Greetings and welcome to the Portillo's Fourth Quarter and Year End 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Barbara Noverini, Portillo's Director of Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning everyone and welcome to our fourth quarter and full year 2023 earnings call. Our 10-K, earnings press release, and supplemental presentation are posted at investors.portillos.com. With me on the call today is Michael Osanloo, President and Chief Executive Officer and Michelle Hook, Chief Financial Officer. Any commentary may hear about our future results and business conditions are forward-looking statements, which are based on management's current expectations and are not guarantees of future performance. We do not update these forward-looking statements unless required by law. Our 10-K identifies risk factors that may cause our actual results to vary materially from these forward-looking statements. Today's earnings call we'll make reference to non-GAAP financial measures, which are not an alternative to GAAP measures. Reconciliations of these non-GAAP measures to their most comparable GAAP counterparts are included in this morning's posted materials. Finally, after we deliver our prepared remarks, we will open the lines for your questions. Now, let me turn the call over to Michael Osanloo, President and Chief Executive Officer of Portillo's.

Thank you, Barb and good morning everyone. Thanks for joining us for our fourth quarter and full year 2023 earnings call. I'm happy to share that we had a great fourth quarter and ended the year on a high note. In the fourth quarter, total sales increased 24.5% to approximately $188 million. Same-restaurant sales grew 4.4%, on the back of transactions increasing 1.3%. Restaurant-level adjusted EBITDA grew 42.7% to $46 million and restaurant-level adjusted EBITDA margins expanded by 310 basis points to 24.3%. For fiscal year 2023, total sales increased 15.8% to approximately $680 million. Same-restaurant sales grew 5.7% and we ended the year with average unit volumes of $9.1 million per restaurant. Restaurant-level adjusted EBITDA grew 24.7% to $165 million and for the full year, we expanded restaurant-level margins by 170 basis points to 24.3%. And importantly, we grew operating cash flow by 24.4% to a record level for Portillo's. Let's dive into the factors that drove the success. First, we were operationally on-point. We believe the best way to drive revenue and traffic in a sustainable fashion is to give our guests the outstanding experience we're known for and they've come to expect. In the fourth quarter, we did just that. The result was strong revenue and margin performance, multiyear highs in overall guest satisfaction, and a current Net Promoter Score of nearly 70, outperforming most of our peers. We know the play, we serve abundant, delicious food at a fantastic price in an engaging environment. This is the number one way we create value for our guests and keep them coming back. In Q4, we flexed our multichannel muscle extremely well. We excelled in dine-in, our drive thrus were hummin, pickup and delivery orders were flying off the shelves, and we did a great job growing our…

Great. Thank you, Michael and good morning everyone. In Q4, we saw strong top line revenue growth. During the fourth quarter, revenues were up $187.9 million, reflecting an increase of $37 million or 24.5% compared to last year, driven by a 4.4% increase in same-restaurant sales combined with the opening of new restaurants. The same-restaurant sales increase of 4.4% was primarily driven by an increase in average check of 3.1% and a 1.3% increase in transactions. The higher average check was driven by an approximate 6% increase in certain menu prices, partially offset by product mix. We had 14 weeks this fiscal quarter versus 13 weeks last year. Excluding the 14th week, revenue in the fourth quarter increased approximately 15.3%. The 14th week and fiscal 2023 included Christmas Day resulting in six operating days. You have all seen choppy performance during the first quarter due to winter weather and consumer headwinds in our industry. We are not immune to that, but we don't expect that to derail the rest of our year. Our long-term growth algorithm reflects low single digit comps. Now there will be years when unexpected things happen in any given quarter and years when we outperform. But on average, we have confidence we can hit that target on an annual basis. And we feel no different as we sit here today. On the development front, we expect to open at least nine new restaurants in the class of 2024. We currently expect one new opening later in the first quarter of this year with two to three openings in each of the subsequent quarters. We remain committed to delivering on our long-term mid-teens revenue growth target, primarily through new restaurant growth while continuing to deliver positive comp growth. We updated our long-term outlook in September at our…

Thanks, Michelle. Before we open for questions, I want to reiterate how pleased we are with the progress our teams made in 2023. We grew revenue and adjusted EBITDA by double digits. We generated record operating cash flow. We opened 12 new restaurants. We ended the year with positive traffic and multiyear highs in guest satisfaction. None of this is possible without our great team members. I'm extremely proud of them and thankful to our frontline folks who delight our guests every single day. Feel great about these results, and I've never been more confident about our future. Thank you.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Sharon Zackfia with William Blair. Please proceed with your question.

