Portillo's Inc. 10-Q Summary: Quarter Ended June 28, 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 28, 2026, and the two quarters ended June 28, 2026, for Portillo's Inc. The company operates 109 restaurants across 11 states, serving Chicago-style hot dogs, Italian beef, and burgers. As of the reporting date, the company had 72.5 million shares of Class A common stock and 3.4 million shares of Class B common stock outstanding. The company is a large accelerated filer.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Revenue | $198.95 million | $188.46 million | $381.58 million | $364.89 million |
| Operating Income | $13.78 million | $17.53 million | $18.27 million | $27.91 million |
| Net Income (GAAP) | $7.16 million | $10.04 million | $6.65 million | $14.03 million |
| Net Income Attributable to Portillo's Inc. | $6.94 million | $8.70 million | $6.54 million | $12.02 million |
| Diluted EPS | $0.09 | $0.12 | $0.09 | $0.18 |
| Adjusted EBITDA | $29.82 million | $30.06 million | $48.27 million | $51.27 million |
| Restaurant-Level Adjusted EBITDA | $43.25 million | $44.48 million | $78.09 million | $81.14 million |
| Cash from Operations (YTD) | $35.13 million | $28.69 million | N/A | N/A |
| Total Debt (Net) | $338.44 million | N/A | N/A | N/A |
| Cash & Equivalents | $21.25 million | N/A | N/A | N/A |
Liquidity: As of June 28, 2026, the company held $21.25 million in cash and cash equivalents. Under the 2025 Credit Agreement, the company had $48.8 million available under its $150 million Revolver Facility after accounting for $97.0 million in borrowings and $4.2 million in letters of credit.
Material Changes vs. Prior Period
- Revenue Growth: Net revenue increased 5.6% year-over-year in Q2 2026, driven by the opening of eight restaurants in fiscal 2025 and seven in the first half of 2026. However, same-restaurant sales declined 1.2% due to a 3.4% drop in transactions, partially offset by a 2.2% increase in average check.
- Profitability Decline: Operating income decreased 21.4% to $13.78 million, and Net Income attributable to Portillo's Inc. decreased 20.2% to $6.94 million. This was primarily due to higher operating costs and a $1.7 million legal contingency charge.
- Cost Pressures: Food, beverage, and packaging costs rose 9.1% year-over-year, driven by a 7.0% increase in commodity inflation. Labor costs remained flat as a percentage of revenue in Q2 but increased 0.2% year-over-year for the two-quarter period due to wage rate increases and revenue deleverage from new units.
- Legal Contingency: "Other loss (income), net" swung from a $0.3 million gain in Q2 2025 to a $1.1 million loss in Q2 2026, largely due to a $1.7 million reserve recorded for an arbitration with Maverick BJK, LLC regarding a "Ghost Kitchen" location.
Guidance, Outlook, and Risks
- Management Commentary: Management noted a decline in same-restaurant sales and increased commodity inflation. The company is executing a "spend optimization initiative" and assessing its brand strategy. A reduction in force affecting approximately 18% of the corporate headquarters workforce was implemented on July 31, 2026, with estimated restructuring charges of $1.1 million expected in Q3 2026.
- Leadership Changes: Kevin Kalicak was announced as the new Chief Financial Officer, effective September 7, 2026, succeeding Interim CFO Pamela Smith.
- Development: The company opened three restaurants in Q2 2026, including its first airport location at DFW. Plans include opening an in-line restaurant in downtown Chicago later in 2026 and a Wrigleyville location in 2027.
- Risks: Key risks include food safety concerns, unionization activities, labor market competition, inflationary pressures on food and labor costs, and the impact of the ongoing legal arbitration with Maverick BJK, LLC.
- Tax Receivable Agreement (TRA): The company has a TRA liability of approximately $343.4 million, representing 85% of future tax benefits realized. Payments of $7.9 million were made in the first half of 2026.
Investor Verification Checklist
- Same-Store Sales Trend: Verify the sustainability of the 1.2% same-restaurant sales decline and the impact of the 3.4% transaction drop on future revenue growth.
- Legal Contingency Outcome: Monitor the resolution of the Maverick BJK, LLC arbitration and the potential for additional charges beyond the $1.7 million reserve.
- Restructuring Impact: Assess the effectiveness of the $1.1 million restructuring plan and the reduction in force in improving operating margins in subsequent quarters.
- Commodity Inflation: Track the trajectory of food and labor costs, which rose significantly (7.0% commodity inflation in Q2), and the company's ability to pass these costs to consumers via menu price increases.
- Debt Covenants: Confirm continued compliance with the 2025 Credit Agreement covenants, particularly given the decline in operating income and Adjusted EBITDA.