are you working on in terms of? Kiosk has been fantastic. We're very, very happy with it. I think we're still figuring out, there's still some great fine-tuning to do. There's some ways of optimizing the consumer interaction at the kiosk. There's ways of making sure that, you know, if Brian Mullen comes to a kiosk and it shows you your last few orders. I think there's a continuous improvement approach to the kiosk. We're also looking at, can we use kiosks at our front cash? That way, when you have a slow period, could you have people making orders via kiosk instead of front cash? We're continuing to explore. That's the great news on kiosks. The bad news is we're lapping all of the kiosk rollouts in November and December, and there's a little bit of a headwind there. Understood. Yeah. On the last earnings call, it was a response to a question, so I don't want to overstate it, but you did indicate there might be an opportunity to get more efficient with the supply chain. I think the impetus here, maybe COGS is running up about 34% of sales. Maybe just elaborate on what those comments were. Is there anything you're looking at behind the scenes? No, I think, look, we came into the year and we were always guiding to 3% to 5% commodity inflation. We knew beef was going to be a headwind that continues to not ease. We're still feeling increased pressure on the beef commodity. As we look into 2026, we know that's going to be a continued headwind for us. I think we've done a really good job of managing that risk this year. We're about 90% locked on our beef lots for 2025. We opportunistically do some forward buys, use a freezer program as we see some turns in the market over the course of this year. As we go into next year, we're going to continue to de-risk that as best as we can and manage that inflation. In terms of your question, Brian, we knew it was going to be a headwind. We're still in that 3% to 5% inflationary increase for all of 2025. We'll talk about 2026 in January and what we're thinking on our overall basket of goods as we go into the year. I know you know this, but I want to give Michelle and the Supply Chain team some credit. The actual commodity inflation is significantly higher than low single digits. That is because I think we have done some really smart things in terms of forward buying, in terms of a freezer program, yield management. I am very proud of how we've managed that commodity this year. Okay. In the time we have left, I’d just turn it to you if you had any closing remarks. I know you had a lot announced this morning and you’re working hard, so just turn it over to you. Here's how I'd recap. If there's a couple of things I'd love everyone to take away from the announcement this morning and our talk today, I'd like you to think three things. Portillo's is going to be maniacally focused on driving traffic. Hugely important to us. It's hugely important to have a very strong foundation. Second, Portillo's is maniacally focused on unit-level economics. We would like to achieve best-in-class unit-level economics. There's a lot of heavy lifting and hard work that we've done over the last couple of years that is starting to show itself. That's second. This is a team that truly understands that focus means not just what you're going to do, but what you're not going to do. We're very thoughtful in eliminating things in subservience to our first two overarching goals. I still feel incredibly bullish about our concept, right? We generate a ton of cash flow. This is a little bit of a reset. We're repositioning ourselves, but this is still a really good concept. All right. Thank you both for being here. We'll leave it there. Thank you very much, Brian. Thank you.