Financial Performance - Portillo's Inc. reported quarterly earnings of $0.12 per share, matching the Zacks Consensus Estimate, and an increase from $0.10 per share a year ago [1] - The company posted revenues of $188.46 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.5%, but up from $181.86 million year-over-year [2] - Over the last four quarters, Portillo's has surpassed consensus EPS estimates three times, while it has topped consensus revenue estimates only once [2][3] Market Performance - Portillo's shares have increased by approximately 1% since the beginning of the year, compared to a 7.6% gain in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $196.28 million, and for the current fiscal year, it is $0.36 on revenues of $779.09 million [7] - The outlook for the Retail - Restaurants industry, where Portillo's operates, is currently in the top 41% of Zacks industries, suggesting a favorable environment for stock performance [8]

Q2 2025 Performance - Total revenue grew by 3.6% reaching $188.5 million[9, 10] - Operating income was $17.5 million[13] - Restaurant-Level Adjusted EBITDA was $44.5 million[13] - Net income reached $10.0 million[13] - Adjusted EBITDA was $30.1 million[13] Q2 YTD 2025 Performance - Total revenue grew by 4.9% reaching $364.9 million[16, 17] - Operating income was $27.9 million[17] - Adjusted EBITDA was $51.3 million[17] - Restaurant-Level Adjusted EBITDA was $81.1 million[17] - Net income reached $14.0 million[17] Fiscal 2025 Financial Targets - The company plans to open 12 new restaurants[20, 22] - Same-restaurant sales are expected to grow by 1% to 3%[22] - Revenue growth is targeted at 5% to 7%[22]

[Cautionary Note Regarding Forward-Looking Information](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Information) This section advises that the Form 10-Q contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - This Form 10-Q contains forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ materially. These statements discuss current expectations and projections related to financial position, operations, plans, objectives, future performance, and business[9](index=9&type=chunk)[10](index=10&type=chunk) - Important factors that could cause actual results to differ include regional, national, or global political, economic, business, competitive, market, and regulatory conditions, as well as specific risks such as organizational structure, food safety, economic and financial market volatility (inflation, interest rates, recession), unionization activities, reliance on IT systems (including AI), competition, labor market, government regulations, inability to achieve growth strategy, consumer sentiment, and increased operating costs[10](index=10&type=chunk)[13](index=13&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by law[12](index=12&type=chunk) [Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) This part presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis for the reported periods [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Portillo's Inc.'s unaudited condensed consolidated financial statements for Q2 2025 and 2024, including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's assets, liabilities, and stockholders' equity as of June 29, 2025, and December 29, 2024 | ASSETS (in thousands) | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :------------ | :------------------ | | **CURRENT ASSETS:** | | | | Cash and cash equivalents and restricted cash | $16,621 | $22,876 | | Accounts and tenant improvement receivables | $17,669 | $14,794 | | Inventories | $10,098 | $7,915 | | Prepaid expenses | $5,905 | $7,066 | | **Total current assets** | **$50,293** | **$52,651** | | Property and equipment, net | $384,883 | $358,975 | | Operating lease assets | $243,220 | $222,390 | | Goodwill | $394,298 | $394,298 | | Trade names | $223,925 | $223,925 | | Other intangible assets, net | $24,745 | $26,098 | | Equity method investment | $15,538 | $16,056 | | Deferred tax assets | $209,051 | $197,409 | | Other assets | $7,777 | $8,284 | | **Total other assets** | **$875,334** | **$866,070** | | **TOTAL ASSETS** | **$1,553,730**| **$1,500,086** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | **CURRENT LIABILITIES:** | | | | Accounts payable | $43,683 | $45,516 | | Current portion of long-term debt | $6,250 | $11,250 | | Current portion of Tax Receivable Agreement liability | $9,177 | $7,686 | | Short-term debt | $70,000 | $25,000 | | Deferred revenue | $4,970 | $7,032 | | Short-term operating lease liabilities | $6,458 | $6,013 | | Accrued expenses | $30,730 | $33,072 | | **Total current liabilities** | **$171,268** | **$135,569** | | **LONG-TERM LIABILITIES:** | | | | Long-term debt, net of current portion | $240,758 | $275,422 | | Tax Receivable Agreement liability | $343,717 | $316,893 | | Long-term operating lease liabilities | $306,692 | $278,540 | | Other long-term liabilities | $3,498 | $3,559 | | **Total long-term liabilities** | **$894,665** | **$874,414** | | **Total liabilities** | **$1,065,933**| **$1,009,983** | | **STOCKHOLDERS' EQUITY:** | | | | Class A common stock | $719 | $637 | | Class B common stock | — | — | | Additional paid-in-capital | $403,068 | $357,295 | | Retained earnings | $55,146 | $43,129 | | **Total stockholders' equity attributable to Portillo's Inc.** | **$458,933** | **$401,061** | | Non-controlling interest | $28,864 | $89,042 | | **Total stockholders' equity** | **$487,797** | **$490,103** | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$1,553,730**| **$1,500,086** | - Total assets increased by **$53.6 million (3.6%)** from December 29, 2024, to June 29, 2025, primarily driven by increases in property and equipment, net, and operating lease assets[16](index=16&type=chunk) - Total liabilities increased by **$55.9 million (5.5%)** over the same period, mainly due to increases in short-term debt, Tax Receivable Agreement liability, and long-term operating lease liabilities[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the Company's revenues, operating income, and net income for the quarter and two quarters ended June 29, 2025, and June 30, 2024 | (In thousands, except share and per share data) | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | REVENUES, NET | $188,456 | $181,862 | $364,893 | $347,693 | | OPERATING INCOME | $17,531 | $18,115 | $27,912 | $28,212 | | INCOME BEFORE INCOME TAXES | $13,722 | $12,026 | $19,072 | $16,233 | | NET INCOME | $10,043 | $8,530 | $14,033 | $13,874 | | NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. | $8,704 | $6,470 | $12,017 | $11,032 | | Basic Net income per common share | $0.13 | $0.10 | $0.18 | $0.19 | | Diluted Net income per common share | $0.12 | $0.10 | $0.18 | $0.18 | - Net revenues increased by **3.6%** for the quarter and **4.9%** for the two quarters ended June 29, 2025, compared to the prior year periods[17](index=17&type=chunk) - Operating income decreased by **$0.6 million (3.2%)** for the quarter and **$0.3 million (1.1%)** for the two quarters ended June 29, 2025, compared to the prior year periods[17](index=17&type=chunk) - Net income attributable to Portillo's Inc. increased by **$2.2 million (34.5%)** for the quarter and **$1.0 million (9.0%)** for the two quarters ended June 29, 2025, compared to the prior year periods[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including net income, equity-based compensation, and non-controlling interests, for the period ended June 29, 2025 | (In thousands, except share data) | Balance at Dec 29, 2024 | Net Income | Equity-based Compensation | Activity under Equity-based Compensation Plans | Redemption of LLC Units | Non-controlling Interest Adjustment | Distributions Paid to Non-controlling Interest Holders | Establishment of TRA Liabilities | Balance at June 29, 2025 | | :-------------------------------- | :---------------------- | :--------- | :------------------------ | :--------------------------------------------- | :---------------------- | :---------------------------------- | :--------------------------------------------- | :------------------------------- | :----------------------- | | Class A Common Stock (Amount) | $637 | — | — | $9 | $73 | — | — | — | $719 | | Additional Paid-in Capital | $357,295 | — | $4,048 | $2,140 | $(73) | $61,463 | — | $(21,805) | $403,068 | | Retained Earnings | $43,129 | $12,017 | — | — | — | — | — | — | $55,146 | | Non-Controlling Interest | $89,042 | $2,016 | $560 | — | — | $(61,463) | $(1,291) | — | $28,864 | | Total Stockholders' Equity | $490,103 | $14,033 | $4,608 | $2,149 | — | — | $(1,291) | $(21,805) | $487,797 | - Total stockholders' equity decreased from **$490.1 million** at December 29, 2024, to **$487.8 million** at June 29, 2025, primarily due to the establishment of Tax Receivable Agreement liabilities and distributions to non-controlling interest holders, partially offset by net income and equity-based compensation[19](index=19&type=chunk)[21](index=21&type=chunk) - Non-controlling interest significantly decreased from **$89.0 million** to **$28.9 million**, largely due to a non-controlling interest adjustment of **$(61.5) million** and distributions paid[19](index=19&type=chunk)[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities for the two quarters ended June 29, 2025, and June 30, 2024 | (In thousands) | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $28,693 | $41,628 | | Net cash used in investing activities | $(33,076) | $(33,828) | | Net cash used in financing activities | $(1,872) | $(5,881) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(6,255) | $1,919 | | Cash and cash equivalents and restricted cash at end of period | $16,621 | $12,357 | - Net cash provided by operating activities decreased by **$12.9 million (31.1%)** for the two quarters ended June 29, 2025, primarily due to changes in operating assets and liabilities[22](index=22&type=chunk)[194](index=194&type=chunk) - Net cash used in investing activities decreased by **$0.8 million (2.2%)**, mainly due to the number and timing of builds in process and adopting a more cost-effective restaurant format[22](index=22&type=chunk)[196](index=196&type=chunk) - Net cash used in financing activities decreased by **$4.0 million (68.2%)**, driven by increased proceeds from short-term debt, partially offset by long-term debt payments and higher Tax Receivable Agreement liability payments[22](index=22&type=chunk)[197](index=197&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of significant accounting policies, revenue recognition, inventory, property, debt, equity, and other financial statement items [Note 1. Description Of Business](index=14&type=section&id=Note%201.