Portillo's Inc (NASDAQ:PTLO) Q3 2025 Earnings Miss Estimates, Stock Falls on Profitability Pressures

Portillo's Inc (NASDAQ:PTLO) reported financial results for the third quarter of 2025, delivering a performance that fell short of Wall Street's expectations on key profitability metrics. The market reaction reflected this disappointment, with the stock trading lower in pre-market activity following the announcement.

Earnings and Revenue Versus Estimates

The casual dining chain posted a mixed quarter where a modest revenue increase was overshadowed by a significant earnings miss. The company's top-line growth, while positive, failed to meet the bar set by analysts.

• Revenue: $181.4 million, a 1.8% year-over-year increase.
• Revenue Miss: Fell short of analyst estimates of $185.7 million.
• Earnings Per Share (EPS): GAAP profit of $0.02 per share.
• EPS Miss: Came in $0.0265 below the consensus estimate of $0.0465 per share.

The discrepancy between the slight revenue growth and the steeper decline in profitability points to mounting cost pressures within the business during the quarter.

Market Reaction

Investors responded negatively to the earnings report. In pre-market trading, Portillo's stock was down approximately 3.4%, indicating that the market was focused on the earnings miss and the underlying pressures on profitability rather than the slight revenue gain. This price action suggests that the results failed to instill confidence in the company's near-term financial trajectory.

Third Quarter Performance Highlights

The earnings press release detailed the challenges Portillo's faced in the quarter, with key profitability metrics showing considerable declines compared to the same period last year.

• Same-Restaurant Sales: Decreased 0.8%, driven by a 2.2% drop in customer transactions, partially offset by a 1.4% increase in the average check.
• Operating Income: Fell to $5.4 million from $16.0 million in the prior year, a decrease of 66%.
• Net Income: Dropped to $0.8 million from $8.8 million in Q3 2024.
• Adjusted EBITDA: Declined 23.4% to $21.4 million.

The company attributed the revenue increase primarily to the contribution from new restaurant openings. However, this was offset by the negative same-restaurant sales and increased operating costs. Management cited a 6.3% rise in commodity prices and incremental investments in team members as key factors driving up restaurant operating expenses, which grew 6.2% during the quarter.

Updated Fiscal 2025 Outlook

Portillo's provided updated financial targets for the full fiscal year 2025, which offer a measured view of the company's expectations for the remainder of the year. This outlook can be compared to the analyst estimates provided for context.

• Revenue: Targeting $730-$733 million.
• Analyst Sales Estimate for FY2025: $751.3 million. The company's guidance range sits below this consensus figure.
• Same-Restaurant Sales: Projected to be in the range of (1.0%) to (1.5%).
• Adjusted EBITDA: Targeting $90-$94 million.

The company's revenue guidance, which is below the current analyst consensus, helps explain the market's cautious reaction, as it signals that management anticipates continued challenges.

Expansion and Development

Amid the profitability pressures, Portillo's continues to execute its expansion strategy. The company opened four new restaurants during the third quarter, including its first in-line format location. Subsequent to the quarter's end, one additional restaurant was opened, bringing the total count to 99. Portillo's plans to open three more locations in the fourth quarter, including its first restaurant in Georgia, for a total of eight new units in fiscal 2025. The company is focusing on its smaller "Restaurant of the Future" design to improve unit economics.

For a detailed look at historical earnings and future analyst estimates, you can review the earnings and estimates data for PTLO.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security.