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What changed in Portillo's Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Portillo's Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+362 added−413 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in Portillo's Inc.'s 2025 10-K

362 paragraphs added · 413 removed · 293 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIt always sounds good.” The ad campaign consisted of commercials, billboards, and partnerships with several digital media outlets, such as Barstool Sports, to reach our guests across the Chicagoland area. • Digitally Engage Guests: Our guests increasingly interact with Portillo’s in the digital space, whether engaging with us on social media, learning about us through digital advertising, or placing an order on our app or in one of our new self-order kiosks.
Biggest changeOur guests increasingly interact with Portillo's in the digital space, whether engaging with us on social media, our new Perks loyalty platform, learning about us through digital advertising, or placing an order on our app or in one of our self-order kiosks. Kiosks have been a success, adding incrementality to the check and providing a great guest experience.
Class A common stock trades on the Nasdaq under the symbol "PTLO." Unless the context otherwise requires, references to "we," "us," "our," "Portillo's," the "Company" and other similar references refer to Portillo's Inc. and its subsidiaries, including Portillo’s OpCo.
Portillo’s Inc. Class A common stock trades on the Nasdaq under the symbol "PTLO." Unless the context otherwise requires, references to "we," "us," "our," "Portillo's," the "Company" and other similar references refer to Portillo's Inc. and its subsidiaries, including Portillo’s OpCo.
Quality and food safety are paramount to protecting our brand and are treated with the utmost priority. Our supplier and distribution partners participate in third-party audits to ensure all applicable quality system expectations are being met.
Quality and food safety are paramount to protecting our brand and are treated with the utmost priority. Our supplier and distribution partners participate in third-party audits to ensure all applicable food safety and quality system expectations are being met.
We take steps to enforce and maintain our intellectual property, but infringement, validity challenges and other risks may adversely affect or even eliminate our intellectual property rights.
We take steps to enforce and maintain our intellectual property rights, but infringement, validity challenges and other risks may adversely affect or even eliminate our intellectual property rights.
We create a consumer experience like no other by combining the best attributes of fast-casual and quick-service concepts with an exciting energy-filled atmosphere in a restaurant model capable of generating tremendous volumes.
We create a consumer experience like no other by combining the best attributes of fast-casual and quick-service ("QSR") concepts with an exciting energy-filled atmosphere in a restaurant model capable of generating tremendous volumes.
Governmental Regulation and Environmental Matters We are subject to extensive federal, state and local government regulation, including those relating to, among others, public health and safety, nutritional content labeling, zoning and fire codes, environmental protection, and employment regulations. Failure to obtain or retain food or other licenses and registrations or exemptions would adversely affect the operations of restaurants.
Governmental Regulation and Environmental Matters We are subject to federal, state and local government regulation, including those relating to, among others, public health and safety, nutritional content labeling, zoning and fire codes, environmental protection, and employment regulations. Failure to obtain or retain food or other licenses and registrations or exemptions would adversely affect the operations of our restaurants.
Our Competition The restaurant industry is highly competitive and fragmented. We compete primarily with quick service and fast casual concepts, and to a lesser extent, full-service restaurants. The number, size and strength of competitors vary by region.
Our Competition The restaurant industry is highly competitive and fragmented. We compete primarily with QSR and fast-casual concepts, and to a lesser extent, full-service restaurants. The number, size and strength of competitors vary by region.
This commitment is evidenced by our investment in our compensation packages and robust suite of benefit offerings. In 2024, we completed a comprehensive benchmark analysis for our positions and made pay adjustments to preserve our competitive edge.
This commitment is evidenced by our investment in our compensation packages and robust suite of benefit offerings. In 2025, we completed a comprehensive benchmark analysis for our positions and made pay adjustments to preserve our competitive edge.
The physical, financial, and mental well-being of our team members remains a top priority, and we continue to invest in their success. We believe in a total rewards philosophy of providing top quartile pay in our restaurants, especially across our leadership positions. We remain focused on compensating our team members fairly and equitably based on their roles and responsibilities.
The physical, financial, and mental well-being of our team members remains a top priority, and we continue to invest in their success. We believe in a total rewards philosophy of providing above market pay in our restaurants, especially across our leadership positions. We remain focused on compensating our team members fairly and equitably based on their roles and responsibilities.
We also have 88 hourly team members, which also includes crew chiefs, and 12 salaried team members, which includes managers and senior managers, at our commissaries. Our team members are not covered by any collective bargaining agreements.
We also have 87 hourly team members, which also includes crew chiefs, and 12 salaried team members, which includes managers and senior managers, at our commissaries. Our team members are not covered by any collective bargaining agreements.
In addition, expanding product offerings at fast casual and quick-service restaurants and the convenience of home delivery services, together with negative economic conditions, could cause consumers to choose less expensive alternatives or reduce the frequency of their restaurant visits. We expect intense competition to continue in all of these areas.
In addition, expanding product offerings at fast-casual and QSR and the convenience of home delivery services, together with negative economic conditions, could cause consumers to choose less expensive alternatives or reduce the frequency of their restaurant visits. We expect intense competition to continue in all of these areas.
In 2024, the fund awarded over 60 grants and has provided support to team members for expenses following illness or injury, the unexpected death of a family member, negative impact from a natural disaster, and other financial hardships.
In 2025, the fund awarded over 50 grants and has provided support to team members for expenses following illness or injury, the unexpected death of a family member, negative impact from a natural disaster, and other financial hardships.
Our guests can see into our open kitchens, where their meals are prepared right before their eyes. The smells of burgers broiling, french fries frying, and beef simmering emanate from the kitchen. Each completed meal is announced with a fun rhyme (“Number two, we got you”; “Number seven, welcome to Portillo’s heaven”).
Our guests can see into our open kitchens, where their meals are prepared right before their eyes. The smells of burgers broiling, french fries frying, and beef simmering in gravy emanate from the kitchen. Each completed meal is announced with a fun rhyme (“Number two, we got you!”; “Number seven, welcome to Portillo’s heaven!”).
Our main line distribution network is comprised of several independently-operated partners aligned under the UniPro umbrella, the largest food service distribution cooperative in the United States. This strategy affords us the opportunity to align with right-sized organizations that are dedicated to us which allows us to leverage volume and scale for a competitive advantage and exceptional customer service. Commissaries.
Our main line distribution network is comprised of several independently-operated partners aligned under the UniPro umbrella, the largest food service distribution cooperative in the United States. This strategy affords us the opportunity to align with right-sized organizations across the United States to leverage volume for a competitive advantage and exceptional customer service. Commissaries.
In 2024, the “Heart of Portillo’s Fund,” an IRC section 501(c)(3) charitable fund, raised over $200,000 to provide emergency assistance to team members.
In 2025, the “Heart of Portillo’s Fund,” an IRC section 501(c)(3) charitable fund, raised over $180,000 to provide emergency assistance to team members.
But the most important element of the energy is the enthusiasm of the scores of guests who are all excited to be there and enjoying their Portillo’s. We want every guest that visits to leave with good memories, a satiated appetite and a desire to return.
But the most important element of the energy is the enthusiasm of the scores of guests who are all excited to be there and enjoying their Portillo’s experience. We want every guest that visits to leave with good memories, a satiated appetite and a desire to return. Our Strategy Maintaining the Fabric of our Beloved Brand.
Each of our restaurants has its own themed décor, ranging from a 1930s prohibition motif to a 1950s diner to a 1960s flower-power bus, as well as a retro automotive garage theme. The period music ties to the theme, from ragtime to doo wop to disco.
Our dining areas evoke nostalgia and local influences. Each of our restaurants has its own themed décor, ranging from a 1930s prohibition motif to a 1950s diner to a 1960s flower-power bus, as well as a retro automotive garage theme. The music ties to the theme, from ragtime to doo wop to disco.
We have implemented and are executing several initiatives to support our objectives to attract, develop and retain team members, including at the executive level. Values-Driven, People-Centric Culture . We believe this reflects our conviction that our people are the Heart of Portillo’s.
We have implemented and are executing several initiatives to support our objectives to attract, develop and retain team members, including at the executive level. Values-Driven, People-Centric Culture . P eople are the Heart of Portillo’s.
In 2024 we opened two restaurants with our “Restaurant of the Future” prototype, a 6,250 square foot restaurant with a 47-foot production line that is more efficient to build and also better reflects the way consumers interact with our brand today.
In 2024, we opened two restaurants with our Restaurant of the Future ("RoTF 1.0") design, a 6,250 square foot restaurant with a 47-foot production line that is more efficient to build and also better reflects the way consumers interact with our brand today.
Our philosophy is to develop people to be ready before a position is open, as opposed to waiting for a position to be open and then training them. We view this investment as fundamental to our growth, building a pipeline of leaders for our future. We are committed to continuing education and providing ways for individuals to build their talents.
Our philosophy is to develop people to be ready before a position is open, as opposed to waiting for a position to be open and then training them. We view this investment as fundamental to our growth, building a pipeline of leaders for our future.
ITEM 1. BUSINESS Portillo’s Inc. (the “Company") was incorporated as a Delaware corporation on June 8, 2021, in connection with our initial public offering in October 2021 ("IPO") and related reorganization transactions (collectively, the "Transactions”) in order to carry on the business of PHD Group Holdings LLC and its subsidiaries (“Portillo’s OpCo”).
ITEM 1. BUSINESS Portillo’s Inc. (the “Company") was incorporated as a Delaware corporation on June 8, 2021, for the purpose of facilitating an initial public offering ("IPO") and other related transactions in order to carry on the business of PHD Group Holdings LLC and its subsidiaries (“Portillo’s OpCo”).