%20Description%20Of%20Business) Portillo's Inc. operates 93 restaurants across 10 states, serving Chicago-style food, and holds a 50% interest in one restaurant - Portillo's Inc. was formed in 2021 for an IPO and related reorganization, operating as the sole managing member of Portillo's OpCo. The Company operates **93 restaurants** across **10 states**, serving Chicago-style food, and also has a **50% interest** in one restaurant owned by C&O Chicago, L.L.C[25](index=25&type=chunk)[26](index=26&type=chunk) - A ghost kitchen was closed during the second quarter ended June 29, 2025[26](index=26&type=chunk) [Note 2. Summary Of Significant Accounting Policies](index=14&type=section&id=Note%202.%20Summary%20Of%20Significant%20Accounting%20Policies) This note outlines the basis of preparation for the unaudited financial statements, fiscal year details, and the evaluation of new accounting pronouncements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial statements and SEC rules, reflecting all necessary normal recurring adjustments[27](index=27&type=chunk) - The Company uses a 52- or 53-week fiscal year ending on the Sunday prior to or on December 31. Fiscal years 2025 and 2024 consist of **52 weeks**[29](index=29&type=chunk) - The Company is evaluating the effect of adopting ASU 2023-09 (Income Taxes) effective for fiscal years beginning after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective for annual reporting periods beginning after December 15, 2026[31](index=31&type=chunk)[32](index=32&type=chunk) - ASU 2023-07 (Segment Reporting) was adopted for the year ended December 29, 2024, requiring disclosure of reportable segments' significant expenses[33](index=33&type=chunk) [Note 3. Revenue Recognition](index=16&type=section&id=Note%203.%20Revenue%20Recognition) This note details the Company's policies for recognizing revenue from retail sales, delivery, gift cards, and the new Portillo's Perks™ loyalty program - Revenue from retail restaurants is recognized net of discounts when food and beverage products are sold. Delivery sales are recognized when food is delivered, with Dispatch Sales including delivery/service fees and Marketplace Sales excluding them[35](index=35&type=chunk)[36](index=36&type=chunk) - Gift card sales are recorded as a contract liability, with revenue recognized upon redemption or as breakage (**11%** of sales not expected to be redeemed). Gift card breakage recognized was **$0.2 million** for the quarter and **$0.5 million** for the two quarters ended June 29, 2025[37](index=37&type=chunk) Gift Card Liability and Revenue Recognized (in thousands) | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :------------------ | | Gift card liability | $4,450 | $6,875 | | Revenue recognized from gift card liability balance at the beginning of the year (Q) | $961 | $912 | | Revenue recognized from gift card liability balance at the beginning of the year (2Q) | $2,982 | $2,982 | - The Company launched Portillo's Perks™, an app-less loyalty program, on March 3, 2025. Revenue is deferred for earned rewards and recognized upon redemption. As of June 29, 2025, the Perks liability was **$0.1 million**, with no breakage recorded due to short expiration periods[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 4. Inventories](index=18&type=section&id=Note%204.%20Inventories) This note provides a breakdown of inventory components and highlights a significant increase in total inventories from December 2024 to June 2025 Inventories (in thousands) | Item | June 29, 2025 | December 29, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $7,584 | $5,756 | | Work in progress| $134 | $168 | | Finished goods | $1,732 | $1,216 | | Consigned inventory| $648 | $775 | | **Total** | **$10,098** | **$7,915** | - Total inventories increased by **$2.2 million (27.6%)** from December 29, 2024, to June 29, 2025, primarily driven by an increase in raw materials and finished goods[41](index=41&type=chunk) [Note 5. Property & Equipment, Net](index=19&type=section&id=Note%205.%20Property%20%26%20Equipment,%20Net) This note details the composition of property and equipment, net, and explains the increase primarily due to construction-in-progress Property and Equipment, Net (in thousands) | Item | June 29, 2025 | December 29, 2024 | | :-------------------------- | :------------ | :---------------- | | Land and land improvements | $24,274 | $24,100 | | Buildings and improvements | $5,516 | $5,084 | | Furniture, fixtures, and equipment | $182,248 | $177,443 | | Leasehold improvements | $287,985 | $286,003 | | Transportation equipment | $2,026 | $2,042 | | Construction-in-progress | $43,427 | $12,348 | | Less accumulated depreciation | $(160,593) | $(148,045) | | **Total** | **$384,883** | **$358,975** | - Property and equipment, net, increased by **$25.9 million (7.2%)** from December 29, 2024, to June 29, 2025, largely due to a significant increase in construction-in-progress[42](index=42&type=chunk) - Depreciation expense was **$6.4 million** for both the quarter ended June 29, 2025, and June 30, 2024. For the two quarters, it was **$12.8 million** (June 29, 2025) and **$12.6 million** (June 30, 2024)[42](index=42&type=chunk) [Note 6. Goodwill & Intangible Assets](index=19&type=section&id=Note%206.%20Goodwill%20%26%20Intangible%20Assets) This note describes the Company's goodwill and intangible assets, including trade names and recipes, and reports on amortization expense and impairment assessments - The Company has one reporting unit for goodwill, evaluated annually for impairment in the fourth quarter. No impairment charges were recognized for goodwill or indefinite-lived intangible assets during the reported periods[43](index=43&type=chunk) Intangible Assets, Net (in thousands) | Item | June 29, 2025 Net Carrying Amount | December 29, 2024 Net Carrying Amount | | :--------------------------------- | :-------------------------------- | :------------------------------------ | | Indefinite-lived intangible assets: | | | | Trade names | $223,925 | $223,925 | | Intangible subject to amortization: | | | | Recipes | $24,745 | $26,098 | | **Total** | **$248,670** | **$250,023** | - Amortization expense for intangible assets was **$0.7 million** for the quarter and **$1.4 million** for the two quarters ended June 29, 2025, consistent with the prior year[43](index=43&type=chunk) Estimated Aggregate Amortization Expense (in thousands) | Year | Estimated Amortization | | :------------------ | :--------------------- | | 2025 (remainder) | $1,354 | | 2026 | $2,707 | | 2027 | $2,707 | | 2028 | $2,707 | | 2029 | $2,150 | | 2030 | $1,369 | | 2031 and thereafter | $11,751 | | **Total** | **$24,745** | [Note 7. Fair Value of Financial Instruments](index=21&type=section&id=Note%207.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value measurement of financial instruments, including deferred compensation plan investments, and confirms no impairment charges - The carrying values of current assets and liabilities approximate fair values due to their short-term nature. Long-term prepaid expenses and other long-term liabilities also approximate fair values[45](index=45&type=chunk)[46](index=46&type=chunk) - The Company maintains a rabbi trust for a deferred compensation plan, with investments in mutual funds measured at fair value (Level 1 hierarchy) using quoted market prices[47](index=47&type=chunk) Fair Value of Deferred Compensation Plan Investments (in thousands) | Item | June 29, 2025 (Level 1) | December 29, 2024 (Level 1) | | :-------------------------------------------- | :---------------------- | :-------------------------- | | Cash accounts | $867 | $988 | | Mutual funds | $1,989 | $2,208 | | **Total assets** | **$2,856** | **$3,196** | - No impairment charges were recognized for assets measured at fair value on a non-recurring basis (property and equipment, operating lease assets, equity-method investment, goodwill, and indefinite-lived intangible assets) during the reported periods[51](index=51&type=chunk) [Note 8. Debt](index=23&type=section&id=Note%208.%20Debt) This note details the Company's debt structure, including the Term Loan and Revolver Facility, and the impact of the 2025 credit agreement amendment on interest rates Debt (in thousands) | Item | June 29, 2025 | December 29, 2024 | | :------------------------------------ | :------------ | :---------------- | | Term Loan | $250,000 | $288,750 | | Revolver Facility | $70,000 | $25,000 | | Unamortized discount and debt issuance costs | $(2,992) | $(2,078) | | **Total debt, net** | **$317,008** | **$311,672** | | Less: Short-term debt | $(70,000) | $(25,000) | | Less: Current portion of long-term debt | $(6,250) | $(11,250) | | **Long-term debt, net** | **$240,758** | **$275,422** | - On January 27, 2025, the Company amended its credit agreement, establishing a new **$250 million** Term Loan A facility and **$150 million** Revolving Credit Facility, both maturing on January 27, 2030. This arrangement was accounted for as a debt modification[53](index=53&type=chunk)[54](index=54&type=chunk) - The interest rate on the 2025 Term Loan and Revolver Facility was **6.55%** and **6.58%**, respectively, as of June 29, 2025, a decrease from **7.98%** and **7.94%** on the prior facilities as of June 30, 2024. The effective interest rate decreased from **8.31%** to **6.90%**[56](index=56&type=chunk)[57](index=57&type=chunk)[155](index=155&type=chunk) - As of June 29, 2025, outstanding borrowings totaled **$320.0 million** (**$250.0 million** Term Loan, **$70.0 million** Revolver Facility), with **$74.7 million** available under the Revolver Facility[60](index=60&type=chunk) - Total interest expense decreased by **$0.9 million (13.3%)** for the quarter and **$1.7 million (12.6%)** for the two quarters ended June 29, 2025, primarily due to the lower effective interest rate from the 2025 Credit Agreement amendment[64](index=64&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Note 9. Non-Controlling Interests](index=25&type=section&id=Note%209.