Portillo's Inc. 10-Q Summary: Quarter Ended June 29, 2025
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 29, 2025, and the two quarters ended June 29, 2025, for Portillo's Inc. The company operates 94 restaurants (including one 50% owned joint venture) across 10 states, serving Chicago-style hot dogs, Italian beef, and burgers. As of the filing date, the company had opened one additional restaurant in Tomball, Texas, bringing the total count to 95. The company is a large accelerated filer.
Key Financial Metrics
| Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 |
|---|---|---|---|---|
| Net Revenue | $188.5 million | $181.9 million | $364.9 million | $347.7 million |
| Operating Income | $17.5 million | $18.1 million | $27.9 million | $28.2 million |
| Net Income (GAAP) | $10.0 million | $8.5 million | $14.0 million | $13.9 million |
| Net Income Attributable to Portillo's Inc. | $8.7 million | $6.5 million | $12.0 million | $11.0 million |
| Diluted EPS | $0.12 | $0.10 | $0.18 | $0.18 |
| Adjusted EBITDA | $30.1 million | $29.9 million | $51.3 million | $51.6 million |
| Restaurant-Level Adjusted EBITDA | $44.5 million | $44.6 million | $81.1 million | $80.9 million |
| Cash and Cash Equivalents | $16.6 million | $12.4 million (Q2 2024) | $16.6 million | $12.4 million (Q2 2024) |
| Total Debt (Net) | $317.0 million | $311.7 million | $317.0 million | $311.7 million |
| Revolver Availability | $74.7 million | $69.7 million (Dec 2024) | $74.7 million | $69.7 million (Dec 2024) |
Material Changes vs. Prior Period
- Revenue Growth: Q2 revenue increased 3.6% year-over-year, driven by nine new restaurant openings in late 2024 and a 0.7% increase in same-restaurant sales. YTD revenue grew 4.9%.
- Same-Store Sales: Same-restaurant sales increased 0.7% in Q2 and 1.2% YTD, reversing declines seen in the prior year. This was driven by a higher average check (up 2.1% in Q2) partially offset by a decrease in transactions (down 1.4% in Q2).
- Cost Pressures: Commodity inflation moderated to 1.9% in Q2 compared to 6.9% in the prior year. However, labor costs as a percentage of revenue increased slightly (0.2% in Q2) due to wage increases and benefit costs.
- Debt Refinancing: In January 2025, the company amended its credit agreement, reducing the effective interest rate from 8.31% (Q2 2024) to 6.90% (Q2 2025), resulting in lower interest expense.
- Equity Structure: In Q2 2025, pre-IPO members affiliated with Berkshire Partners LLC redeemed 7.3 million LLC units for Class A common stock, increasing Portillo's Inc.'s ownership in the operating company to 95.4% and reducing non-controlling interest.
Guidance, Outlook, and Risks
- Expansion Plans: The company plans to open 12 new restaurants in the second half of 2025, focusing on the Sunbelt region (Texas) and entering the Atlanta market. They also plan to debut a new in-line, walk-up restaurant format.
- Loyalty Program: The "Portillo's Perks" loyalty program launched in March 2025. Management is actively monitoring engagement to refine promotional strategies.
- Tax Legislation: The "One Big Beautiful Bill Act" was signed into law on July 4, 2025. While the company is assessing the impact, they do not expect a significant financial statement impact.
- Risks: Key risks include food safety concerns, unionization activities, labor market competition, inflation in food and operating costs, and reliance on IT systems (including a new ERP and HCM system implemented in Q2).
- Tax Receivable Agreement (TRA): The company has a TRA liability of approximately $352.9 million. Future payments are contingent on generating sufficient taxable income to utilize tax benefits.
Investor Verification Checklist
- Same-Store Sales Drivers: Verify the sustainability of the average check increase versus the decline in transaction volume.
- Capital Expenditures: Review the $33.1 million in cash used for investing activities (YTD) against the plan to open 12 new restaurants in H2 2025.
- TRA Liability Impact: Assess the cash flow implications of the $352.9 million TRA liability and the $9.2 million payment expected within the next 12 months.
- Debt Covenants: Confirm continued compliance with the 2025 Credit Agreement covenants, particularly given the leverage ratios.
- Non-Controlling Interest: Monitor the reduction of non-controlling interest as LLC unit redemptions continue, which affects net income attribution.