As a result, the Company consolidates the financial results of Portillo's OpCo and reports a non-controlling interest representing the economic interest in Portillo's OpCo held by the other members of Portillo's OpCo (the "pre-IPO LLC Members"). Portillo’s Inc.
The Company became the sole managing member of Portillo’s OpCo and operates and controls all of the business and affairs of Portillo's OpCo. As a result, the Company consolidates the financial results of Portillo's OpCo and reports a non-controlling interest representing the economic interest in Portillo's OpCo held by the other members of Portillo's OpCo (the "pre-IPO LLC Members").
We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal, state and local laws governing such matters as minimum wages, exempt versus non-exempt classification, overtime, unemployment tax rates, paid leave, workers’ compensation rates, citizenship requirements and other working conditions.
For a more in-depth discussion of such risks, see Part I, Item 1A, "Risk Factors." We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal, state and local laws governing such matters as minimum wages, exempt versus non-exempt classification status, overtime pay, unemployment tax rates, paid leave, workers’ compensation rates, residency and work authorization requirements and other working conditions.
Available Information Our website is located at www.portillos.com, and our investor relations website is located at http://investors.portillos.com. We are subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and file or furnish reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC").
We are subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and file or furnish reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC").
Our Team – Human Capital Management Our team member base, as of December 29, 2024, consisted of 8,512 team members. This included 216 Restaurant Support Center (“RSC”) team members, 482 restaurant managers, AGMs, and GMs, and 7,714 restaurant hourly team members in positions such as crew chief, training lead, food production and guest services.
Our Team – Human Capital Management Our team member base, as of December 28, 2025, consisted of 7,890 team members. This included 195 Restaurant Support Center (“RSC”) team members, 478 Restaurant Managers, Assistant General Managers, and General Managers, and 7,118 restaurant hourly team members in positions such as crew chief, training lead, food production and guest services.
We capture the hearts, minds and stomachs of our guests with every meal. Our menu features something for everyone and appeals to a broad demographic, which enables our restaurants to thrive and generate strong and balanced volumes across multiple dayparts, weekdays and occasions.
Our menu features something for everyone and appeals to a broad demographic, which enables our restaurants to thrive and generate strong and balanced volumes across multiple dayparts, weekdays and occasions. Energetic Restaurant Atmosphere that Engages the Senses.
Our leadership program, Ignite, continues to be a stronghold in our growth and development strategy. The creation of a strong talent pipeline while retaining our high performing team members continues to be our mission. Talent management continues to be a top priority with our yearly performance review process focused on Portillo’s seven leadership traits to be successful in the organization.
Our leadership program, Ignite, continues to be a stronghold in our growth and development strategy, allowing us to create a strong talent pipeline while retaining our high-performing team members. Talent management prioritizes Portillo's seven leadership traits, which are needed to be successful in the organization.
Our teams are focused on continuously improving and innovating the drive-thru experience to improve throughput and order accuracy. All new restaurants are opened with drive-thru doors to aid our runners and improve the guest experience.
Portillo’s pioneered our drive-thru model beginning in the 1980s, combining speed and hospitality via outside order takers, food runners, and multi-lane drive-thrus. Our teams are focused on continuously improving and innovating the drive-thru experience to improve throughput and order accuracy. New restaurants are opened with drive-thru doors to aid our runners and improve the guest experience.
Our greatness is rooted in Quality, Service, Attitude and Cleanliness (“QSAC”). Energy We move with urgency and passion, while maintaining attention to detail. Fun We entertain our guests, we connect authentically, and we make each other smile. We believe these values extend beyond our restaurants, to every Portillo's team member.
Our greatness is rooted in Quality, Service, Attitude and Cleanliness (“QSAC”). Energy We move with urgency and passion, while maintaining attention to detail. Fun We entertain our guests, we connect authentically, and we make each other smile. Leadership Development. We provide a full spectrum of resources, from skill building to leadership development, in the organization.
In our sales channels of digital pickup, delivery, and catering we have made great strides operationally that will allow us to win additional market share. • Greatness in Drive-Thru : Portillo’s pioneered a winning drive-thru model beginning in the 1980s, combining speed and hospitality via outside order takers, food runners, and multi-lane drive-thrus.
In our drive-thru, we strive to maintain top performance in the industry across speed, service, and accuracy. In our sales channels of digital pickup, delivery, and catering we have made great strides operationally that will allow us to win additional market share.
Our quarterly results have been and will continue to be affected by the timing of new restaurant openings and their associated pre-opening expenses. As a result of these factors, our financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year.
As a result of these factors, our financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year. Available Information Our website is located at www.portillos.com, and our investor relations website is located at http://investors.portillos.com.
Our teams consistently monitor price points across many categories and occasions that are relevant to our guests. To succeed moving forward, we will continue our pricing strategy combined with a focus on operational excellence and aim to remain an unrivaled value compared to fast casual competitors. Innovate and Amplify the Portillo's Experience.
To succeed moving forward, we will continue our pricing strategy combined with a focus on operational excellence and aim to remain an unrivaled value compared to fast-casual competitors. Leveraging Our Brand Strength . We believe one of the most effective ways to market Portillo's is by having people experience our food firsthand.
We have also started a camera vision test in select restaurants to provide operators with real-time actionable insights. • Unrivaled Value in Fast Casual: Experience, service, and food quality define value in our brand, but maintaining a strong price point remains a high priority given how broadly we compete in the restaurant industry.
Experience, service, and food quality define value in our brand, but maintaining a strong price point remains a high priority given how broadly we compete in the restaurant industry. We consistently monitor price points across many categories and occasions that are relevant to our guests.
Our people-centric culture is centered on working together to create a fun, energetic atmosphere while living our values: Family We work together to make everyone feel at home, and we step up when someone needs help. Greatness We are obsessed with being the best and work hard to continuously improve.
They represent a people-centric approach that impacts how we work, how we lead, and how we support one another every day. They are: Family We work together to make everyone feel at home, and we step up when someone needs help. Greatness We are obsessed with achieving greatness and work hard to continuously improve.
For a more in-depth discussion of such risks, see Part I, Item 1A, "Risk Factors." As of December 29, 2024, we owned and operated 94 restaurants across 10 states, including a restaurant owned by C&O Chicago, L.L.C. ("C&O") of which we own 50% of the equity .
As of the fiscal year ended December 28, 2025 ("fiscal 2025"), we owned and operated 102 restaurants across 11 states, including a restaurant owned by C&O Chicago, L.L.C. ("C&O") of which we own 50% of the equity .
The core tactics we use in this strategy are: • Flexing our Multichannel Muscle : Portillo’s aims to offer industry-leading experiences across our traditional sales channels, while continuing to grow and innovate in growth sales channels.
Portillo’s aims to offer industry-leading experiences across our traditional sales channels, while continuing to grow and innovate in growth sales channels. Dine-in provides the best Portillo’s experience, so we strive for our dine-in experience to represent the heart of Portillo’s and our values of Family, Greatness, Energy, and Fun.
In 2024, we hosted our annual General Manager Summit, bringing together our restaurant leaders from across the country to align on company priorities, share best practices, and celebrate achievements. This event underscores our commitment to leadership development, operational excellence, and fostering a culture of collaboration.
We also celebrated leadership and collaboration through our General Manager Summit and RSC Summit, bringing together leaders from across the country to align priorities, share best practices, and strengthen cross-functional partnerships. These events underscore our commitment to leadership development, operational excellence, and innovation. Total Rewards.
We also enhanced our benefits package by transitioning our 401(k) plan to a new vendor that offers our team members a more streamlined experience and additional financial education resources and opportunities. During 2024, we enhanced existing benefits and offered new ones. We upgraded all medical, dental, and vision plans with the introduction of four coverage tiers, to offer greater flexibility.
We also enhanced our benefits package by providing 100% coverage for mental health office visits on our medical plans and transitioned our non-qualified retirement savings plan to a new vendor that offers our team members a more streamlined experience and additional financial education resources and opportunities. Heart of Portillo's Fund.
When guests walk into a Portillo’s, they get an experience completely different than a typical chain restaurant visit. Our restaurants engage all the senses to create a fun, relaxed and memorable occasion. Our dining areas evoke nostalgia and local influences. No two Portillo’s are alike.
While our operating model is focused on getting delicious, made-to-order food to our guests quickly, we believe our atmosphere makes the experience more than a delicious meal. When guests walk into a Portillo’s, they are immersed in an experience unlike any chain restaurant visit. Our restaurants engage all the senses to create a fun, relaxed and memorable occasion.
We host webinars, workshops, and conferences each year on a variety of topics that are accessible to all team members. Further, we continue to hold bi-annual talent and succession planning summits to identify and support individuals with career pathing and development opportunities.
Further, we continue to hold bi-annual talent and succession planning summits to identify and support individuals with career pathing and development opportunities. We encourage team members to connect with one another in an informal mentoring program to build relationships and solidify their sense of belonging. Engagement & Experience .
Additionally, any difficulties, delays or failures in obtaining licenses, permits, registrations, exemptions, or approvals could delay or prevent the opening of, or adversely impact the viability of, a restaurant in a particular area. Seasonality Our business is subject to seasonal fluctuations in that our revenues are typically nominally higher during the second, third and fourth quarters of the fiscal year.
Seasonality Our business is subject to seasonal fluctuations in that our revenues are typically nominally higher during the second, third and fourth quarters of the fiscal year. Our quarterly results have been and will continue to be affected by the timing of new restaurant openings and their associated pre-opening expenses.
In the past, some of our restaurants were over 10,000 square feet and had 105-foot production lines. Restaurants built in 2023 were approximately 7,700 square feet with a 65-foot production line all while capable of generating an equivalent AUV.