%20Non-Controlling%20Interests) This note explains the accounting for non-controlling interests, including LLC unit redemptions and their impact on ownership percentages - Portillo's Inc. consolidates Portillo's OpCo's financial results and reports a non-controlling interest for pre-IPO LLC Members' economic interest[68](index=68&type=chunk) - In Q2 2025, certain pre-IPO Members redeemed **7,290,465 LLC units** for newly-issued Class A common stock on a one-for-one basis[70](index=70&type=chunk) LLC Interest Ownership | Item | June 29, 2025 LLC Units | June 29, 2025 Ownership % | December 29, 2024 LLC Units | December 29, 2024 Ownership % | | :-------------------- | :---------------------- | :------------------------ | :-------------------------- | :---------------------------- | | Portillo's Inc. | 71,890,168 | 95.4 % | 63,674,579 | 85.6 % | | pre-IPO LLC Members | 3,442,335 | 4.6 % | 10,732,800 | 14.4 % | | **Total** | **75,332,503** | **100.0 %** | **74,407,379** | **100.0 %** | - The pre-IPO LLC Members' weighted average ownership percentage decreased to **9.9%** for the quarter and **12.2%** for the two quarters ended June 29, 2025, from **15.9%** and **18.7%** respectively, in the prior year periods[70](index=70&type=chunk) [Note 10. Equity-Based Compensation](index=27&type=section&id=Note%2010.%20Equity-Based%20Compensation) This note details equity-based compensation expense, including grants of RSUs, stock options, and PSUs, and their impact on financial results Equity-Based Compensation Expense (in thousands) | Item | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Labor | $505 | $546 | $858 | $954 | | General and administrative expenses | $2,153 | $2,344 | $3,750 | $4,763 | | **Total** | **$2,658** | **$2,890** | **$4,608** | **$5,717** | - Total equity-based compensation expense decreased by **$0.2 million (8.0%)** for the quarter and **$1.1 million (19.4%)** for the two quarters ended June 29, 2025, compared to the prior year periods[72](index=72&type=chunk) - During the two quarters ended June 29, 2025, the Company granted **589,745 RSUs** to employees and **93,725 RSUs** to non-employee directors, with a weighted average fair value of **$12.08**[73](index=73&type=chunk) - The Company granted **307,692 stock options** to its CEO in Q2 2025, valued at **$6.50** per option using the Black-Scholes model[74](index=74&type=chunk) - **301,118 Performance Stock Units (PSUs)** were granted to executive officers, vesting after fiscal year 2027 based on service and achievement of revenue and Adjusted EBITDA growth targets[75](index=75&type=chunk) [Note 11. Income Taxes](index=28&type=section&id=Note%2011.%20Income%20Taxes) This note explains the Company's tax structure, effective income tax rates, and the impact of LLC unit redemptions and the Tax Receivable Agreement liability - Portillo's OpCo is treated as a partnership for tax purposes, with taxable income/loss passed through to its members. Portillo's Inc. is subject to federal, state, and local income taxes on its allocable share[76](index=76&type=chunk) Effective Income Tax Rate | Period | June 29, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Quarter Ended Effective Income Tax Rate | 26.8% | 29.1% | | Two Quarters Ended Effective Income Tax Rate | 26.4% | 14.5% | - The decrease in the effective tax rate for the quarter ended June 29, 2025, was due to a decrease in the valuation allowance against deferred tax assets from LLC unit redemptions. The increase for the two quarters was driven by Portillo's Inc.'s increased ownership interest in Portillo's OpCo[77](index=77&type=chunk)[78](index=78&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - In Q2 2025, an increase in tax basis from LLC unit redemptions resulted in a **$16.7 million** deferred tax asset and a **$38.5 million** additional Tax Receivable Agreement (TRA) liability[80](index=80&type=chunk) - The estimated TRA liability totaled **$352.9 million** as of June 29, 2025. Payments of **$7.7 million** (tax year 2023) and **$4.4 million** (tax year 2022) were made in the two quarters ended June 29, 2025, and June 30, 2024, respectively. A **$9.2 million** payment for tax year 2024 is expected within 12 months[81](index=81&type=chunk)[94](index=94&type=chunk) [Note 12. Earnings Per Share](index=30&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share calculations and details the shares excluded from diluted EPS for the reported periods Earnings Per Share (in thousands, except per share data) | Item | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :-------------------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Net income attributable to Portillo's Inc. | $8,704 | $6,470 | $12,017 | $11,032 | | Weighted-average common shares outstanding-basic | 67,595 | 61,650 | 65,717 | 59,544 | | Weighted-average common shares outstanding-diluted | 69,868 | 64,609 | 68,175 | 62,578 | | Basic net income per share | $0.13 | $0.10 | $0.18 | $0.19 | | Diluted net income per share | $0.12 | $0.10 | $0.18 | $0.18 | - Basic EPS increased to **$0.13** from **$0.10** for the quarter ended June 29, 2025, and remained stable at **$0.18** for the two quarters ended June 29, 2025, compared to **$0.19** in the prior year[83](index=83&type=chunk) - Diluted EPS increased to **$0.12** from **$0.10** for the quarter ended June 29, 2025, and remained stable at **$0.18** for the two quarters ended June 29, 2025, compared to the prior year[83](index=83&type=chunk) Shares Excluded from Diluted EPS (in thousands) | Item | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Performance Stock Options | 1,377 | 2,109 | 1,377 | 2,109 | | Performance Stock Units | 592 | 296 | 592 | — | | Restricted Stock Units | 606 | 714 | — | 159 | | Stock Options | 619 | 321 | 619 | 321 | | **Total shares excluded** | **3,194** | **3,440** | **2,588** | **2,589** | [Note 13. Contingencies](index=32&type=section&id=Note%2013.%20Contingencies) This note addresses the Company's involvement in legal proceedings and potential claims, asserting no material impact on financial statements - The Company is involved in legal proceedings and potential claims arising from normal business operations, including employment matters, contractual disputes, customer injuries, and property damage. Management believes that any resulting liability will not materially affect the condensed consolidated financial statements[86](index=86&type=chunk) [Note 14. Segment Information](index=32&type=section&id=Note%2014.%20Segment%20Information) This note clarifies that the Company operates as a single reportable segment, with performance assessed at a consolidated level by the CEO - The Company operates as one operating segment and one reportable segment, as the Chief Executive Officer (CODM) reviews financial performance and allocates resources at a consolidated level[87](index=87&type=chunk) - The CODM assesses performance based on net income (loss), which was **$10.0 million** for the quarter and **$14.0 million** for the two quarters ended June 29, 2025, and **$8.5 million** and **$13.9 million** for the respective prior year periods[88](index=88&type=chunk) - No single guest accounts for **10%** or more of the Company's revenues[91](index=91&type=chunk) [Note 15. Related Party Transactions](index=32&type=section&id=Note%2015.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including receivables from C&O, Olo-related costs, and distributions to non-controlling interest holders - Receivables from related parties, specifically C&O, amounted to **$0.3 million** as of June 29, 2025, and December 29, 2024[92](index=92&type=chunk) Olo-Related Costs (in thousands) | Item | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Food, beverage and packaging costs | $497 | $512 | $984 | $1,014 | | Other operating expenses | $142 | $138 | $293 | $240 | | **Total Olo-related costs** | **$639** | **$650** | **$1,277** | **$1,254** | - The Company incurred **$0.6 million** in Olo-related costs for the quarter and **$1.3 million** for the two quarters ended June 29, 2025, for its mobile ordering and delivery platform[93](index=93&type=chunk) - In Q2 2025, pre-IPO Members affiliated with Berkshire Partners LLC redeemed **7,290,465 LLC units** for Class A common stock. Berkshire Partners LLC and its affiliates beneficially own approximately **5.2%** of the Company as of June 29, 2025[96](index=96&type=chunk) Distributions Paid to Non-Controlling Interest Holders (in thousands) | Period | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Distributions paid to non-controlling interest holders | $1,291 | $838 | [Note 16. Subsequent Events](index=36&type=section&id=Note%2016.