Hi. Good morning. Two questions.

Good morning, Sharon.

First, Michelle -- good morning. Michelle, it sounds like you're probably not going to price away all of the labor and commodity inflation you're expecting this year. So if you could give some thoughts on kind of how do you think restaurant level margin ebbs and flows this year? I think that would be helpful. And then, Michael, given the success of the marketing in Chicago, can you talk about what plans might be for marketing in Chicago this year and whether there are any other markets where you have density where that might make sense?

Yeah, Sharon. So I'll address the first question. On pricing, we haven't made any decisions yet. It's still early in the year and how we're going to approach pricing as we go into this year. As you know, we always take an approach that generally, we want to set -- offset our inflationary pressures with price. Having said that, though, you all know that the consumer right now is a little bit shaky and so we need to be careful on how we approach pricing. And so we're going to continue to assess how that consumer is, what the competitive landscape looks like before we make any decisions further on pricing. In terms of your restaurant level margin question, when we look at the portfolio and bringing in 12 new restaurants into the base this year plus the 9 plus that we're going to open this year, we do expect to see some margin degradation from those restaurants. As they don't come out of the gate doing 20%-plus margins generally in year one. They're going to be in that high-teens. And so we do expect to see those restaurants impact restaurant level margins as we approach this year.

Yeah. And then on -- I think your question, it's marketing, but it's really traffic driving. So undeniably, we have a muscle that we use, but we like to use selectively when it comes to TV and ad campaigns to drive traffic. It works really well in Chicago. I think we're approaching a scale where it could work for us in markets like Arizona and Indiana. And so we certainly have that arrow in our quiver, and we won't hesitate to use it if we need to. I honestly think, though, Sharon, that the best way to drive traffic is operational excellence. We're already investing in that. We're already paying people to do that. So the difference between good and great is the guest comes back frequently or a guest comes back less frequently. And so we think that being operationally excellent is probably the most important lever to use to drive traffic. But of course, we have advertising, we have new menu innovation. We have our PR machine. So we have other tools that we'll use to make sure that we're appropriately driving and balancing traffic versus expense.

Great. Thank you.

Our next question comes from Sara Senatore with Bank of America. Please proceed with your question.

Great. Thank you. And just I guess a little bit more of a deeper dive into that comp. I guess you talked about catering and so I was curious if that was an outsized driver for the fourth quarter, but I know that's a big bigger share of the mix in the fourth quarter, but just trying to understand, to what extent that a driver in the fourth quarter versus over time. And then, as we think about the advertising in the Chicagoland, I guess the sort of perception has always been that your new markets tend to comp better than the core market. One, is that fair? And two, should we think about the fourth quarter being just maybe less of a drag from the Chicagoland comp or did you actually see traffic improve sequentially across all your markets?

Yes. I'll take the catering question, Sara. So I would only say that, as we were comparing catering this year versus last year. Remember, we had a little bit of weather impacts as we approach that heavy catering season for us in Q4 last year. And so, when I look at quarter over quarter, yes, we did see a growth in catering from that perspective. But having said that, it was an outweighted. I wouldn't call it anything it weighted in Q4. But as Michael mentioned over time, I think it is a real opportunity for us to push catering particularly in our outer markets. And so that's we're going to -- what we're going to continue to work towards is making sure that our guests understand that we have this channel outside of Chicagoland.

Yes, let me end up, two little builds. One is, I think the catering theme is part of a broader theme for us which is we are incredibly proud of our multichannel capabilities and it's important to us that we are masters at flexing each one of those channels. There's a lot of folks right now who are trying to learn how to do drive-through, people trying to get better catering. We're really good at all of these channels. And so, our goal is that catering, we think there's more opportunity, more tailwind. And we look at the catering performance in the core versus in our growth markets and we know that we can get better. And so that's one of the reasons I think we're excited about catering. We want that to be as stronger channel for us as drive-through is dine-in and delivery. So that's sort of the big picture. Your second theme of questions here about the trends. The trends were pretty consistent for us across all of our markets. I would say that, we probably saw a little bit of an acceleration with the advertising campaign in the Midwest. So that certainly helped. But we had a very, very positive trends across all of our markets for the fourth quarter.

Got it. Thank you, very much.

Our next question comes from Chris O'Cull with Stifel. Please proceed with your question.

Thanks for taking my question and congratulations on a strong quarter. I had a follow up question just on advertising. And Michael, I appreciate the need to drive frequency by delivering on the experience inside the store. But just curious, why not have a more consistent advertising strategy in Chicago that keeps the brand top of mind really during important seasons for the brands.