We are continuously refining our restaurant prototypes, including the introduction of a limited number of smaller-footprint restaurants in non-traditional locations such as an airport location and an in-line restaurant, while investing in existing restaurants to drive great guest experiences and great returns. In the past, some of our restaurants were over 10,000 square feet and had 105-foot production lines.
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Following the consummation of the Transactions on October 20, 2021, the Company became the sole managing member of Portillo’s OpCo and now operates and controls all of the business and affairs of Portillo's OpCo.
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As of December 28, 2025 , the Company owned 95.4% of Portillo's OpCo and the pre-IPO LLC Members owned the remaining 4.6% of Portillo's OpCo. The Company entered into a joint venture agreement to develop and operate a restaurant at the Dallas-Fort Worth International Airport ("DFW") which is expected to commence operations in 2026.
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As of December 29, 2024 , the Company owned 85.6% of Portillo's OpCo and the pre-IPO LLC Members owned the remaining 14.4% of Portillo's OpCo. Our Story We relish the opportunity to create lifelong memories by igniting the senses with unrivaled food and experiences. An Iconic and Beloved Brand with Obsessed, Lifelong Fans .
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The Company holds a 65% ownership interest in AP Dogs, LLC ("AP Dogs") and has day-to- day operational and managerial control over its business and affairs. Accordingly, the Company consolidates the joint venture and reports a noncontrolling interest representing the economic interest in AP Dogs held by the other partner.
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Guests cake shake their way in for our Chicago-style hot dogs, Italian beef sandwiches, char-broiled burgers, cheese fries, fresh salads and famous chocolate cake. Energetic Restaurant Atmosphere that Engages the Senses. While our operating model is focused on getting delicious, made-to-order food to our guests quickly, we believe our atmosphere makes the experience more than a delicious meal.
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For a more in-depth discussion of such risks, see Part I, Item 1A, "Risk Factors." Our Story An Iconic and Beloved Brand with Obsessed, Lifelong Fans . We capture the hearts, minds and stomachs of our guests with every meal served.
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Our Strategy Our strategic plan is comprised of four pillars, which guide our short-term objectives and form the basis for growth: • Run World-Class Operations • Innovate and Amplify the Portillo’s Experience • Build Restaurants with Industry-Leading Returns • Take Great Care of Our Teams We believe that by focusing on the components of each of these simple, but focused, strategies we feed a virtuous cycle in which we take care of our team members, our team members take care of our guests, and our guests reward our shareholders.
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Our average unit volume ("AUV") is bolstered by a broad menu that offers something truly craveable for everyone. We constantly tap industry and primary consumer research to inform our menu, operations, and guest experience, while also monitoring the competition to keep our offerings relevant and differentiated.
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Run World-Class Operations. We believe that delivering a consistently exceptional guest experience, including having guests try our delicious food is one of the most effective forms of marketing. By running world class operations, we will fuel Portillo’s same-restaurant sales growth.
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In March 2025, we launched Portillo's Perks™ ("Perks"), our first-ever loyalty program delivered through guests' digital wallets. The program provides personalized, frequency-based rewards designed to drive repeat visits and brand engagement. By the end of 2025, Perks amassed more than two million members.
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Dine-in provides the best Portillo’s experience, so we strive for our dine-in experience to represent the heart of Portillo’s and our company values of Family, Greatness, Energy, and Fun. In our drive-thru, we strive to maintain top performance in the industry across speed, service, and accuracy. In new markets, we show new guests the value and efficiency of our drive-thrus.
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Throughout 2025, we supported select promotional initiatives tied to core menu items, including limited-time value offers for loyalty members. These initiatives included brand-related product launches and collaborations designed to drive guest engagement. We employ localized field marketing efforts, supported by digital, social, and selective traditional advertising, to build awareness, drive traffic, and support new and existing markets.
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We believe one of the most effective ways to market Portillo’s is by having people experience our food firsthand. Our efforts in field marketing, social media, digital engagement, advertising, and menu innovation support the following aspirations: • Craveable & Fresh For Everyone : Our industry-leading AUVs are bolstered by a broad menu that offers something truly craveable for everyone.
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These efforts are tailored at the local level through coordination between field marketing teams and restaurant management. In fiscal 2025, marketing activities included targeted advertising in our Chicagoland core market, and in Arizona and Texas, limited-time product offerings, and community-based initiatives. Pre-opening marketing activities were also conducted to support our entry into the Georgia market, and drive initial consumer awareness.
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We constantly research our menu, our guests, and our competition to keep the menu fresh and relevant while also balanced to ensure operational efficiency.
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Driving Growth via Strong Unit Economics and Measured Capital Deployment. In fiscal 2025, we opened eight new restaurants. We continue to pursue our substantial runway for growth by fine tuning our development approach, led by an emphasis on four-wall returns and a more gradual approach to new market entry to build the needed awareness, trial and demand for future restaurants.
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For example: ◦ In 2024 we launched two new salads, our Chicken Pecan Salad with Bacon to appeal to health-driven foodies and our Spicy Chicken Chopped Salad, a new twist on a Portillo’s classic to increase visits from longtime fans. Both items added excitement and variety to the menu while enhancing average ticket.
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In 2025, with the exception of one in-line restaurant and one Portillo's pickup restaurant, all new restaurant openings were our RoTF 1.0 design. Our teams will continue to evaluate our restaurant formats to further reduce our build costs, provide flexibility as we grow, and achieve attractive returns.
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To celebrate the launch, we unveiled a limited-time brown paper bag with green stripes. Similar to its predecessor, the new bag is 100% recyclable, bleach-free, and is made from fibers certified by the Sustainable Forestry Initiative.
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Guided by our purpose of creating lifelong memories and our Employee Value Proposition ("EVP") — Feeding Passions, Making Memories — we aim to attract, hire, develop and retain great people who turn their obsession for our brand into a profession. This work is shaped by our values.
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We believe this purposeful menu innovation drives increased guest frequency and reinforces the everyday value proposition that is key to our success. ◦ We enhance our menu with seasonal shakes and specialty cakes, offering something special throughout the year. In Fall 2024, we launched our first new cake flavor in 20 years: the Salted Caramel Spice Cake.
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Across the team member lifecycle—from attraction and recruiting to onboarding, development, and retention—we prioritize empowerment, inclusion, and recognition to ensure every individual has a voice and the tools to succeed.
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To celebrate, September 2024 became "Spice-Tember", in which we sold our new cake for $1 a slice with the purchase of an entree.
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Our blended in-house recruiting team and decentralized ownership hiring at the restaurants and plants build a strong talent pipeline, while onboarding equips new hires to thrive and development opportunities enable team members to deepen skills and advance their careers. In 2025, we continued to strengthen engagement through innovative platforms and strategic partnerships.
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In October 2024, we also partnered with former Chicago Bear, Anthony "Spice" Adams, to create energetic and entertaining content, spotlighting the Salted Caramel Spice Cake in a fun and engaging way. • Local & Experiential : Whether it’s an influencer night for a launch of new menu items, hosting a community fundraiser, partnering with local and national sport teams, or a visit from our mobile food truck, lovingly dubbed “The Beef Bus,” we aim to create lifelong memories via grassroots field-marketing efforts.
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Portillo’s Connect, launched in 2024, has become a cornerstone for team recognition, collaboration, and idea sharing. We measure engagement through our partnership with Gallup and our annual EverEngaged survey, where we achieved a record 91% participation rate this year. Over time, Portillo’s has maintained steady engagement levels, with Market Managers and General Managers continuing to rank among the highest tiers.
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In each of our markets we employ field marketing managers who partner with local restaurant General Managers to personalize a marketing plan and introduce Portillo’s to the local area. We believe this approach creates a personal and emotional connection with the communities in which we operate and creates incremental returns on our marketing investments.
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Survey insights confirm that team members feel clear on expectations, have the resources to perform effectively, and understand how our values guide their work. Flexibility is another cornerstone of our experience strategy.
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We use a full suite of communication channels, such as email, X (formerly known as "Twitter"), Instagram, TikTok, Facebook, and other platforms to spread our message to different customer segments. When a compelling opportunity arises, Portillo’s also utilizes traditional advertising in Chicagoland to drive frequency and outside Chicagoland to drive trial and awareness.
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Our scheduling system enables hourly team members to align work with personal commitments, while RSC team members benefit from a hybrid work model and initiatives like “No-Meeting Fridays” for professional development or personal time. During summer months, we extend this flexibility with early weekend starts.
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Below are a few advertising and marketing highlights of the fiscal year ended December 29, 2024 ("fiscal 2024") : ◦ We launched an ad campaign in Arizona in the first quarter of 2024 to drive trial and awareness. ◦ In April, we re-launched our Famous Five combo meal menu that features a classic entree, side, and drink. ◦ We re-launched our advertising in the Chicagoland market.
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In 2025, we elevated our experience through the implementation of Workday ("MyPortillo’s"), a human capital management connected platform for talent, total rewards, learning and development. This system empowers team members to manage growth, performance, and benefits with ease.
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Our comprehensive advertising campaign coincided with the start of the NFL season. We continued the theme of "Portillo’s.
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Kiosks have been a resounding success, adding incrementality to the check and providing a stellar guest experience. In 2025 we are launching our "Portillo's Perks” TM loyalty program to drive and reward repeat visits and make the Portillo’s experience even more engaging for our longtime fans. Build Restaurants with Industry-Leading Returns.