%20Subsequent%20Events) This note reports on the 'One Big Beautiful Bill Act' signed into law on July 4, 2025, and its expected non-material impact on financial statements - On July 4, 2025, the 'One Big Beautiful Bill Act' was signed into law, permanently extending certain Tax Cuts and Jobs Act provisions and modifying international tax frameworks. The Company is assessing its impact but does not expect a significant financial statement impact[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Portillo's Inc.'s financial performance, liquidity, and cash flows for the reported periods, highlighting revenue growth, cost pressures, and strategic initiatives [Overview](index=37&type=section&id=Overview) Portillo's operates 94 restaurants across ten states, offering Chicago street food with a hybrid fast-casual and quick-service model - Portillo's operates **94 restaurants** across **ten states**, serving Chicago street food with a diverse menu. The business model combines fast-casual and quick-service attributes, featuring double-lane drive-thrus and multiple access modes (dine-in, carryout, delivery, catering)[104](index=104&type=chunk)[105](index=105&type=chunk) [Financial Highlights](index=38&type=section&id=Financial%20Highlights) This section summarizes key financial metrics, including revenue, operating income, net income, and Adjusted EBITDA, for the quarter and two quarters ended June 29, 2025 Financial Highlights (Quarter Ended June 29, 2025 vs. June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total revenue | $188.5 million| $181.9 million| $6.6 million| 3.6% | | Same-restaurant sales increase | +0.7% | -0.6% | N/A | N/A | | Operating income | $17.5 million | $18.1 million | $(0.6) million| -3.3% | | Net income | $10.0 million | $8.5 million | $1.5 million| 17.6% | | Restaurant-Level Adjusted EBITDA | $44.5 million | $44.6 million | $(0.1) million| -0.2% | | Adjusted EBITDA | $30.1 million | $29.9 million | $0.2 million| 0.7% | Financial Highlights (Two Quarters Ended June 29, 2025 vs. June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total revenue | $364.9 million| $347.7 million| $17.2 million| 4.9% | | Same-restaurant sales increase | +1.2% | -0.9% | N/A | N/A | | Operating income | $27.9 million | $28.2 million | $(0.3) million| -1.1% | | Net income | $14.0 million | $13.9 million | $0.2 million| 1.4% | | Restaurant-Level Adjusted EBITDA | $81.1 million | $80.9 million | $0.2 million| 0.2% | | Adjusted EBITDA | $51.3 million | $51.6 million | $(0.4) million| -0.8% | [Recent Developments and Trends](index=38&type=section&id=Recent%20Developments%20and%20Trends) This section discusses revenue growth drivers, same-restaurant sales trends, commodity inflation, labor costs, menu pricing strategies, and the launch of the loyalty program - Total revenue grew **3.6%** for the quarter and **4.9%** for the two quarters ended June 29, 2025, driven by new restaurant openings in 2024 and increased same-restaurant sales[109](index=109&type=chunk) - Same-restaurant sales increased by **0.7%** for the quarter and **1.2%** for the two quarters ended June 29, 2025, reversing declines from the prior year periods[109](index=109&type=chunk) - Commodity inflation was **1.9%** for the quarter and **2.6%** for the two quarters ended June 29, 2025, significantly lower than the prior year. Labor costs as a percentage of revenue increased due to lower transactions, wage increases, and benefit costs, partially offset by higher average check[110](index=110&type=chunk) - Menu prices were increased by approximately **1.5%** in January, **1.0%** in April, and **0.7%** in June 2025 to address inflationary pressures[110](index=110&type=chunk) - The Portillo's Perks™ loyalty program, launched in March 2025, aims to drive trial, build brand awareness, and encourage incremental traffic[111](index=111&type=chunk) [Development Highlights](index=38&type=section&id=Development%20Highlights) This section outlines new restaurant openings, future expansion plans focusing on the Sunbelt and existing markets, and details on new restaurant prototypes - No new restaurants were opened during the two quarters ended June 29, 2025. Subsequent to this period, one restaurant opened in Tomball, Texas, bringing the total count to **95**[113](index=113&type=chunk) - The Company plans to open **12 new restaurants** in the second half of 2025, focusing on expansion in the Sunbelt (Texas, Atlanta) and filling in existing markets like Chicagoland[114](index=114&type=chunk) - Most new openings in 2025 will be the 'RoTF 1.0' prototype (**6,250 sq ft, 47-foot production line**), with one pick-up only and one in-line walk-up restaurant also planned[114](index=114&type=chunk)[117](index=117&type=chunk) [Consolidated Results of Operations](index=40&type=section&id=Consolidated%20Results%20of%20Operations) This section provides a detailed analysis of the Company's revenues and various operating expenses for the quarter and two quarters ended June 29, 2025 [Revenues, Net](index=40&type=section&id=Revenues,%20Net) Net revenues increased due to new restaurant openings and same-restaurant sales growth, driven by higher average check despite transaction decreases - Revenues for the quarter ended June 29, 2025, increased by **$6.6 million (3.6%)** to **$188.5 million**, primarily due to nine new restaurant openings in 2024 and a **0.7%** increase in same-restaurant sales[120](index=120&type=chunk) - Same-restaurant sales growth was driven by a **2.1%** increase in average check, partially offset by a **1.4%** decrease in transactions. Menu prices increased by approximately **3.4%**[120](index=120&type=chunk) - Revenues for the two quarters ended June 29, 2025, increased by **$17.2 million (4.9%)** to **$364.9 million**, attributed to ten new restaurant openings in 2024 and a **1.2%** increase in same-restaurant sales[123](index=123&type=chunk) - For the two quarters, same-restaurant sales growth was due to a **3.4%** increase in average check, partially offset by a **2.2%** decrease in transactions. Menu prices increased by approximately **3.9%**[123](index=123&type=chunk) [Food, Beverage and Packaging Costs](index=42&type=section&id=Food,%20Beverage%20and%20Packaging%20Costs) These costs increased due to commodity price inflation and new restaurant openings, with a slight percentage change relative to revenues - Food, beverage, and packaging costs increased by **$2.0 million (3.3%)** to **$63.8 million** for the quarter and **$6.2 million (5.2%)** to **$124.9 million** for the two quarters ended June 29, 2025[126](index=126&type=chunk)[127](index=127&type=chunk) - The increases were primarily due to a **1.9%** (quarter) and **2.6%** (two quarters) rise in commodity prices and new restaurant openings[126](index=126&type=chunk)[127](index=127&type=chunk) - As a percentage of revenues, these costs decreased by **0.1%** for the quarter but increased by **0.1%** for the two quarters, reflecting the balance between average check increases and commodity price inflation[126](index=126&type=chunk)[127](index=127&type=chunk) [Labor Expenses](index=44&type=section&id=Labor%20Expenses) Labor expenses rose due to new restaurant openings, team member investments, and increased benefit and variable compensation costs - Labor expenses increased by **$1.9 million (4.2%)** to **$48.3 million** for the quarter and **$5.5 million (6.1%)** to **$95.2 million** for the two quarters ended June 29, 2025[130](index=130&type=chunk)[131](index=131&type=chunk) - The increases were driven by new restaurant openings, incremental investments in team members, increased benefit costs, and higher variable-based compensation[130](index=130&type=chunk)[131](index=131&type=chunk) - As a percentage of revenues, labor expenses increased by **0.2%** for the quarter and **0.3%** for the two quarters, mainly due to lower transactions, increased benefit costs, and wage increases, partially offset by labor efficiencies and higher average check[130](index=130&type=chunk)[131](index=131&type=chunk) [Occupancy Expenses](index=44&type=section&id=Occupancy%20Expenses) Occupancy expenses increased due to new restaurant openings, resulting in a slight rise as a percentage of revenues - Occupancy expenses increased by **$0.8 million (8.2%)** to **$10.0 million** for the quarter and **$1.4 million (7.7%)** to **$20.0 million** for the two quarters ended June 29, 2025[133](index=133&type=chunk)[134](index=134&type=chunk) - These increases were primarily due to the opening of new restaurants in 2024[133](index=133&type=chunk)[134](index=134&type=chunk) - As a percentage of revenues, occupancy expenses increased by **0.2%** for the quarter and **0.1%** for the two quarters[133](index=133&type=chunk)[134](index=134&type=chunk) [Other Operating Expenses](index=44&type=section&id=Other%20Operating%20Expenses) Other operating expenses increased due to new restaurant openings, higher repairs, maintenance, utilities, and insurance, partially offset by lower cleaning costs - Other operating expenses increased by **$2.0 million (9.8%)** to **$21.9 million** for the quarter and **$3.9 million (9.8%)** to **$43.7 million** for the two quarters ended June 29, 2025[136](index=136&type=chunk)[137](index=137&type=chunk) - The increases were mainly due to new restaurant openings, higher repairs and maintenance, utilities, and insurance expenses, partially offset by lower cleaning costs due to vendor renegotiation[136](index=136&type=chunk)[137](index=137&type=chunk) - As a percentage of revenues, other operating expenses increased by **0.6%** for the quarter and **0.5%** for the two quarters[136](index=136&type=chunk)[137](index=137&type=chunk) [General and Administrative Expenses](index=45&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased due to higher professional fees, advertising, and software licenses, partially offset by lower equity-based compensation - General and administrative expenses increased by **$0.9 million (4.8%)** to **$18.8 million** for the quarter and **$1.2 million (3.3%)** to **$37.7 million** for the two quarters ended June 29, 2025[140](index=140&type=chunk)[141](index=141&type=chunk) - The increases were primarily driven by higher professional fees, advertising expenses, and software license fees for ERP and HCM system implementations, partially offset by lower equity-based compensation[140](index=140&type=chunk)[141](index=141&type=chunk) [Pre-Opening Expenses](index=45&type=section&id=Pre-Opening%20Expenses) Pre-opening expenses decreased due to the timing and number of activities related to planned restaurant openings compared to the prior year - Pre-opening expenses decreased by **$0.4 million (19.2%)** to **$1.7 million** for the quarter and **$1.3 million (37.4%)** to **$2.2 million** for the two quarters ended June 29, 2025[143](index=143&type=chunk)[144](index=144&type=chunk) - The decrease was due to the number and timing of activities related to planned restaurant openings compared to the prior year periods[143](index=143&type=chunk)[144](index=144&type=chunk) [Depreciation and Amortization](index=45&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization remained stable for the quarter and slightly increased for the two quarters due to new restaurant capital expenditures - Depreciation and amortization expense remained stable at **$7.1 million** for the quarter ended June 29, 2025, and increased by **$0.1 million (0.9%)** to **$14.2 million** for the two quarters[146](index=146&type=chunk)[147](index=147&type=chunk) - The increase for the two quarters was primarily due to incremental depreciation from capital