First, thanks for the compliment. And I actually I think we do. We're just not comfortable telling everyone exactly what we're going to do and when to be totally honest with you. We have done -- we have post in and out of the Chicago market as appropriate. And I think, we will continue to do that. Like -- and it doesn't, I'm not telling you anything that's state secrets, but like trying to advertise during an election cycle is really tough spend. And so we're probably not advertising the back half of this year anywhere in the country, we would get shouted out by local politicians. So you can imagine that, if we're going to advertise, we're going to do it selectively. We're going to advertise and as necessary and when we think we're going to get great returns on those dollars. I don't want -- Chris, I don't want to be formulaic and say I got to spend this much money on advertising in this quarter. We'd like to be more opportunistic when it comes to spending those ad dollars.

Okay. That's fair. And then, when you look at the early sales curves of the 2022, '23 class of units -- new units, do they continue to outperform your previous classes at a similar point in time, particularly those new units outside of Chicagoland?

Yes Chris, as you know we put out at our development day how the class of '22 was trending from in that 1st year that $8 million AUV level. Class of 23 frankly Chris is really very new and young. So, we opened six of the eight just in Q4 alone. So, it's really too early to tell. But I'll point to what Michael said which is we're very happy about the performance, particularly when you look at those outer markets you called out Fort Worth and Claremont. But really it's too early for me to make any commentary on the class of 2023 because it's just so new right now.

Yes, fair enough. Thanks guys.

Thanks Chris.

Our next question comes from Brian Mullan with Piper Sandler. Please proceed with your question.

Hey, thank you. Just a question on Texas, you're off to a great start in that market. And can you just speak to how the Arlington and Fort Worth openings went? And out of curiosity, do you see any cannibalization effect that at the Colony or at Alan that you could observe? And then a related but separate just talk about the entrance into Houston this year kind of what's the roadmap?

Yes. So, we're -- look we're super excited about Texas. We have been consistent about how great our response has been from people in DFW. We've gone from zero restaurants a little over a year ago to four opened. The fifth is going to open soon. That's -- I mean we're really happy with that. The Colony had a ridiculously good first year and I think that's not surprising. We have a very strong brand. We have an installed base. There was a lot of demand for us. And so I think that that first year, you see a lot of a lot of visitation that's outside of a normal catchment. You have people driving 30, 40 miles. I mean heck we had people driving from Houston and Austin to visit us at the Colony. So, that's of course not sustainable. So, we expect fully expected the Colony to slowed down a bit this year and we're seeing that, still performing exceptionally well. But Arlington, Fort Worth have gotten off to great starts. It's -- those are those are great starts. Alan has been a little bit slower. You'll recall that it was, I don't know, maybe eight nine months ago that that mall that we're at had a shooting. And so I think that whole mall has been a bit depressed. It's still performing well. It's just not performing at the same pace as Arlington, Fort Worth, or the Colony. So, we're super excited about at DFW. We're continuing to build in DFW and we're continuing to develop scale there. We will open our first few restaurants in Houston this year. Similar to Dallas-Fort Worth, I think that we're going to we're going to come out of the gate strong. All of the modeling that we have done, for what it's worth, says it's going to be every bit as good as Dallas is for us. And so we have great locate -- we have some great locations. We took our time to make sure we have A-plus locations that have great visibility, great ingress, great egress, great demographics, tailwind population growth, sort of all the things that matter to us. And I'm excited to see how Houston grows for us. I'm excited to get to scale very quickly in Houston.

Okay. Thank you for all that color. And then just a follow-up question on the Rosemont, Illinois location. I think you touched on it a little in the prepared remarks, but just elaborate a little how that second location is doing and maybe anything you're learning there relative to the first one? And then when might you start to expect to deploy these formats a little more broadly across the system? I mean could that be next year or should we be thinking a little bit longer term for that type performance?

Yes, I -- Julia it was fantastic. It exceeded all of our expectations when we built Julia. That was the very first Portola's pickup. Rosemont is doing well. We learned from Julia -- I think in the Julia, we realize we overbuilt the kitchen. It was a little bit bigger. We probably underbuilt the amount of space necessary for teams. And I think frankly we underestimated how many people would walk up and order food. And we were not quite as well prepared for walk-in business. So, we tried to tweak all of that in Rosemont. Rosemont I really want to I want to sue on a bit to make sure that we've learned everything that we need to learn. Do we have the right kitchen line? Do we have enough space for our team members? Are we appropriately friendly to walk up some people who just want to come in and get their food and eat at a counter maybe? And so we're learning all of that and my expectation is that we'll probably have one more iteration to perfect the model and then we can hit go and grow aggressively.