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En route to our current goal of over 900 US restaurants (see “Our Growth” below for more details) we continue to innovate our business model in ways that meet a rapidly changing economic and consumer environment while delivering outstanding returns to investors. • Best-In-Class AUVs : The average Portillo’s generates per-restaurant sales that sit far atop the fast-casual and limited-service restaurant segments.
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A key element of our strong restaurant-level adjusted EBITDA margin, we aim to keep our average unit volumes ("AUVs") high via discerning market and site selection. • Optimize Capital Investments : We are continuously refining our restaurant prototypes while investing in existing restaurants to drive great guest experiences and great returns.
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Our teams will continue to make strides in this space to further reduce our build costs and achieve attractive returns. • Scale Quickly: Having scale in markets creates brand awareness, drives sales, and expands profit margins. We aim to have minimum efficient scale (6-8 restaurants) in new markets within 24 months of our first opening.
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Our entry into the Dallas-Fort Worth, Texas market is a great example of this strategy, where our first restaurant opened in January of 2023 and our 7th restaurant opened in December 2024. • Replicable Processes : Scaling quickly requires standardizing leases and deal structures, leveraging select general contractors and vendors, and standardizing the base of our prototypes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Tax Receivable Agreement provides that upon a “Change of Control” (which is defined to include, among other things, a 50% change in control of Portillo’s Inc., the approval of a complete plan of liquidation or dissolution of Portillo’s Inc., the disposition of all or substantially all of Portillo’s Inc.’s direct or indirect assets or a change of a majority of the Board of Directors without approval of at least two-thirds majority of the then-existing Board members), upon a breach of any of our material obligations under the Tax Receivable Agreement or if, at any time, we elect an early termination of the Tax Receivable Agreement, then our payment obligations under the Tax Receivable Agreement will accelerate.
Biggest changeThese payments may be accelerated in certain circumstances, such as a “Change of Control” (which is defined to include, among other things, a 50% change in control of Portillo’s Inc., the approval of a complete plan of liquidation or dissolution of Portillo’s Inc., the disposition of all or substantially all of Portillo’s Inc.’s direct or indirect assets or a change of a majority of the Board of Directors without approval of at least two-thirds majority of the then-existing Board members), and could exceed actual tax benefits realized.
If our vendors fail to comply with food safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted and we may not be able to engage replacement suppliers on commercially reasonable terms or a timely basis, if at all.
If our vendors fail to comply with food safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted and we may not be able to engage replacement suppliers on commercially reasonable terms or on a timely basis, if at all.
We invest significant time and money in the qualification and training of our personnel, so failure to retain team members will increase costs without improving Results.
We invest significant time and money in the qualification and training of our personnel, so failure to retain team members will increase costs without improving our Results.
Inability to recruit or retain team members could also delay new restaurant openings, could adversely impact existing restaurants, or result in higher team member turnover in existing restaurants, increasing our labor costs and adversely affecting our Results.
Inability to recruit or retain team members could also delay new restaurant openings, adversely impact existing restaurants, or result in higher team member turnover in existing restaurants, increasing our labor costs and adversely affecting our Results.
If we are not effective in addressing environmental, social and other sustainability matters affecting our industry, or setting and meeting relevant sustainability goals, our brand image may suffer. In addition, we may experience increased costs to achieve our sustainability goals, which could have a material adverse impact on our Results.
If we are not effective in addressing environmental, social and other sustainability matters affecting our industry, or setting and meeting relevant sustainability goals, our brand image may suffer. In addition, we may experience increased costs to achieve sustainability goals, which could have a material adverse impact on our Results.
We may not generate sufficient cash flow to repay our indebtedness when due and meet our other cash needs. If this occurs, we may be required to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness or selling additional debt or equity securities.
We may not generate sufficient cash flow to repay our indebtedness when due and to meet our other cash needs. If this occurs, we may be required to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness or selling additional debt or equity securities.
Difficulties or failure to obtain or maintain the required licenses, permits and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel new restaurant openings, which could have a material adverse effect on our Results.
Difficulties in or failure to obtain or maintain the required licenses, permits and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel new restaurant openings, which could have a material adverse effect on our Results.
Fluctuations in our results could also cause other problems, including but not limited to analysts or investors changing their valuation models for our shares, experiencing short-term liquidity issues, diminishing ability to retain or attract key personnel or other unanticipated issues. Quarterly results of operations may vary in the future and period-to-period comparisons may not be meaningful.
Fluctuations in our results could also cause other problems, including but not limited to, analysts or investors changing their valuation models for our shares, experiencing short-term liquidity issues, diminishing our ability to retain or attract key personnel or other unanticipated issues. Quarterly results of operations may vary in the future and period-to-period comparisons may not be meaningful.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, an inability to perform vital corporate functions, tardiness in reporting and compliance requirements, a failure to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation and exposure for administrative and other legal claims.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in data recovery, an inability to perform vital corporate functions, tardiness in reporting and compliance requirements, a failure to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operations and exposure for administrative and other legal claims.
If any third-party delivery provider we partner with experiences damage to their brand image, we may also see ramifications due to our partnership with them. We have a limited number of suppliers and distributors for certain key ingredients. If our suppliers or distributors do not fulfill their contractual obligations, we could encounter supply shortages and incur higher costs.
If any third-party delivery provider with whom we partner experiences damage to their brand image, we may also see ramifications due to our partnership with them. We have a limited number of suppliers and distributors for certain key ingredients. If our suppliers or distributors do not fulfill their contractual obligations, we could encounter supply shortages and incur higher costs.
We are also subject to a variety of other claims that could arise in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and state securities laws or law regarding workplace and employment matters, equal opportunity, harassment, discrimination and similar matters, and we could encounter class action or other lawsuits related to these or different matters in the future.
We are also subject to a variety of other claims that could arise in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and state securities laws or laws regarding workplace and employment matters, equal opportunity, harassment, discrimination and similar matters, and we could encounter class action or other lawsuits related to these or different matters in the future.
We carry liquor liability coverage as part of our existing comprehensive general liability insurance; however, litigation against restaurant chains has resulted in significant judgments and settlements under these statutes. These cases often seek punitive damages, which may not be covered by insurance, and such litigation could have a material effect on our Results.
We carry liquor liability coverage as part of our existing comprehensive general liability insurance program; however, litigation against restaurant chains has resulted in significant judgments and settlements under these statutes. These cases often seek punitive damages, which may not be covered by insurance, and such litigation could have a material effect on our Results.
Alcoholic beverage control regulations impact many parts of restaurant operations, including minimum age of team members, advertising, trade practices, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages and training. Failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our Results.
Alcoholic beverage control regulations impact many parts of restaurant operations, including minimum age of team members, advertising, trade practices, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages and team member training. Failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our Results.
Additionally, if the ERP system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected or our ability to adequately assess those controls could be further delayed. We utilize technologies at our restaurants that support guest experience and transactions processes, including the processing of guest payments.
Additionally, if the ERP or HCM system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected or our ability to adequately assess those controls could be further delayed. We utilize technologies at our restaurants that support guest experience and transactions processes, including the processing of guest payments.
These rules and regulations could also make it more difficult for us to attract and retain qualified directors or executive officers. Our management and other personnel devote a substantial amount of time to these compliance initiatives. As a result, management’s attention may be diverted from other business concerns, which could harm our business and results of operations.
These rules and regulations could also make it more difficult for us to attract and retain qualified directors or executive officers. Our management and other personnel devote a substantial amount of time to these compliance initiatives. As a result, management’s attention may be diverted from other business concerns, which could harm our Results.
We may be adversely affected by negative publicity relating to food quality, the safety, sanitation and welfare of our restaurant facilities, guest complaints or litigation, health inspection scores, integrity of our suppliers’ food processing and other policies, practices and procedures, team member relationships and welfare, employment practices or other matters at one or more of our restaurants.
We may be adversely affected by negative publicity relating to food quality, the safety, sanitation and upkeep of our restaurant facilities, guest complaints or litigation, health inspection scores, integrity of our suppliers’ food processing and other policies, practices and procedures, team member relationships and welfare, employment practices or other matters at one or more of our restaurants.
The loss of any of our executive officers could have a material adverse effect on our Results, as we may be unable to find suitable replacements on a timely basis, without incurring increased costs, or at all. There is a high level of competition for experienced, successful executive personnel in our industry.
The loss of any of our current executive officers could have a material adverse effect on our Results, as we may be unable to find suitable replacements on a timely basis, without incurring increased costs, or at all. There is a high level of competition for experienced, successful executive personnel in our industry.
Patient Protection and Affordable Care Act (“ACA”), we must provide affordable coverage, as defined in ACA, to eligible team members, or make a payment per team member based on ACA's affordability criteria. Additionally, some state and local laws mandate certain levels of health benefits by some employers.
Patient Protection and Affordable Care Act (“ACA”), we must provide affordable coverage, as defined in the ACA, to eligible team members, or make a payment per team member based on the ACA's affordability criteria. Additionally, some state and local laws mandate certain levels of health benefits by some employers.
At the same time, if we fail to keep pace with the rapid evolution of AI technologies, particularly in our industry, our competitive position and business results could suffer. In addition, the evolving regulatory landscape for AI technologies requires continuous monitoring and adaptation to ensure compliance and mitigate potential legal and operational risks.
At the same time, if we fail to keep pace with the rapid evolution of AI technologies, particularly in our industry, our competitive position and business results could suffer. In addition, the evolving regulatory landscape for AI technologies requires continuous monitoring and adaptation to ensure compliance and mitigate potential legal, financial and operational risks.
Generally, our leases also require us to pay our share of the costs of real estate taxes, utilities, building operating expenses, insurance and other charges and may include rent escalations. If we close a restaurant, our lease obligations may remain, requiring, among other things, payment of the rent and other costs through the lease term.