expenditures for new restaurants, partially offset by a reduction from fully depreciated assets and disposals[147](index=147&type=chunk) [Net Income Attributable to Equity Method Investment](index=47&type=section&id=Net%20Income%20Attributable%20to%20Equity%20Method%20Investment) Net income from equity method investment increased for the quarter due to higher sales from the C&O restaurant, remaining stable for two quarters - Net income attributable to equity method investment increased by **$0.05 million (14.0%)** to **$0.4 million** for the quarter ended June 29, 2025, driven by increased sales from the C&O restaurant[149](index=149&type=chunk) - For the two quarters ended June 29, 2025, net income attributable to equity method investment remained stable at **$0.5 million**[149](index=149&type=chunk) [Other Income, Net](index=47&type=section&id=Other%20Income,%20Net) Other income, net, decreased due to reduced sales tax filing discounts, increased loss on asset sales, and lower trading gains from the rabbi trust - Other income, net, decreased by **$0.1 million (16.2%)** to **$0.3 million** for the quarter and **$0.5 million (60.3%)** to **$0.3 million** for the two quarters ended June 29, 2025[151](index=151&type=chunk)[152](index=152&type=chunk) - The decrease was primarily due to reduced sales tax filing discounts (new Illinois statutory cap), increased loss on asset sales, and a decrease in trading gains from the rabbi trust[151](index=151&type=chunk)[152](index=152&type=chunk) [Interest Expense](index=47&type=section&id=Interest%20Expense) Interest expense decreased due to a lower effective interest rate resulting from the 2025 Credit Agreement amendment and improved lending terms - Interest expense decreased by **$0.9 million (13.3%)** to **$5.7 million** for the quarter and **$1.7 million (12.6%)** to **$11.5 million** for the two quarters ended June 29, 2025[153](index=153&type=chunk)[154](index=154&type=chunk) - This decrease was primarily driven by a lower effective interest rate (**6.90%** vs. **8.31%**) due to improved lending terms from the 2025 Credit Agreement amendment[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [Interest Income](index=47&type=section&id=Interest%20Income) Interest income remained stable for both the quarter and two quarters ended June 29, 2025, consistent with prior year periods - Interest income remained stable at **$0.1 million** for the quarter and **$0.2 million** for the two quarters ended June 29, 2025, consistent with prior year periods[157](index=157&type=chunk)[158](index=158&type=chunk) [Tax Receivable Agreement Liability Adjustment](index=49&type=section&id=Tax%20Receivable%20Agreement%20Liability%20Adjustment) The TRA liability adjustment increased due to remeasurement from equity-based compensation plan activity and an amendment to the TRA interest rate - The Tax Receivable Agreement (TRA) liability adjustment increased to **$1.8 million** for the quarter and **$2.5 million** for the two quarters ended June 29, 2025, compared to **$0.4 million** and **$1.0 million** respectively in the prior year periods[160](index=160&type=chunk)[161](index=161&type=chunk) - This change was primarily related to a remeasurement due to activity under equity-based compensation plans[160](index=160&type=chunk)[161](index=161&type=chunk) - An amendment to the TRA on January 24, 2025, replaced the LIBOR-based interest rate with a Term Secured Overnight Financing Rate (SOFR) based rate[159](index=159&type=chunk) [Income Tax Expense](index=49&type=section&id=Income%20Tax%20Expense) Income tax expense increased for the two quarters due to Portillo's Inc.'s increased ownership in Portillo's OpCo, while the quarterly rate decreased from LLC unit redemptions - Income tax expense increased by **$0.2 million (5.2%)** to **$3.7 million** for the quarter and **$2.7 million (113.6%)** to **$5.0 million** for the two quarters ended June 29, 2025[163](index=163&type=chunk)[164](index=164&type=chunk) - The effective income tax rate for the quarter decreased to **26.8%** from **29.1%** due to a lower valuation allowance from LLC unit redemptions. For the two quarters, it increased to **26.4%** from **14.5%** due to Portillo's Inc.'s increased ownership in Portillo's OpCo[163](index=163&type=chunk)[164](index=164&type=chunk) [Net Income Attributable to Non-controlling Interests](index=49&type=section&id=Net%20Income%20Attributable%20to%20Non-controlling%20Interests) Net income attributable to non-controlling interests decreased due to a reduction in their weighted average ownership percentage - Net income attributable to non-controlling interests decreased by **$0.7 million (35.0%)** to **$1.3 million** for the quarter and **$0.8 million (29.1%)** to **$2.0 million** for the two quarters ended June 29, 2025[166](index=166&type=chunk)[167](index=167&type=chunk) - This decrease was primarily due to a reduction in the non-controlling interest holders' weighted average ownership percentage (from **15.9%** to **9.9%** for the quarter, and from **18.7%** to **12.2%** for the two quarters)[166](index=166&type=chunk)[167](index=167&type=chunk) [Selected Operating Data and Non-GAAP Financial Measures](index=51&type=section&id=Selected%20Operating%20Data%20and%20Non-GAAP%20Financial%20Measures) This section presents key operating metrics and non-GAAP financial measures, including same-restaurant sales, AUV, Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA [Change in Same-Restaurant Sales](index=51&type=section&id=Change%20in%20Same-Restaurant%20Sales) Same-restaurant sales increased for both the quarter and two quarters ended June 29, 2025, reversing prior year declines - Same-restaurant sales increased by **0.7%** for the quarter and **1.2%** for the two quarters ended June 29, 2025, compared to declines of **0.6%** and **0.9%** in the prior year periods, respectively[170](index=170&type=chunk) - The Comparable Restaurant Base included **75 restaurants** for the two quarters ended June 29, 2025, and **70** for the prior year period, excluding the C&O restaurant[171](index=171&type=chunk) [Average Unit Volume ("AUV")](index=51&type=section&id=Average%20Unit%20Volume%20%28%22AUV%22%29) AUV for the twelve months ended June 29, 2025, decreased compared to the prior year period Average Unit Volume (AUV) (in millions) | Period | June 29, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | AUV (for twelve months ended) | $8.7 | $9.0 | - AUV for the twelve months ended June 29, 2025, was **$8.7 million**, a decrease from **$9.0 million** for the twelve months ended June 30, 2024[170](index=170&type=chunk) [Non-GAAP Financial Measures](index=52&type=section&id=Non-GAAP%20Financial%20Measures) The Company utilizes non-GAAP measures like Adjusted EBITDA and Restaurant-Level Adjusted EBITDA to assess performance and guide strategic decisions - The Company uses non-GAAP financial measures like Adjusted EBITDA, Adjusted EBITDA Margin, Restaurant-Level Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA Margin to evaluate business performance, develop forecasts, and make strategic decisions[169](index=169&type=chunk)[174](index=174&type=chunk) - These measures are supplemental and may not be comparable to other companies' metrics, and should not be considered in isolation from GAAP results[174](index=174&type=chunk) [Adjusted EBITDA and Adjusted EBITDA Margin](index=52&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) Adjusted EBITDA increased for the quarter but decreased for the two quarters ended June 29, 2025, with margins declining for both periods - Adjusted EBITDA represents net income adjusted for depreciation, amortization, interest, income taxes, and certain non-cash/non-core items. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net revenues[175](index=175&type=chunk) Adjusted EBITDA and Margin (in thousands) | Metric | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :---------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Adjusted EBITDA | $30,064 | $29,866 | $51,274 | $51,643 | | Adjusted EBITDA Margin | 16.0% | 16.4% | 14.1% | 14.9% | - Adjusted EBITDA increased by **$0.2 million (0.7%)** for the quarter but decreased by **$0.4 million (0.8%)** for the two quarters ended June 29, 2025. Adjusted EBITDA Margin decreased for both periods[179](index=179&type=chunk) [Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin](index=53&type=section&id=Restaurant-Level%20Adjusted%20EBITDA%20and%20Restaurant-Level%20Adjusted%20EBITDA%20Margin) Restaurant-Level Adjusted EBITDA slightly decreased for the quarter but increased for the two quarters ended June 29, 2025, with margins declining for both periods - Restaurant-Level Adjusted EBITDA is revenue less restaurant operating expenses, excluding corporate-level expenses and depreciation/amortization. Restaurant-Level Adjusted EBITDA Margin is this metric as a percentage of net revenues[182](index=182&type=chunk) Restaurant-Level Adjusted EBITDA and Margin (in thousands) | Metric | Quarter Ended June 29, 2025 | Quarter Ended June 30, 2024 | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Restaurant-Level Adjusted EBITDA | $44,481 | $44,569 | $81,137 | $80,940 | | Restaurant-Level Adjusted EBITDA Margin | 23.6% | 24.5% | 22.2% | 23.3% | - Restaurant-Level Adjusted EBITDA slightly decreased by **$0.1 million (0.2%)** for the quarter but increased by **$0.2 million (0.2%)** for the two quarters ended June 29, 2025. The margin decreased for both periods[185](index=185&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity, capital resources, Tax Receivable Agreement obligations, and cash flow activities from operations, investing, and financing [Tax Receivable Agreement](index=54&type=section&id=Tax%20Receivable%20Agreement%20%28within%20Liquidity%29) The Company is obligated under a TRA to pay 85% of realized tax benefits, with an estimated future obligation of $352.9 million as of June 29, 2025 - The Company is obligated under a Tax Receivable Agreement (TRA) to pay **85%** of realized tax benefits from certain transactions, including tax basis increases from LLC Unit acquisitions and redemptions[189](index=189&type=chunk) - As of June 29, 2025, the estimated TRA obligation for future payments totaled **$352.9 