Thanks a lot.

Our next question comes from Andy Barish with Jefferies. Please proceed with your question.

Hey guys good morning Tom. Yes it was kind of more on sort of explicit guidance versus implied guidance. Michelle, you noted a couple of things on same-store sales. Margins may be down a little bit on – new units are a little bit below the 12 to 15, but clearly kind of distilling it down to adjusted EBITDA growth in the low double digits. Is that a reasonable starting point kind of adjusting out you know the extra week for 2023? Just trying to kind of get a little bit closer to what really matters there.

Yes. I think Andy as you know we don't give short-term guidance, but we as I mentioned in terms of a long-term growth algorithm, right? We're always going to be aiming to hit that as we look at any given year. And I will say on the margins though, that yes, we have a lot of new units coming in and obviously we still have a lot of year to play out here. But our operational teams are phenomenal in terms of just continuing to look for ways that we can become more efficient as we have these new kitchens coming online. As Michael mentioned in his prepared remarks Kitchen 2023 as we build restaurant of the future even as we retrofit another 20 plus restaurants within 2024 I think we continue to look for operational efficiencies. So that we can come combat some of that margin pressures that we see from the new units as well as getting to scale as quickly as possible. And I know we've talked to you all about that and in continuing to do that. So we can again buffer against any margin degradation, but that's just a fact right with the 12 from last year and the nine plus this year. But look I think if you if you look at how you expect the units to perform when you layer in the nine units et cetera. Obviously, I'm not going to give short-term guidance but it's something that we're always going to aim for. So that's what I'll comment on Andy without giving explicit guidance in 2024.

Yes, that's very helpful. And sort of dovetails into my follow-up. I was going to ask a last couple of years. You've kind of had a handful of really effective operational changes and productivity measures. You know that Derek and the team have put in place and anything you're willing to share with us kind of you know in your back pocket for 2024 or is it really kind of around the you know the labor deployment with the new kitchens and the remodels and things like that?

I think it's the latter. Andy, I think, you nailed it like Michelle just I think probably gave more guidance than she wanted. Like -- we have 20 -- we did 17 restaurants last year that we rush road in Chicago land to do the grab and goes, to streamline the kitchen, to get some efficiency for our team members. We have another 20 we're doing this year. That's I mean that's a that is very, very good. That's real helpful. And it helps protect our margins. Our new kitchens the more we deploy these, the more we learn and the more excited we are. The shorter kitchen lines have improvements. They were seeing every little element of our staffing, our productivity getting better and better. And so I think it's more of the same in what we did in 2023 on a go-forward basis. We were passionate about efficiency. We're sort of closet lean Six Sigma people. And so we want to get really great at that in our restaurants.

Thanks.

You bet.

Thanks, Andy.

Our next question come from Dennis Geiger with UBS. Please proceed with your question.

Great. Thanks guys and congrats on the results. I wondering if you could talk a little bit more about the traffic strength that you saw in the quarter? And what that means for this year? Michael I know you talked about a bunch of key traffic drivers. I assume all those are in play for 204. Is there anything else to add on how you're thinking about traffic this year given those drivers, given the momentum you had in the 4Q? Michelle I know you kind of spoke to the long-term low single-digit company. Any other considerations and how you're thinking at a high level about that traffic momentum broadly going into this year or for this year?

I think traffic is obviously really important. And we take we take traffic trends very, very seriously it's probably the most important health metric of an organization. And I would say Dennis like in my experience the reason people choose to go to a restaurant is because of a past great experience. Think about where you all go. When you want to go get something to eat for lunch or dinner, you're going to go somewhere that you said man I had a great experience there last time and it was delicious and its craveable. I think that's the healthiest way to be a consistent traffic driver. Now, of course, you need to have an entire toolkit. And so part of our toolkit is, the great experience is the preeminent one but part of our toolkit is channel flexibility. If the weather's bad, you've got great drive-thru. We have great delivery. We have great catering. If the weather is great, we have beautiful restaurants that you can sit outside and enjoy. So, having channel flexibility is really important to be a traffic buffer. Having an ability to market aggressively and whether that doing, we have some really entertaining quirky marketing campaigns coming up with our new salads, I think that's going to be awesome. I think it's going to drive visitation. I think it's going to drive incrementality to salad. And we've got two amazing new salads coming out that our guests love in the test panels and the test kitchens and in our restaurants, and our investors are going to love, because they're -- they mix a little bit higher price point and better margins. So, I think those are the kind of things that a company needs to do. And it's -- there's no one lever, that's the magical lever that you pull all the time. You have to be balanced in what levers you're pulling and our commitment is we will use whatever levers are necessary to make sure that we have a healthy level of transaction growth.