Generally, our leases also require us to pay our share of the costs of real estate taxes, utilities, building operating expenses, insurance and other charges and may include rent escalations. If we close a restaurant, our lease obligations may remain, requiring, among other things, payment of the rent and other costs through the remainder of the lease term.
The development and operation of our restaurants depend, to a significant extent, on the selection of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements. We are also subject to licensing and regulation by state and local authorities relating to health, sanitation, safety and fire standards.
The development and operation of our restaurants depend, to a significant extent, on the selection of suitable sites, which are subject to zoning, land use, environmental, traffic, accessibility, and other regulations and requirements. We are also subject to licensing and regulation by state and local authorities relating to health, sanitation, safety and fire standards.
Similarly, interest rates may continue to rise and create further uncertainty and volatility in the market which would negatively impact our Results. These political and economic changes could have a material effect on global economic conditions and the stability of financial markets and could significantly reduce global trade.
Similarly, interest rates may continue to rise and create further uncertainty and volatility in the market which could negatively impact our Results. These political and economic changes could have a material effect on global economic conditions and the stability of financial markets and could significantly reduce global trade.
We may be unable to increase our menu prices in order to pass future increased labor costs on to our guests, in which case our operating margins would be negatively affected. If we increase menu prices to cover increased labor costs, the higher prices could adversely affect demand for our menu items, resulting in lower sales.
We may be unable to increase our menu prices to pass future increased labor costs on to our guests, in which case our operating margins would be negatively affected. If we increase menu prices to cover increased labor costs, the higher prices could adversely affect demand for our menu items, resulting in lower sales.
As a result, we may close or relocate the restaurant, resulting in unanticipated construction costs, the delay or failure by the landlord to timely deliver the new restaurant location to us, and unfavorable commercial, residential or infrastructure development near our new restaurant location, among other costs and risks.
As a result, we may need to close or relocate the restaurant, resulting in unanticipated construction costs, the delay or failure by the landlord to timely deliver the new restaurant location to us, and unfavorable commercial, residential or infrastructure development near our new restaurant location, among other costs and risks.
Our Restaurant Support Center, restaurants, and their respective facilities, as well as certain of our vendors and customers, are located in areas that have been and could be subject to natural disasters such as floods, drought, hurricanes, tornadoes, fires or earthquakes.
Our Restaurant Support Center, restaurants, and their respective facilities, as well as certain of our vendors and customers, are located in areas that have been and could be subject to natural disasters such as snowstorms, floods, drought, hurricanes, tornadoes, fires or earthquakes.
Moreover, consumer recognition of our brand has been important to the success of our existing restaurants, and our concept may have limited appeal in new markets. Restaurants in new markets may take longer to reach expected sales and profit and may have higher construction, occupancy and operating costs than existing restaurants.
Moreover, consumer recognition of our brand has been important to the success of our existing restaurants, and our concept may have limited appeal in new markets. Restaurants in new markets may take longer to reach expected sales and profit targets and may have higher construction, occupancy and operating costs than existing restaurants.
Compliance with current and future laws and regulations including those regarding permitted ingredients and disclosure of nutritional and allergen content may be costly and time-consuming. If we fail to comply with existing or future laws and regulations, we may be subject to governmental or judicial fines or sanctions or to litigation.
Compliance with current and future laws and regulations including those regarding permitted ingredients and disclosure of nutritional and allergen content may be costly and time-consuming. If we fail to comply with existing or future laws and regulations, we may be subject to governmental or judicial fines or sanctions or exposed to litigation.
We are subject to the Americans with Disabilities Act (the "ADA"), which, among other things, requires our restaurants to meet federally mandated requirements for individuals with disabilities. The ADA prohibits discrimination in employment and public accommodations on the basis of disability.
We are subject to the Americans with Disabilities Act (the "ADA"), which, among other things, requires our restaurants to meet federally mandated access requirements for individuals with disabilities. The ADA prohibits discrimination in employment and public accommodations on the basis of disability.
Incidents or reports of food-borne or water-borne illness or other food safety issues, food contamination or tampering, team member hygiene and cleanliness failures, improper team member conduct, or guests spreading illness while at our restaurants could lead to product liability or other claims.
Incidents or reports of food-borne or water-borne illness or other food safety issues, food contamination or tampering, team member hygiene and cleanliness failures, improper team member conduct, or guests spreading illness while at our restaurants could lead to product liability or other legal claims.
A significant increase in the number of these claims or an increase in the number of successful claims could have a material adverse effect on our Results. The digital and delivery business, and expansion thereof, is uncertain and subject to risk.
A significant increase in the number of these claims or an increase in the number of successful claims could have a material adverse effect on our Results. The digital and delivery business, and expansion thereof, is uncertain and subject to inherent risk.
Termination of a significant number of team members who lack work authorization may disrupt our operations, cause temporary increases in our labor costs as we train new team members and result in adverse publicity.
Termination of a significant number of team members who lack valid work authorization may disrupt our operations, cause temporary increases in our labor costs as we train new team members and result in adverse publicity.
Any of these factors, or any combination thereof, could have a material adverse effect on our Results. The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation, and adversely impact our Results.
Any of these factors, or any combination thereof, could have a material adverse effect on our Results. The focus on environmental sustainability and social initiatives could increase our costs, harm our reputation, and adversely impact our Results.
Many licenses, permits and approvals must be renewed annually and may be revoked, suspended or denied renewal if governmental authorities determine that our conduct violates applicable regulations.
Many licenses, permits and approvals must be renewed annually and may be revoked, suspended or denied for renewal if governmental authorities determine that our conduct violates applicable regulations.
Our effective tax rate in a given financial reporting period may be materially impacted by a variety of factors including changes in the mix and level of earnings, varying jurisdictional tax rates, tax effects of equity-based compensation, changes in tax laws, regulations or interpretations thereof, cost related to intercompany restructuring, fluctuations in the valuation allowance or by changes to existing accounting rules or regulations.
Our effective tax rate in a given financial reporting period may be materially impacted by a variety of factors including changes in the mix and level of earnings, varying jurisdictional tax rates, tax effects of equity-based compensation, changes in tax laws, regulations or interpretations thereof, costs related to intercompany restructuring, fluctuations in the valuation allowance or by changes to existing accounting rules or regulations.
We compete directly and indirectly with national, regional and local limited-service (e.g., quick service or fast casual) and full-service restaurants on food quality, brand recognition, service, price and value, convenience, design and location. Some competitors have significantly greater financial, marketing, personnel and other resources, and many are well-established in our target markets.
We compete directly and indirectly with national, regional and local limited-service (e.g., QSR or fast-casual) and full-service restaurants on food quality, brand recognition, service, price and value, convenience, design and location. Some competitors have significantly greater financial, marketing, personnel and other resources, and many are well-established in our target markets.
We cannot accurately predict the amount and timing of any impairment. Should the value of goodwill or other indefinite-lived intangible assets become impaired in the future, such impairment could have a material adverse effect on our Results. See Note 6. Goodwill & Intangible Assets in the notes to the consolidated financial statements for additional information. Portillo's Inc.
We cannot accurately predict the amount and timing of any impairment. Should the value of goodwill or other indefinite-lived intangible assets become impaired in the future, such impairment could have a material adverse effect on our Results. See Note 6. Goodwill & Intangible Assets in the notes to the consolidated financial statements for additional information.
In addition, these threats are constantly evolving, which increases the difficulty of accurately and timely predicting, planning for and protecting against such threats. As a result, our disaster recovery procedures and business continuity plans may not adequately address all threats we face or protect us from resulting losses.
In addition, these threats are constantly evolving, which increases the difficulty of accurately and timely predicting, planning for and protecting against such threats. As a result, our disaster recovery procedures and business continuity plans may not adequately address all threats we face or protect us from resulting losses. Portillo's Inc.
Our success depends upon our ability to attract, motivate and retain enough qualified team members to meet the needs of our new and existing restaurants. Competition for qualified team members in some areas could require higher wages and greater benefits. Our team members are typically paid more than the applicable minimum wage where they work.
Our success depends upon our ability to attract, motivate and retain enough qualified team members to meet the needs of our new and existing restaurants. Competition for qualified team members in some areas could require higher wages and enhanced benefits. Our team members are typically paid more than the applicable minimum wage where they work.
Regardless of whether any claims against us are valid, or whether we are ultimately held liable, claims may be expensive to defend and may divert time, attention, and money away from our operations. A judgment in excess of our insurance coverage for any claims could have a material adverse effect on our Results.
Regardless of whether any claims against us are determined to be valid, or whether we are ultimately held liable, claims may be expensive to defend and may divert time, attention, and money away from our operations. A judgment significantly in excess of our insurance coverage for any claims could have a material adverse effect on our Results.
Further, our existing restaurant management systems, financial and management controls and information systems (collectively, our “Infrastructure”) may be inadequate to support our planned expansion. We may not enhance our Infrastructure quickly enough or effectively hire, train and retain team members, which could have a material adverse effect on our Results.
Further, our existing restaurant management systems, financial and management controls and information systems (collectively, our “Infrastructure”) may be inadequate to support our expansion plan. We may not enhance our Infrastructure quickly enough or effectively hire, train and retain team members, which could have a material adverse effect on our Results.
Third parties also may make claims for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our restaurants. Some of our leases provide for indemnification of our landlords for environmental contamination, clean-up or owner liability.
Third parties also may make claims for personal injuries and property damage associated with release of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our restaurants. Some of our leases provide for indemnification of our landlords for environmental contamination, clean-up or owner liability.
If a court were to find the choice of forum provisions in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our Results.