million**. Assuming sufficient taxable income, estimated tax savings would aggregate to **$415.2 million**, with **$352.9 million** payable to TRA Parties primarily over the next 15 years[190](index=190&type=chunk)[191](index=191&type=chunk) - TRA payments of **$7.7 million** (tax year 2023) and **$4.4 million** (tax year 2022) were made in the two quarters ended June 29, 2025, and June 30, 2024, respectively. A **$9.2 million** payment for tax year 2024 is expected within 12 months[192](index=192&type=chunk) [Summary of Cash Flows](index=56&type=section&id=Summary%20of%20Cash%20Flows) This section provides a summary of net cash flows from operating, investing, and financing activities for the two quarters ended June 29, 2025 Summary of Cash Flows (in thousands) | Item | Two Quarters Ended June 29, 2025 | Two Quarters Ended June 30, 2024 | | :------------------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $28,693 | $41,628 | | Net cash used in investing activities | $(33,076) | $(33,828) | | Net cash used in financing activities | $(1,872) | $(5,881) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(6,255) | $1,919 | | Cash and cash equivalents and restricted cash at end of period | $16,621 | $12,357 | [Operating Activities](index=56&type=section&id=Operating%20Activities) Net cash provided by operating activities decreased due to changes in operating assets and liabilities, partially offset by a slight increase in net income - Net cash provided by operating activities decreased by **$12.9 million (31.1%)** to **$28.7 million** for the two quarters ended June 29, 2025[194](index=194&type=chunk) - This decrease was primarily driven by a **$13.4 million** change in operating assets and liabilities (from a source of cash to a use of cash) and a **$0.3 million** change in non-cash items, partially offset by a **$0.2 million** increase in net income[194](index=194&type=chunk)[195](index=195&type=chunk) [Investing Activities](index=56&type=section&id=Investing%20Activities) Net cash used in investing activities decreased due to the timing of construction projects and the adoption of a more cost-effective restaurant format - Net cash used in investing activities decreased by **$0.8 million (2.2%)** to **$33.1 million** for the two quarters ended June 29, 2025[196](index=196&type=chunk) - This decrease was primarily due to the number and timing of construction projects and the adoption of a more cost-effective restaurant format[196](index=196&type=chunk) [Financing Activities](index=56&type=section&id=Financing%20Activities) Net cash used in financing activities decreased due to increased short-term debt proceeds, partially offset by long-term debt and TRA liability payments - Net cash used in financing activities decreased by **$4.0 million (68.2%)** to **$1.9 million** for the two quarters ended June 29, 2025[197](index=197&type=chunk) - This decrease was mainly due to an increase in proceeds from short-term debt, partially offset by payments of long-term debt related to refinancing and a **$3.3 million** increase in TRA liability payments[197](index=197&type=chunk) [2025 Revolver Facility and Liens](index=58&type=section&id=2025%20Revolver%20Facility%20and%20Liens) This section details the new $150 million 2025 Revolver Facility, outstanding borrowings, available capacity, and compliance with financial covenants - On January 27, 2025, the Company amended its credit agreement, establishing a **$150 million** 2025 Revolver Facility, maturing on January 27, 2030[198](index=198&type=chunk)[199](index=199&type=chunk) - As of June 29, 2025, **$70.0 million** was borrowed under the Revolver Facility, with **$5.3 million** in outstanding letters of credit, leaving **$74.7 million** available[200](index=200&type=chunk) - The Company was in compliance with all financial covenants in the 2025 Credit Agreement as of June 29, 2025[201](index=201&type=chunk) [Material Cash Requirements](index=58&type=section&id=Material%20Cash%20Requirements) No material changes to the Company's cash requirements have occurred since the 2024 Annual Report on Form 10-K, beyond ordinary course payments - There have been no material changes to the Company's material cash requirements as disclosed in its Annual Report on Form 10-K for fiscal year 2024, other than ordinary course payments[202](index=202&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) No significant changes to critical accounting estimates or policies have occurred since the 2024 Annual Report on Form 10-K - There have been no significant changes to the Company's critical accounting estimates or significant accounting policies as disclosed in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the Company's market risk exposure have occurred since the disclosures in its 2024 Annual Report on Form 10-K - No material changes to market risk exposure have occurred since the Annual Report on Form 10-K for fiscal year 2024[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports on changes in internal control over financial reporting [EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES](index=59&type=section&id=EVALUATION%20OF%20DISCLOSURE%20CONTROLS%20AND%20PROCEDURES) Management concluded that the Company's disclosure controls and procedures were effective as of June 29, 2025 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 29, 2025[208](index=208&type=chunk) [CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING](index=59&type=section&id=CHANGES%20IN%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) Implementation of a new HCM system led to control modifications, but no material adverse changes to internal control over financial reporting were identified - During the quarter ended June 29, 2025, the Company implemented a new human capital management (HCM) system, resulting in modifications and new internal controls[209](index=209&type=chunk) - No changes in internal control over financial reporting were identified that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[210](index=210&type=chunk) [Part II. Other Information](index=60&type=section&id=Part%20II.%20Other%20Information) This part includes information on legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 13. Contingencies in the financial statements - Information on legal proceedings is incorporated by reference from Note 13. Contingencies in the unaudited condensed consolidated financial statements[212](index=212&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the disclosures in the Company's 2024 Annual Report on Form 10-K - No material changes to risk factors have occurred since the Annual Report on Form 10-K for fiscal year 2024[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the redemption of LLC units by certain pre-IPO Members for newly-issued Class A common stock during Q2 2025 - In Q2 2025, certain pre-IPO Members affiliated with Berkshire Partners LLC redeemed **7,290,465 LLC units** for newly-issued Class A common stock on a one-for-one basis[214](index=214&type=chunk) [Item 3. Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[215](index=215&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Not applicable[217](index=217&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, amended, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted, amended, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 29, 2025[218](index=218&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws, Cooperation Agreement, Certifications of Principal Executive and Financial Officers, and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[220](index=220&type=chunk) [Signatures](index=62&type=section&id=Signatures) The report was signed on August 5, 2025, by the President, CEO, Director, CFO, and Treasurer - The report was signed on August 5, 2025, by Michael Osanloo, President, Chief Executive Officer and Director, and Michelle Hook, Chief Financial Officer and Treasurer[224](index=224&type=chunk)

[Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Overview) Portillo's Inc. reported a **3.6%** revenue increase to **$188.5 million** in Q2 2025, driven by new openings and sales growth, with mixed profitability metrics [Performance Highlights](index=1&type=section&id=Performance%20Highlights) Total revenue increased by **3.6% to $188.5 million** in Q2 2025, driven by new restaurants and same-restaurant sales, with mixed profitability Second Quarter 2025 Performance Highlights (vs. Second Quarter 2024) | Metric | Q2 2025 (Millions) | Change vs. Q2 2024 (Millions) | Percentage Change | | :----------------------------- | :------------------ | :----------------- | :------------------ | | Total revenue | $188.5 | +$6.6 | +3.6% | | Same-restaurant sales | +0.7% | | | | Operating income | $17.5 | -$0.6 | -3.2% | | Net income | $10.0 | +$1.5 | +17.7% | | Restaurant-Level Adjusted EBITDA | $44.5 | -$0.1 | -0.2% | | Adjusted EBITDA | $30.1 | +$0.2 | +0.7% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Michael Osanloo emphasized effective margin management and solid earnings amidst traffic challenges, focusing on market refinement and footprint expansion - The team managed restaurant-level margins effectively and drove solid earnings despite a tough traffic environment[3](index=3&type=chunk) - Strategic focus includes testing and learning, refining the new market playbook, and continuous improvement[3](index=3&type=chunk) - Key objectives are to drive consistent sales, expand the restaurant footprint, and deliver top-tier shareholder returns[3](index=3&type=chunk) [Second Quarter 2025 Financial and Operating Review](index=1&type=section&id=Second%20Quarter%202025%20Financial%20and%20Operating%20Review) This section details Portillo's Q2 2025 financial performance, including revenue growth and rising operating and administrative expenses [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis) Total revenues grew **3.6% to $188.5 million**, driven by new restaurants and a **0.7%** increase in same-restaurant sales, primarily from higher average checks Q2 2025 Revenue Breakdown | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :---------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Total Revenues | $188.5 | $181.9 | +$6.6 | +3.6% | | New Restaurants Contribution | $6.1 | | | | | Same-Restaurant Sales | +0.7% | | +$1.1 | | | Average Check Increase | +2.1% | | | | | Transactions Decrease | -1.4% | | | | | Menu Price Increase | ~3.4% | | | | | Product Mix Decrease | -1.3% | | | | - The Company increased select menu prices by approximately **1.0%** in April 2025 and **0.7%** in June 2025 to address inflationary cost pressures[3](index=3&type=chunk) [Expense Analysis](index=1&type=section&id=Expense%20Analysis) Total restaurant operating expenses rose **4.9% to $144.0 million** due to new openings, commodity prices, and labor, while G&A expenses increased **4.8%** Q2 2025 Expense Changes | Expense Category | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :----------------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Total restaurant operating expenses | $144.0 | $137.3 | +$6.7 | +4.9% | | General and administrative expenses | $18.8 | $17.9 | +$0.9 | +4.8% | - Increase in restaurant operating expenses was primarily driven by nine new restaurant openings, a **1.9%** increase in commodity prices, and incremental investments in labor[4](index=4&type=chunk) - Increase in general and administrative expenses was due to higher professional fees and advertising expenses, partially offset by lower equity-based compensation[5](index=5&type=chunk) [Profitability Metrics](index=1&type=section&id=Profitability%20Metrics) Operating income decreased **3.2% to $17.5 million**, while net income increased **17.7% to $10.0 million**, driven by tax adjustments and lower interest expense Q2 2025 Profitability Metrics | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :----------------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Operating income | $17.5 | $18.1 | -$0.6 | -3.2% | | Net income | $10.0 | $8.5 | +$1.5 | +17.7% | | Restaurant-Level Adjusted EBITDA | $44.5 | $44.6 | -$0.1 | -0.2% | | Adjusted EBITDA | $30.1 | $29.9 | +$0.2 | +0.7% | - The increase in net income was primarily due to a **$1.4 million** increase in the tax receivable agreement liability adjustment and a **$0.9 million** decrease in interest expense[9](index=9&type=chunk) - Operating income decrease was partially offset by a **$0.4 million** decrease in pre-opening expenses[6](index=6&type=chunk)[8](index=8&type=chunk) [Development Highlights](index=3&type=section&id=Development%20Highlights) This section outlines Portillo's recent restaurant openings and strategic plans for future expansion, focusing on new markets and efficient prototypes [Restaurant Openings and Future Plans](index=3&type=section&id=Restaurant%20Openings%20and%20Future%20Plans) No new restaurants opened in Q2 2025, but one opened post-quarter, bringing the total to **95**, with **12** planned for H2 2025 in Sunbelt markets - No new restaurants were opened during the quarter ended June 29, 2025[12](index=12&type=chunk) - Subsequent to June 29, 2025, one new restaurant opened in Tomball, Texas, bringing the total restaurant count to **95**[12](index=12&type=chunk) - The Company plans to open **12** new restaurants in the second half of 2025, focusing on the Sunbelt (Texas, Atlanta) and introducing its first in-line, walk-up restaurant format[13](index=13&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) Portillo's updated its fiscal 2025 financial targets, revising revenue growth downwards while maintaining other key operational and capital expenditure targets [Fiscal 2025 Financial Targets](index=3&type=section&id=Fiscal%202025%20Financial%20Targets) Fiscal 2025 revenue growth revised to **5% to 7%** (from 10% to 12%), and Adjusted EBITDA growth to flat to low single digits Fiscal 2025 Financial Targets (Updated) | Metric | Prior Target | Updated Target | | :----------------------------- | :------------------ | :------------------ | | Unit growth | 12 new units | 12 new units | | Same-restaurant sales | 1% to 3% | 1% to 3% | | Revenue growth | 10% to 12% | 5% to 7% | | Commodity inflation | 3% to 5% | 3% to 5% | | Labor inflation | 3% to 4% | 3% to 4% | | Restaurant-level adjusted EBITDA margin | 22.5% to 23% | 22.5% to 23% | | General and administrative expenses (Millions) | $80 - $82 | $78 - $80 | | Pre-opening expenses (Millions) | $11 - $12 | $11 - $12 | | Adjusted EBITDA growth | 5% to 8% | Flat to Low single digits | | Capital expenditures (Millions) | $97 - $100 | $97 - $100 | [Long-Term Financial Targets](index=4&type=section&id=Long-Term%20Financial%20Targets) Long-term targets include **12% to 15%** annual unit growth, low single-digit same-restaurant sales, mid-teens revenue growth, and low teens Adjusted EBITDA growth Long-Term Financial Targets | Metric | Target | | :-------------------- | :------------- | | Annual unit growth | 12% - 15% | | Same-restaurant sales | Low single digits | | Revenue growth | Mid teens | | Adjusted EBITDA growth | Low teens | [Key Performance Indicators and Non-GAAP Definitions](index=4&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Definitions) This section defines Portillo's key operating metrics and non-GAAP financial measures, including same-restaurant sales, AUV, and EBITDA [Definitions of Key Operating Metrics](index=4&type=section&id=Definitions%20of%20Key%20Operating%20Metrics) Key operating metrics include 'Change in Same-Restaurant Sales' for existing restaurant performance and 'Average Unit Volume' for assessing consumer spending - Change in Same-Restaurant Sales is the percentage change in year-over-year revenue for restaurants open for at least **24** full fiscal periods (Comparable Restaurant Base)[17](index=17&type=chunk) - Average Unit Volume (AUV) is the total revenue recognized in the Comparable Restaurant Base divided by the number of restaurants in that base, used to assess consumer spending and overall restaurant performance[19](index=19&type=chunk) [Definitions of Non-GAAP Financial Measures](index=4&type=section&id=Definitions%20of%20Non-GAAP%20Financial%20Measures) Non-GAAP measures, Adjusted EBITDA and Restaurant-Level Adjusted EBITDA, are defined to reflect core operating and restaurant-specific profitability - Adjusted EBITDA represents net income (loss) before depreciation and amortization, interest expense, interest income, and income taxes, adjusted for certain non-cash and other items not considered in ongoing core operating performance[20](index=20&type=chunk) - Restaurant-Level Adjusted EBITDA is defined as revenue less restaurant operating expenses (food, beverage, packaging, labor, occupancy, other operating expenses), excluding corporate-level expenses and depreciation/amortization[20](index=20&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents Portillo's consolidated financial statements, including statements of operations, balance sheets, and cash flows for Q2 2025 and year-to-date [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Detailed breakdown of revenues, costs, and profitability for Q2 and YTD June 2025, including total revenues, operating income, and net income Consolidated Statements of Operations (Selected Data, in thousands) | Metric | Quarter Ended June 29, 2025 (thousands) | Quarter Ended June 30, 2024 (thousands) | Two Quarters Ended June 29, 2025 (thousands) | Two Quarters Ended June 30, 2024 (thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | REVENUES, NET | $188,456 | $181,862 | $364,893 | $347,693 | | Total restaurant operating expenses | $143,975 | $137,293 | $283,756 | $266,753 | | General and administrative expenses | $18,798 | $17,941 | $37,701 | $36,481 | | OPERATING INCOME | $17,531 | $18,115 | $27,912 | $28,212 | | NET INCOME | $10,043 | $8,530 | $14,033 | $13,874 | | NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. | $8,704 | $6,470 | $12,017 | $11,032 | | Basic Income per common share | $0.13 | $0.10 | $0.18 | $0.19 | | Diluted Income per common share | $0.12 | $0.10 | $0.18 | $0.18 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) Presents financial position as of June 29, 2025, detailing assets, liabilities, and stockholders' equity, with increased total assets and liabilities Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 29, 2025 (thousands) | December 29, 2024 (thousands) | | :------------------------------------ | :-------------- | :---------------- | | TOTAL ASSETS | $1,553,730 | $1,500,086 | | Total current assets | $50,293 | $52,651 | | Property and equipment, net | $384,883 | $358,975 | | Goodwill | $394,298 | $394,298 | | Total liabilities | $1,065,933 | $1,009,983 | | Total current liabilities | $171,268 | $135,569 | | Long-term debt, net of current portion | $240,758 | $275,422 | | Total stockholders' equity | $487,797 | $490,103 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Outlines cash generated and used across operating, investing, and financing activities for YTD June 2025, showing decreased operating cash flow Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Two Quarters Ended June 29, 2025 (thousands) | Two Quarters Ended June 30, 2024 (thousands) | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net income | $14,033 | $13,874 | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $28,693 | $41,628 | | NET CASH USED IN INVESTING ACTIVITIES | $(33,076) | $(33,828) | | NET CASH USED IN FINANCING ACTIVITIES | $(1,872) | $(5,881) | | NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $(6,255) | $1,919 | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | $16,621 | $12,357 | [Selected Operating Data and Non-GAAP Reconciliations](index=12&type=section&id=Selected%20Operating%20Data%20and%20Non-GAAP%20Reconciliations) This section provides key operational metrics and reconciliations of non-GAAP financial measures, including Adjusted EBITDA and Restaurant-Level Adjusted EBITDA [Selected Operating Data](index=12&type=section&id=Selected%20Operating%20Data) Presents key operational metrics and non-GAAP financial measures for Q2 and YTD June 2025, including total restaurants, AUV, and EBITDA figures Selected Operating Data and Non-GAAP Financial Measures | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Total Restaurants | 94 | 86 | 94 | 86 | | AUV (Millions) | N/A | N/A | $8.7 | $9.0 | | Change in same-restaurant sales | 0.7 % | (0.6)% | 1.2% | (0.9)% | | Adjusted EBITDA (thousands) | $30,064 | $29,866 | $51,274 | $51,643 | | Adjusted