And I'll just add onto that Dennis. One of the things that we know is very powerful is having digital menu boards in our restaurants, and so to Michael's point earlier on you don't have to have a massive ad campaign but we found that to be effective whether it's in the core or outside of the core how we market. Portillo’s as our markets, certain things on those menu boards, I think matters and we talked to you all about Portillo's classics and Portillo's pairings, and how we pivoted into that advertising within the back half of last year. And I think, there's some opportunities to utilize those assets within our restaurants to drive home whatever messaging we want whether that's the new salads or other things. So, I think that's a powerful tool as well.

That's great. Thanks guys. And then just one more as it relates to -- I guess, Michael you talked about the strength and the guest satisfaction scores to all-time highs, which is terrific, about the strength I think across channels. Anything else, as it relates to what you saw with your customer behavior changes that help support some of that traffic whether it's dayparts, days of the week? Anything else you would flag there that you maybe saw that was a shift in the fourth quarter versus prior quarters? Thanks very much.

Dennis, it's a great question Dennis, but I think that I would say, it was a broad based improvement. It was not dinner versus lunch or weekend versus weekday or anything like that. It was at no unique segments of consumer. It was pretty broad-based and we feel really good about that.

Terrific. Thanks again.

Our next question comes from David Tarantino with Baird. Please proceed with your question.

Hi, good morning. Two different questions. Actually, one sort of dovetails off some of the comments you're just making Mike. I was just wondering on traffic whether you think speed of service is a big opportunity for Portillo's? And is that something you're focused on more so going forward than in the past or just wondering what your thoughts are on that as a potential traffic driver?

Well, I mean for sure, David that it is some -- it is hard hit is sort of -- I know that might be my secret sauce that we didn't want to talk about. But yes, we have a very strong emphasis internally on speed of service even to the point where -- look, we know exactly what our service times are in the drive-thru, a 32nd improvement in service time in the drive-thru represents a 1% comp, when we're pack that is incremental and the incrementality of that revenue flows through remarkably well. So, we are -- our operators right now are maniacally focused on speed of service, number one in the drive-through. It's less relevant frankly on dine-in, still important but just it doesn't have the same impact as in the drive-through. And so, absolutely speed of service matters, how fast you get guests in and out matters. Not just their perception of the time and how happy they are with it, but literally the math of getting them in and out and moving the next person and it's -- drive-through can be almost infinite capacity if you're fast enough.

And I guess…

Yes. Huge emphasis for us. We don't like to talk about it. We'd like to just do that.

I thought that was going to be your answer. But I guess, my follow-up to that is, I guess where are you on speed of service now versus maybe where you were previously? And is this a bigger opportunity now that you have more new locations and new markets that maybe have less experienced operators so to speak? I guess, how do you think about where you are now, and maybe where you want to be at the end of this year or next year or the following year so to speak?

Yeah. I think you want to separate speed of -- I think there's two ways to think about speed of service. One is what does the customer say in terms of their satisfaction on speed of service. That is a -- that is their perception, which matters and it makes them happy or not. Then there is something on speed of service. Just the absolute time it took you to get I guess through your drive-throughs. I think we have material room for improvement. There were nowhere near when we were at our best, and it's always a balancing act when you focus purely on speed there's a tendency to perform less well on accuracy on all these other things that really matter. So for us, it's what's usually important is you don't love the old adage of walking and chewing gum at the same time. So we need to be fast, but we also need to be accurate and friendly and so those things are always a balance. I think we have perhaps pushed accuracy and friendliness to the detraction of speed a little bit. And it's -- we'll reach there -- that will rebalance that. And hopefully that's a traffic driver for us this year as well.

Great. Thank you for that detail.

You bet.

Our next question comes from Brian Harbour with Morgan Stanley. Please proceed with your question.

Thank you. Good morning. I had just a couple of margin questions. Was the timing of the openings in the fourth quarter consistent with what you planned, or could you shed any light on what the timing looked like? And was there any impact on 4Q versus like what you might expect in 1Q 2024 from a margin perspective?