If a court were to find the choice of forum provisions in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our Results. Portillo's Inc.
Although we will continue to take progressive steps to assess and promote the furthering security capabilities of third parties that support our restaurant operations, compromising events such as distributed denial of service, ransomware attack and other cyber attacks, natural / weather disasters or human error (and other events as noted above) may occur that will cause disruption to our vendors' system, that in turn may impact our ability to interact and transact with guests, on and off premise.
Although we will continue to take progressive steps to assess and promote enhanced security capabilities of third parties that support our restaurant operations, compromising events such as distributed denial-of-service, ransomware attack and other cyber attacks, natural / weather disasters or human error (and other events as noted above) may occur that will cause disruption to our vendors' system, that in turn may impact our ability to interact and transact with guests, on and off premise.
We may not be able to effectively respond to changes in consumer health perceptions, comply with further nutrient content disclosure requirements or adapt our menu offerings to trends in eating habits, which could have a material adverse effect on our Results.
We may not be able to effectively respond to changes in consumer health perceptions, comply with further nutritional content disclosure requirements or adapt our menu offerings to trends in eating habits, which could have a material adverse effect on our Results.
For example, failure to register or enforce our trademarks, whether in print, on the Internet or through social media or other media, could prevent us from successfully challenging third parties who use trademarks similar to ours, which may cause consumer confusion, harm the public perception of our brand, prevent our brand and branded products from achieving and maintaining market acceptance and cause a material adverse effect on our Results.
For example, failure to register or enforce our trademarks, whether in print, on the Internet or through digital or social media or other channels, could prevent us from successfully challenging third parties who use trademarks similar to ours, which may cause consumer confusion, harm the public perception of our brand, prevent our brand and branded products from achieving and maintaining market acceptance, having a material adverse effect on our Results.
It is conceivable that we could be subjected to non-compliance penalties or similar circumstances, that would materially impact our Results. The rapid development and integration of artificial intelligence ("AI") and emerging technologies into our processes poses risks to our business.
It is conceivable that we could be subjected to non-compliance penalties or similar circumstances, that would materially impact our Results. The rapid development and integration of AI and emerging technologies into our processes poses risks to our business.
Fair Labor Standards Act, which governs such matters as minimum wages and overtime, and a variety of federal, state and local laws that govern employment law matters like employee classifications, unemployment tax rates, workers’ compensation rates, family leave, paid leave, working conditions, safety standards, immigration status, payroll taxes, discrimination, and citizenship requirements. In addition, under the U.S.
Fair Labor Standards Act, which governs such matters as minimum wages and overtime, and a variety of federal, state and local laws that govern employment law matters like employee classifications, unemployment tax rates, workers’ compensation rates, family leave, paid leave, working conditions, safety standards, immigration status, payroll taxes, discrimination, and lawful residency requirements. In addition, under the U.S.
New restaurant success is affected by several factors, many of which are beyond our control, including our ability to secure enough appropriate and attractive sites, and complete construction in a timely and cost-efficient manner. We may open restaurants in geographic markets where we have little or no prior operating experience.
New restaurant success is affected by several factors, many of which are beyond our control, including our ability to secure a sufficient pipeline of appropriate and attractive sites, and to complete construction in a timely and cost-efficient manner. We may open restaurants in geographic markets where we have little or no prior operating experience.
If our competitors increase spending on marketing and other initiatives or our marketing expenditures decrease, or our advertising, promotions, and restaurant designs and locations are less effective than our competitors, it could have a material adverse effect on our Results .
If our competitors increase spending on marketing and other initiatives or our marketing expenditures decrease, or our advertising, promotions, and restaurant designs and locations are less effective than those of our competitors, it could have a material adverse effect on our Results .
We are also subject to “dram shop” statutes in certain states, which provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.
We are also subject to “dram shop” statutes in certain states, which provide an individual injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.
Significant additional government regulations and new laws, including mandated increases in minimum wages, changes in exempt and non-exempt status, paid leave, or increased mandated benefits such as health care and insurance costs could have a material adverse effect on our business, financial condition and results of operations.
Significant additional government regulations and new laws, including mandated increases in minimum wages, changes in exempt and non-exempt classification status, worker privacy, paid leave, or increased mandated benefits such as health care and insurance costs could have a material adverse effect on our business, financial condition and results of operations.
We developed sealed packaging to provide some deterrence against such potential food tampering, but some risk remains. Third-party food delivery services are competitive. If our delivery partners fail to effectively compete with other third-party delivery providers, our delivery business may suffer, resulting in a loss of sales.
We developed and implemented sealed packaging protocols to provide some deterrence against such potential food tampering, but some risk remains. Third-party food delivery services are competitive. If our delivery partners fail to effectively compete with other third-party delivery providers, our delivery business may suffer, resulting in a loss of sales.
In recent years, a number of restaurant companies have been subject to such claims, and some of these lawsuits have resulted in the payment of substantial damages by the defendants.
In recent years, a number of restaurant companies, including us, have been subject to such claims, and some of these lawsuits have resulted in the payment of substantial damages by the defendants.
If we do not maintain and innovate competitive digital systems, including our growing use of artificial intelligence in our operations, our digital business and sales may be adversely affected as we lose guests to competitors. We rely on third-parties for our ordering and payment platforms.
If we do not maintain and innovate competitive digital systems, including our growing use of AI in our operations, our business and sales may be adversely affected as we lose guests to competitors. We rely on third-parties for our ordering and payment platforms.
Under the ADA, we could be required to modify our restaurants to provide service to, or make reasonable accommodations for the employment of, disabled persons. Our employment practices are also subject to the requirements of the U.S. Citizenship & Immigration Service ("USCIS") relating to citizenship and residency.
Under the ADA, we could be required to modify our restaurants to provide service to, or make reasonable accommodations for the employment of, disabled persons. Our employment practices are also subject to the requirements of the U.S. Citizenship & Immigration Service ("USCIS") relating to lawful residency and work authorization requirements.
We also invest in other marketing initiatives across digital channels and build customer awareness of, engagement with, and loyalty to our brand. These initiatives may not be successful, resulting in expenses incurred without higher sales or increased brand recognition. Laws and regulations governing the use of these platforms and devices continue to evolve.
We also invest in other marketing initiatives across paid and organic channels to help build customer awareness of, engagement with, and loyalty to our brand. These initiatives may not be successful, resulting in expenses incurred without higher sales or increased brand recognition. Laws and regulations governing the use of these platforms and devices continue to evolve.
Delaware law and our organizational documents, as well as our existing and future debt agreements, may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares.
Risks Related to Our Organizational Structure Delaware law and our organizational documents, as well as our existing and future debt agreements, may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares.
Security breaches, system interruptions, material failure of our system, or complications with the implementation or usage of our new enterprise resource planning system could disrupt our operations, compromise confidential personally identifying information, subject us to loss, harm our business, and have a material adverse impact on our business, financial condition and results of operations.
Security breaches, system interruptions, material failure of our system, or complications with the implementation or usage of our new systems could disrupt our operations, compromise confidential personally identifying information, subject us to loss, harm our business, and have a material adverse impact on our business, financial condition and results of operations.
These changes to our menu could negatively impact our restaurant traffic and operational results during the shortage and thereafter. Additionally, we may be unable to offset all or even a portion of a future cost increase through menu price increases. Competitive conditions may Portillo's Inc.
These changes to our menu could negatively impact our restaurant traffic and operational results during the shortage and thereafter. Additionally, we may be unable to offset all or even a portion of a future cost increase through menu price increases.
Additionally, even if food-borne illnesses are not identified at our restaurants, our restaurant sales could be adversely affected if instances of food-borne illnesses at other restaurant chains were highly publicized.
Additionally, even if food-borne illnesses are not identified at our restaurants, our restaurant sales could be adversely affected if instances of food-borne illnesses at other restaurant chains occur and are highly publicized.
A change in these principles or interpretations could have a significant effect on our financial condition and results of operations, and could affect the reporting of transactions completed before the implementation of a change.
A change in these principles or interpretations could have a significant effect on our Results, and could affect the reporting of transactions completed before the implementation of a change.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and could have a material adverse effect on our Results.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and operational costs and could have a material adverse effect on our Results.
In 2024, we completed the implementation of our new ERP system, designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business.
In 2024, we completed the implementation of our new ERP system, designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business and in 2025, we completed the implementation of the our new Human Capital Management ("HCM") system.
However, use of the “E-Verify” program does not guarantee that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and we may be subject to fines or penalties if any of our workers are found to be unauthorized.
However, use of the “E-Verify” program does not guarantee that we will properly identify all applicants who claim to have work authorization but are ineligible for employment. Unauthorized workers are subject to deportation and we may be subject to fines or penalties if any of our workers are found to be unauthorized.
The ERP system implementation process has required, and will continue to require, the investment of personnel and financial resources as we support post-implementation efforts and system functionality. These post-implementation efforts could result in delays, increased costs, and other difficulties, and disruptions or difficulties in using our ERP system could result in harm to our business.
The ERP and HCM system implementation processes required, and will continue to require, the investment of personnel and financial resources as we support post-implementation efforts and system functionality. These post-implementation efforts could result in delays, increased costs, and other difficulties, and disruptions or difficulties in using our ERP and HCM systems could result in harm to our business.
We have developed contingency plans to mitigate risks related to secondary supply, floor stocking arrangements, product diversification and inventory management, but there can be no assurance that we can obtain commercially reasonable terms or alternative product of equivalent quality. Any prolonged disruption in the operations of our two commissaries could harm our business.