EBITDA Margin | 16.0 % | 16.4 % | 14.1% | 14.9% | | Restaurant-Level Adjusted EBITDA (thousands) | $44,481 | $44,569 | $81,137 | $80,940 | | Restaurant-Level Adjusted EBITDA Margin | 23.6 % | 24.5 % | 22.2% | 23.3% | [Adjusted EBITDA Reconciliation](index=14&type=section&id=Adjusted%20EBITDA%20Reconciliation) Reconciles Net Income to Adjusted EBITDA for Q2 and YTD June 2025, detailing adjustments for non-cash and non-recurring items Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD Q2 2025 (thousands) | YTD Q2 2024 (thousands) | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Net income | $10,043 | $8,530 | $14,033 | $13,874 | | Depreciation and amortization | $7,137 | $7,106 | $14,177 | $14,050 | | Interest expense | $5,726 | $6,603 | $11,475 | $13,133 | | Income tax expense | $3,679 | $3,496 | $5,039 | $2,359 | | EBITDA | $26,506 | $25,660 | $44,574 | $43,262 | | Deferred rent | $1,541 | $1,296 | $2,917 | $2,466 | | Equity-based compensation | $2,658 | $2,890 | $4,608 | $5,717 | | Tax Receivable Agreement liability adjustment | $(1,838) | $(439) | $(2,485) | $(1,000) | | Adjusted EBITDA | $30,064 | $29,866 | $51,274 | $51,643 | [Restaurant-Level Adjusted EBITDA Reconciliation](index=14&type=section&id=Restaurant-Level%20Adjusted%20EBITDA%20Reconciliation) Reconciles Operating Income to Restaurant-Level Adjusted EBITDA for Q2 and YTD June 2025, detailing adjustments for corporate and non-operational expenses Reconciliation of Operating Income to Restaurant-Level Adjusted EBITDA (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD Q2 2025 (thousands) | YTD Q2 2024 (thousands) | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Operating income | $17,531 | $18,115 | $27,912 | $28,212 | | General and administrative expenses | $18,798 | $17,941 | $37,701 | $36,481 | | Pre-opening expenses | $1,697 | $2,100 | $2,205 | $3,523 | | Depreciation and amortization | $7,137 | $7,106 | $14,177 | $14,050 | | Restaurant-Level Adjusted EBITDA | $44,481 | $44,569 | $81,137 | $80,940 | [Additional Information](index=6&type=section&id=Additional%20Information) This section provides background on Portillo's, cautionary notes on forward-looking statements, investor contacts, and earnings call details [About Portillo's](index=6&type=section&id=About%20Portillo's) Portillo's is a unique Chicago-style restaurant brand with over **90** locations across **10** states, focusing on experience-driven dining - Portillo's is a one-of-a-kind brand that originated as a hot dog trailer in Chicago and has grown to over **90** restaurants across **10** states[23](index=23&type=chunk) - Known for its menu of Italian beef sandwiches, Chicago-style hot dogs, char-grilled burgers, fresh salads, and chocolate cake[23](index=23&type=chunk) - Operates a company-owned model of experience-focused destinations that blend dine-in, drive-thru, takeout, and delivery[23](index=23&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) A cautionary note on forward-looking statements, highlighting inherent uncertainties and risks that may cause actual results to differ materially - All statements other than statements of historical fact are forward-looking statements, discussing current expectations and projections relating to financial position, results of operations, plans, objectives, future performance, and business[24](index=24&type=chunk) - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, which may cause actual results to differ materially[25](index=25&type=chunk) - Readers should evaluate all forward-looking statements in the context of risks and uncertainties disclosed in the Company's most recent Annual Report on Form 10-K[26](index=26&type=chunk) [Investor and Media Contacts](index=7&type=section&id=Investor%20and%20Media%20Contacts) Provides contact information for investor relations and media inquiries for stakeholders seeking further information - Investor Contact: Chris Brandon, Vice President of Investor Relations, **312.931.5578**, cbrandon@portillos.com[27](index=27&type=chunk) - Media Contact: Sara Wirth, Director of Communications & PR, press@portillos.com[27](index=27&type=chunk) [Earnings Conference Call](index=6&type=section&id=Earnings%20Conference%20Call) Details for the Q2 earnings conference call, including date, time, dial-in information, and webcast replay access - The conference call to discuss Q2 financial results was held on Tuesday, August 5, 2025, at **10:00 AM ET**[21](index=21&type=chunk) - Live access was available by dialing **877-407-3982**, with a telephone replay available via **844-512-2921** (passcode **13748477**)[21](index=21&type=chunk)[22](index=22&type=chunk) - A webcast replay is available at investors.portillos.com[22](index=22&type=chunk)

Core Insights - Portillo's Inc. reported a revenue increase of 3.6% to $188.5 million for Q2 2025 compared to $181.9 million in Q2 2024, driven by new restaurant openings and same-restaurant sales growth [4][8][28] - Same-restaurant sales rose by 0.7%, attributed to a 2.1% increase in average check, despite a 1.4% decrease in transactions [4][8] - Net income increased by 17.7% to $10.0 million in Q2 2025, up from $8.5 million in Q2 2024, primarily due to a tax receivable agreement liability adjustment [8][9] Financial Performance - Total restaurant operating expenses rose by 4.9% to $144.0 million, influenced by the opening of nine new restaurants and a 1.9% increase in commodity prices [5][28] - General and administrative expenses increased by 4.8% to $18.8 million, mainly due to higher professional fees and advertising costs [6][28] - Operating income decreased by 3.2% to $17.5 million, reflecting changes in revenue and expenses [7][28] Development Highlights - No new restaurants were opened in Q2 2025, but one new location was opened in Tomball, Texas, after the quarter, bringing the total to 95 [11][12] - The company plans to open 12 new restaurants in the second half of 2025, focusing on the Sunbelt region and entering Atlanta [12][13] Fiscal Targets - Updated fiscal 2025 targets include revenue growth of 5% to 7%, down from a previous target of 10% to 12% [13] - Same-restaurant sales growth target remains at 1% to 3%, with adjusted EBITDA growth expected to be flat to low single digits [13][14] Long-Term Outlook - Long-term financial targets include annual unit growth of 12% to 15% and mid-teens revenue growth [14][15]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Portillo's Inc. driven by higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Portillo's Inc. is expected to report quarterly earnings of $0.12 per share, reflecting a +20% year-over-year change, with revenues projected at $195.3 million, a 7.4% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 5.56% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +10.64% for Portillo's Inc., suggesting analysts are optimistic about the company's earnings prospects [12]. Historical Performance - In the last reported quarter, Portillo's Inc. exceeded the expected earnings of $0.04 per share by delivering $0.05, resulting in a +25% surprise. The company has beaten consensus EPS estimates three out of the last four quarters [13][14]. Investment Considerations - While a positive earnings surprise is a strong indicator of potential stock price movement, other factors may also influence the stock's performance post-earnings release [15][17].

Core Insights - Portillo's Inc. is positioned to potentially continue its earnings-beat streak, having achieved an average surprise of 83.93% over the last two quarters [1][2] Earnings Performance - For the last reported quarter, Portillo's Inc. earned $0.05 per share, exceeding the Zacks Consensus Estimate of $0.04 per share, resulting in a surprise of 25.00% [2] - In the previous quarter, the company was expected to post earnings of $0.07 per share but delivered $0.17 per share, achieving a surprise of 142.86% [2] Earnings Estimates and Predictions - Recent estimates for Portillo's Inc. have been trending higher, with a positive Earnings ESP of +10.64%, indicating bullish sentiment among analysts regarding the company's earnings prospects [5][8] - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a strong likelihood of another earnings beat in the upcoming report [8] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7]

Core Insights - The stock market is experiencing a rally to all-time highs, prompting investors to focus on careful stock-picking strategies [1] Group 1: Market Trends - Investors are advised to rotate out of winning momentum trades as the market reaches new peaks [1] Group 2: Analyst Background - Gary Alexander has extensive experience in covering technology companies and has worked in Silicon Valley, providing insights into current industry themes [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications [1]

Core Points - Portillo's is celebrating National Hot Dog Day with a week-long event featuring $1 hot dogs and collaborations with local brands, including Lou Malnati's for a Chicago-style Hot Dog Deep Dish Pizza [1][2][7] - The event runs from July 14 to July 20, 2025, and includes special offers for Perks members, such as a $1 hot dog with a minimum purchase [3][11] - Portillo's has grown from a hot dog trailer to over 90 locations across 10 states, focusing on a unique dining experience that includes dine-in, drive-thru, takeout, and delivery [4] Promotions and Collaborations - Perks members can redeem a $1 hot dog or vegetarian Garden Dog during the promotional week [7][11] - A collaboration with Lou Malnati's will feature a limited-time Chicago Dog Deep Dish pizza available at 21 locations starting July 16 [6][7] - Portillo's has partnered with Local Style Chips to offer hot dog-flavored kettle chips in its restaurants [7] Marketing and Engagement - The company is engaging customers with interactive activations, including a giant inflatable hot dog in Dallas and a pop-up hot dog stand at Lou Malnati's [7] - Portillo's encourages fans to join its loyalty program, Perks, to access exclusive offers and rewards [5][11] - The brand emphasizes its Chicago roots and aims to celebrate its iconic hot dog as a key part of its identity [2][4]

Analyst's Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or a ...