Yeah, Brian, no, it was as expected, our openings. You can look whether it's in the K or the earnings release, we give the bond that we open those restaurants. So you can see heavy into November and December when you look at the openings there. And so, yeah, as you look at again those coming into the first quarter, always within that first call it, six month time period Brian. You're still going to be heavy on the training, heavy on the labor side, heavier on the inefficiency side, whether it's labor or on the food side. And so that's where you'll see, I think a little bit more of the impact would be in that first part of 2024 versus the back half. But then remember we start to layer and then write the new class of restaurants, one in Q1 towards the tail end of Q1 of this year, and then two to three in Q2 et cetera. So yeah I think you'd see a little bit more outweighted impact from those six particularly in the class of 2023 coming into Q1 and Q2.

Okay. That makes sense. And then just on your food cost ratio, I think it was a little bit higher than I would have thought in the fourth quarter relative to what you said inflation was were there any product mix drivers of that, or anything we should keep in mind? And then into coming year, would you expect pretty even inflation throughout the year? Anything we should keep in mind. Just with regards to food costs?

Yeah, I'd say Brian, the 4.4% in Q4 was right about where we thought it would be, maybe just a hair higher but nothing that I would call out in terms of what we were thinking versus where Q4 came in at. When we look at 2024, I think Q2 looks to be a little bit more heavier impacted for us just based on again these are projections based off of our basket of goods and where we think some of the pressures might come into play in Q2, and then Q3 and Q4 be a little bit more moderated, but yeah, I'd call it more Q2 as maybe being a little bit heavier impacted at least that's what we're seeing today.

Okay. Thank you.

Our next question comes from Gregory Francfort with Guggenheim Securities. Please proceed with your question.

Hey, thanks. I have two questions. First, I know you don't like to talk short-term, but Michelle maybe can you can you address what the 53rd week, is there a comp impact to the first quarter just based on that? And any thoughts on kind of rightsizing expectations for how much weather might be impacting you early in the quarter?

Yes, Greg. So, the comp there's no impact. So our comp is actually a 53 week comp number at the 4.4%. And we did that purposefully because that 53rd week has Christmas in it. And so, when you look at, if we were -- if we were to do a 52 week comp, it would have skewed the comp a little bit higher in Q4. And so that's where we reported a 53 week comp, in the fourth quarter because we felt that was more honest in terms of what's the true nature of the business doing actually in the quarter. And so therefore, when we come into Q1 Greg, there is no impact because we're going to continue to be comparing like-for-like weeks Jan one week, starting Jan one week in 2024 to starting Jan second in 2023. So, no impact in terms of whether you think about holidays et cetera, on the cap. To address your question on Q1 of this year, absolutely we are not immune to the impacts that the industry have seen on weather, as well as how the consumer is feeling as we look at not just performance in January, but performance and February, but I'll come back to we feel really good about the health of the business to Michael's point, and regardless of how that choppy the comp maybe in Q1 not just for us, but the rest of the industry, we feel really good about the health of the business the trends that we were seeing outside of a weather impact in January. And so that's what I would say about Q1. Q – Gregory Francfort: Got it. Thanks. And then Michael, maybe just I think you now have five stores in the Phoenix market can you talk so the corn honking behind me -- Just -- can you talk a little about the Phoenix market? I think you now have five our stores there. What has changed as you've hit maturity? What benefits are you getting as you scale up that market? And do you now or maybe hitting a path where other markets are looking to go? Thanks.

Yes, we -- you bet Greg, so we have we have seven restaurants in Arizona, six are in the Valley area and one in Tucson. And so we are approaching scale. And Michelle, gave a little dissertation on the impact of scale in Arizona, when we went from two to four and the -- just the demonstrable margin improvement that we had. But scale allows us to leverage the cost side of the P&L really quickly. It's a wonderful dynamic because you get supply chain, distribution and even some staffing synergies when you have the scale. The second thing that it does for us, is it creates some revenue synergy because now when you're craving a Portillo’s beef sandwich dip, with hot peppers on that delicious crusty bread, you have one relatively close. You don't have to drive 45 minutes to the one on the other side of the valley or the only one that you know of, there's something a little closer. And so that tends to be a revenue synergy, once we achieve scale. We’re at the early stages of scale in Phoenix and we're still planning more restaurants in that market. We've got, I don't know that. But we publicly announced, we're going to we're definitely building more restaurants in that market to leverage that scale that we're getting. So, you'll see it across the P&L in terms of revenue, but you also see it in margin improvement and that's that they're both super exciting things.

We have reached the end of our question-and-answer session. This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.