We have developed contingency plans to mitigate risks related to secondary supply, floor stocking arrangements, product diversification and inventory management, but we cannot ensure that we can obtain commercially reasonable terms or alternative product of equivalent quality. Any prolonged disruption in the operations of our two commissaries could harm our business.
In addition, our AUVs and same-restaurant sales may not increase at the rates our existing restaurants have achieved over the past several years. Our ability to operate new restaurants profitably and increase AUVs and same-restaurant sales will depend on many factors, some of which are beyond our control.
In addition, our AUVs and same-restaurant sales may not increase to the same levels achieved by our existing restaurants over the past several years. Our ability to operate new restaurants profitably and increase AUVs and same-restaurant sales will depend on many factors, some of which are beyond our control.
Form 10-K | 10 Table of Contents Our business and operations could be negatively affected if we become the target of any securities litigation or shareholder activism efforts, which could cause us to incur significant expenses, hinder execution of our growth strategy and impact our stock price.
Our business and operations could be negatively affected if we become the target of any securities litigation or shareholder activism efforts, which could cause us to incur significant expenses, hinder execution of our growth strategy and impact our stock price.
We may struggle to identify target markets, we may not be able to open our planned new restaurants within budget or on a timely basis, and our new restaurants may not perform as well as anticipated.
As part of that process, we may struggle to identify target markets, we may not be able to open our planned new restaurants within budget or on a timely basis, and our new restaurants may not perform as well as anticipated.
Our annual and quarterly results of operations may fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our Class A common stock may decline.
Form 10-K | 15 Table of Contents Our annual and quarterly results of operations may fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our Class A common stock may decline.
Similar lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of managers and failure to pay for all hours worked.
Similar proceedings have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, meal and rest periods, overtime eligibility and failure to pay for all hours worked.
If we do not distribute such excess cash as dividends or otherwise undertake ameliorative actions, holders of our LLC Units (other than Portillo’s Inc.) may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their LLC Units, notwithstanding that such holders of our LLC Units (other than Portillo’s Inc.) may previously Portillo's Inc.
If we do not distribute such excess cash as dividends or otherwise undertake ameliorative actions, holders of our LLC Units (other than Portillo’s Inc.) may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their LLC Units, notwithstanding that such holders of our LLC Units (other than Portillo’s Inc.) may previously have participated as holders of LLC Units in distributions by Portillo’s OpCo that resulted in such excess cash balances at Portillo’s Inc.
Form 10-K | 7 Table of Contents Changes to estimates related to our property, fixtures and equipment and definite-lived intangible assets or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment charges or accelerate the amortization on certain long-lived assets, which could have a material adverse impact on our results of operations.
Changes to estimates related to our property, fixtures and equipment and definite-lived intangible assets or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment charges or accelerate the amortization on certain long-lived assets, which could have a material adverse impact on our Results.
Form 10-K | 2 Table of Contents limit our menu pricing flexibility and implementing menu price increases may change our guests’ visit frequencies or purchasing patterns. Our industry depends on consumer discretionary spending and is affected by changes in consumer tastes, and macro- and micro-economic conditions (including economic downturns, consumer sentiment, inflation or increased food or energy costs).
Competitive conditions may limit our menu pricing flexibility and implementing menu price increases may change our guests’ visit frequencies or purchasing patterns. Our industry depends on consumer discretionary spending and is affected by changes in consumer tastes, and macro- and micro-economic conditions (including economic downturns, consumer sentiment, inflation or increased food or energy costs).
Whether or not claims against us are valid or whether we are found liable, claims may be expensive to defend and may divert time and money away from our operations and result in increases in our insurance premiums. In addition, they may generate negative publicity, which could reduce guest traffic and sales.
Whether or not claims against us are valid or whether we are found liable, claims may be expensive to defend, may divert time and money away from our operations and may result in increases in our insurance premiums. In addition, they may generate negative publicity, which Portillo's Inc.
In addition to potential increases on tariffs, wars or conflicts could affect our ability to obtain raw materials, which could have a substantial impact on the costs associated with food, beverage and packaging of our menu items, as well as building construction materials and negatively impact our results.
In addition to potential increases on tariffs, wars or conflicts could affect our ability to obtain raw materials, which could have a substantial impact on the costs associated with food, beverage and packaging of our menu items, as well as building construction Portillo's Inc. Form 10-K | 13 Table of Contents materials, which could and negatively impact our Results.
We experienced 4.2% and 5.5% commodity price inflation for the years ended December 29, 2024 and December 31, 2023, respectively. If the cost of our ingredients increase, we may suspend or permanently discontinue certain menu items rather than pay the increased cost for the ingredients.
We experienced 3.9% and 4.2% commodity price inflation for the years ended December 28, 2025 and December 29, 2024, respectively. If the cost of our ingredients increase, we may suspend or permanently discontinue certain menu items rather than pay the increased cost for the ingredients.
Our restaurant base is geographically concentrated in the Midwestern United States, and we could be negatively affected by conditions specific to that region. Our restaurants in the Midwestern United States represented approximately 71% of our restaurants as of December 29, 2024.
Our restaurant base is geographically concentrated in the Midwestern United States, and we could be negatively affected by conditions specific to that region. Our restaurants in the Midwestern United States represented approximately 66% of our restaurants as of December 28, 2025.
Any such events could have a material adverse effect on our Results. Our marketing programs and any limited time or seasonal offerings may be unsuccessful and could fail to meet expectations, and our new menu items, advertising campaigns, heavy reliance on social media and restaurant designs and remodels may not generate increased sales or profits.
Our marketing programs and any limited time or seasonal offerings may be unsuccessful and could fail to meet expectations, and our new menu items, advertising campaigns, heavy reliance on social media and restaurant designs and remodels may not generate increased sales or profits.
Additionally, controls can be circumvented by the individuals, by collusion of two or more people or by an unauthorized override of the controls. Because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected and could materially adversely affect our Results.
Additionally, controls can be circumvented by individuals, by collusion Portillo's Inc. Form 10-K | 14 Table of Contents of two or more people or by an unauthorized override of the relevant controls. Because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected and could materially adversely affect our Results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe negotiate with our vendors about a variety of monitoring, testing, and reporting provisions so that we can work with them to better address vulnerabilities. This may include sharing SOC 1 or 2 Type 2 audit reports, conducting periodic penetration and vulnerability testing, both internally and externally, and confirmation that vendors are adhering to applicable laws.
Biggest changeThis may include sharing SOC 1 or 2 Type 2 audit reports, conducting periodic penetration and vulnerability testing, both internally and externally, and confirmation Portillo's Inc. Form 10-K | 16 Table of Contents that vendors are adhering to applicable laws. Some of this testing and monitoring is conducted in-house and some is conducted by third-party vendors.
Our primary source of cybersecurity risk relates to security of our third-party service providers, whose activities and scale may present more desirable targets. However, we do maintain certain systems ourselves and appreciate the need to focus internally as well.
Our primary source of cybersecurity risk relates to the security practices of our third-party service providers, whose activities and scale may present more desirable targets. However, we do maintain certain systems ourselves and appreciate the need to focus internally as well.
ITEM 1C. CYBERSECURITY Risk Management Strategy Responsibility for cybersecurity risk management comes from a collective effort, with day-to-day oversight and management from our executive and information technology ("IT") teams. Additionally, the Audit Committee continues to take a more active role in setting both proactive and reactive strategies, with the overall Board overseeing our efforts and helping to guide our strategy.
ITEM 1C. CYBERSECURITY Risk Management Strategy Responsibility for cybersecurity risk management comes from a collective effort, with day-to-day oversight and management from our executive and information technology ("IT") teams. Additionally, the Audit Committee continues to take an active role in setting both proactive and reactive strategies, with the overall Board overseeing our efforts and helping to guide our strategy.
To address any gaps in the Company’s collective expertise and to account for the ever-evolving nature of cybersecurity risks, the Company retains various consultants as noted above. The internal and external headcount, and the expertise of the employees and consultants, will change from time to time as we adapt to the changing cybersecurity environment.
To address any gaps in the Company’s collective expertise and to account for the ever-evolving nature of cybersecurity risks, the Company retains various consultants as noted above. The internal and external headcount, and the expertise of the employees and consultants, will change from time to time as we adapt to the changing cybersecurity environment. Portillo's Inc.
We involve our IT team when negotiating contracts that could increase our cybersecurity risk exposure, so that the team is aware of the specific risks related to a given vendor and can provide feedback and advice on the contractual provisions necessary to prevent a cybersecurity incident, or in the event an incident does occur, to ensure that the Company has the necessary rights to act quickly to protect team members, guests, and our business and mitigate potential damage.
We involve our IT team when negotiating contracts that could increase our cybersecurity risk exposure, so that the team is aware of the specific risks related to a given vendor and can provide feedback and advice on the contractual provisions necessary to prevent a cybersecurity incident, or in the event an incident does occur, to ensure that the Company has the necessary rights to act quickly to protect team members, guests, and our business, while mitigating potential damage.
We do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected our business strategy, results of operations or financial condition. However, there is no guarantee that a future cybersecurity incident would not materially affect our future strategy, results or financial condition.
We do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected our Results. However, there is no guarantee that a future cybersecurity incident would not materially affect our future strategy, results or financial condition.
The IT Team manages day-to-day cybersecurity risks under the oversight of our Chief Information Officer ("CIO"), who is actively engaged in strategic planning, security assessments, and mitigation efforts. Our CIO has 10+ years of experience overseeing security practices at various multi-national restaurant concepts.
The IT Team manages day-to-day cybersecurity risks under the oversight of our Chief Information Officer ("CIO"), who is actively engaged in strategic planning, security assessments, and mitigation efforts. Our CIO has over ten years of experience overseeing security practices at various multi-national restaurant concepts.
From a framework standpoint, we primarily utilize the National Institute of Standards and Technology ("NIST") framework to assess and mitigate cybersecurity risks. This framework guides our efforts to identify, analyze and contain any security threats, and advises as to potential actions to consider if a need arose to recover from a security incident.
We primarily utilize the National Institute of Standards and Technology ("NIST") framework to assess and mitigate cybersecurity risks. This framework guides our efforts to identify, analyze and contain any security threats, and advises as to potential actions to consider if a need arises to recover from a security incident.
Our CIO and Chief Financial Officer discuss IT matters on a routine basis, and as noted above, periodic reviews are conducted with the executive management team and the Audit Committee. We have an incident response process that is activated in the event of a direct or third-party attack.
Our CIO and Chief Financial Officer discuss IT matters on a routine basis, and as noted above, periodic reviews are conducted with the executive management team and the Audit Committee.
Some of this testing and monitoring is conducted in-house and some is conducted by third-party vendors. We routinely conduct penetration testing across our various environments and networks, including our Restaurant Support Center, our restaurants and our cloud-based architecture and systems. We review penetration testing outcomes and take steps to address any meaningful findings, while documenting resolution steps these efforts.
We routinely conduct penetration testing across our various environments and networks, including our RSC, our restaurants and our cloud-based architecture and systems. We review penetration testing outcomes and take steps to address any meaningful findings, while documenting the resolution process.
The plan is designed to help us detect, respond to and recover from cybersecurity incidents.
We have a Security Committee comprised of cross-functional leaders to assess and respond to security incidents, and we have an incident response process that is activated in the event of a direct or third-party attack. The plan is designed to help us detect, respond to and recover from cybersecurity incidents.
We are continuously improving our processes and contract positions to reflect evolving risks and market Portillo's Inc. Form 10-K | 16 Table of Contents practices. We appreciate the need to monitor and test our systems to make sure that they are working the way that they should.
We appreciate the need to monitor and test our systems to make sure that they are working the way that they should. We negotiate with our vendors about a variety of monitoring, testing, and reporting provisions so that we can work with them to better address vulnerabilities.
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We are continuously improving our processes and contract positions to reflect evolving risks and market practices. This includes the implementation of a vendor security standards program, that establishes security requirements for vendors that are based on the NIST framework.
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We control access to various AI platforms that are used to support our business operations, to ensure a heightened level of data protection. We block access to various AI platforms that do not support our business operations. We ensure that secure and managed enterprise licenses are used to access AI systems.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease the majority of our properties on which we operate restaurants and commissaries. We own real property underlying one company-operated restaurant. We also have two non-traditional locations in operation including a food truck and a ghost kitchen in Chicago (small kitchen with no store-front presence, used to fill online orders).
Biggest changeWe own real property underlying one company-operated restaurant. We also have one non-traditional, mobile location in operation, a food truck.
As of December 29, 2024, we operated 94 restaurants, including C&O, located in the following states: State Number of Restaurants Arizona 8 California 2 Florida 7 Illinois 49 Indiana 8 Iowa 1 Michigan 2 Minnesota 3 Texas 10 Wisconsin 4 Total 94 ITEM 3.
As of December 28, 2025, we operated 102 restaurants, including C&O, located in the following states: State Number of Restaurants Arizona 9 California 2 Florida 8 Georgia 1 Illinois 50 Indiana 8 Iowa 1 Michigan 2 Minnesota 3 Texas 14 Wisconsin 4 Total 102 ITEM 3.
ITEM 2. PROPERTIES Our home office is located at 2001 Spring Road, Suite 400, Oak Brook, IL 60523. We lease our home office. Portillo's Inc. Form 10-K | 17 Table of Contents Our restaurant footprint consists of 94 Portillo’s restaurants across ten states, including C&O. We operate two food production commissaries in Illinois.
ITEM 2. PROPERTIES Our home office is located at 2001 Spring Road, Suite 400, Oak Brook, IL 60523. We lease our home office. Our restaurant footprint consists of 102 Portillo’s restaurants across 11 states, including C&O. We operate two food production commissaries in Illinois. We lease the majority of our properties on which we operate restaurants and commissaries.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeForm 10-K | 19 Stock Performance Graph The following graph and table illustrate the total return from October 21, 2021, the first day of trading for our Class A common stock, through December 29, 2024 for (i) our Class A common stock, (ii) the Standard and Poor's 500 Index and (iii) the Standard and Poor's 600 Restaurant Index, assuming an investment of $100 on October 21, 2021 of Portillo's Inc. stock or on September 30, 2021 in the indices, including the reinvestment of dividends. 10/21/2021 12/26/2021 12/25/2022 12/31/2023 4/1/2024 7/1/2024 10/1/2024 12/29/2024 Portillo's Inc. $100.00 $131.75 $59.07 $54.74 $48.73 $33.40 $46.29 $30.86 S&P 500 100.00 111.03 90.92 114.82 126.94 132.38 140.17 143.55 S&P 600 Restaurants 100.00 89.79 71.31 84.48 88.53 77.95 82.18 100.21 *$100 invested on 10/21/21 in Portillo's Inc. stock or 9/30/21 in indices, including reinvestment of dividends.
Biggest changeForm 10-K | 19 Stock Performance Graph The following graph and table illustrate the total return from October 21, 2021, the first day of trading for our Class A common stock, through December 28, 2025 for (i) our Class A common stock, (ii) the Standard and Poor's 500 Index and (iii) the Standard and Poor's 600 Restaurant Index, assuming an investment of $100 on October 21, 2021 of Portillo's Inc. stock or on September 30, 2021 in the indices, including the reinvestment of dividends. 10/21/2021 12/26/2021 12/25/2022 12/31/2023 12/29/2024 4/1/2025 7/1/2025 10/1/2025 12/28/2025 Portillo's Inc. $100.00 $131.75 $59.07 $54.74 $30.86 $40.86 $40.10 $22.16 $16.19 S&P 500 100.00 111.03 90.92 114.82 143.55 137.41 152.45 164.84 169.21 S&P 600 Restaurants 100.00 89.79 71.31 84.48 100.21 90.36 118.39 88.67 85.41 *$100 invested on 10/21/21 in Portillo's Inc. stock or 9/30/21 in indices, including reinvestment of dividends.
The number of record holders does not include persons who held shares of our Class A common stock in nominee or "street name" accounts through brokers. As of February 18, 2025, there were 7 shareholders of record of our Class B common stock. Dividend Policy No dividends have been declared or paid on our shares of common stock.
The number of record holders does not include persons who held shares of our Class A common stock in nominee or "street name" accounts through brokers. As of February 17, 2026, there were 7 shareholders of record of our Class B common stock. Dividend Policy No dividends have been declared or paid on our shares of common stock.
Our Class B common stock together with a unit of Portillo's OpCo, are exchangeable for one share of Class A common stock, subject to and in accordance with the limited liability company agreement of Portillo's OpCo. Holders of Record As of February 18, 2025, there were approximately 38 shareholders of record of our Class A common stock.
Our Class B common stock together with a unit of Portillo's OpCo, are exchangeable for one share of Class A common stock, subject to and in accordance with the limited liability company agreement of Portillo's OpCo. Holders of Record As of February 17, 2026, there were approximately 39 shareholders of record of our Class A common stock.
Securities Authorized for Issuance under Equity Incentive Plans The following table provides information about our compensation plans under which our Class A common stock is authorized for issuance, as of December 29, 2024: Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuances under equity compensation plans (3) Equity compensation plans approved by security holders 7,063,911 $ 8.28 3,670,837 (1) Includes shares issuable pursuant to stock options, restricted stock units, restricted stock awards and other stock-based awards under the Company's 2021 Plan.
Securities Authorized for Issuance under Equity Incentive Plans The following table provides information about our compensation plans under which our Class A common stock is authorized for issuance, as of December 28, 2025: Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuances under equity compensation plans (3) Equity compensation plans approved by security holders 5,782,719 $ 5.93 3,802,695 (1) Includes shares issuable pursuant to stock options, restricted stock units, restricted stock awards and other stock-based awards under the Company's 2021 Plan.
Represents 2,782,248 shares under the 2021 Plan, including 4,118,056 shares assumed from the 2014 Plan, and 163,607 shares under the Employee Stock Purchase Plan (the "ESPP").
Represents 2,215,365 shares under the 2021 Plan, 3,460,329 shares assumed from the 2014 Plan, and 107,025 shares under the Employee Stock Purchase Plan (the "ESPP").

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRecent Developments and Trends Fiscal 2024 Highlights Our fiscal 2024 financial highlights include: • Total revenue increased 4.5% or $30.6 million to $710.6 million; this increase is inclusive of the impact of the 53rd week in fiscal 2023, which resulted in incremental revenue of approximately $13.9 million in fiscal 2023. • Same-restaurant sales* decreased 0.6%. • Operating income increased $2.6 million to $58.0 million; this increase is inclusive of the impact of the 53rd week in fiscal 2023, which resulted in incremental operating income of approximately $1.6 million in fiscal 2023. • Net income increased $10.3 million to $35.1 million; this increase is inclusive of the impact of the 53rd week in fiscal 2023, which resulted in incremental net income of approximately $1.2 million in fiscal 2023. • Restaurant-Level Adjusted EBITDA** increased $2.9 million to $168.1 million. • Adjusted EBITDA** increased $2.5 million to $104.8 million. * For fiscal 2024, same-restaurant sales compares the 52 weeks from January 1, 2024 through December 29, 2024 to the 52 weeks from January 2, 2023 through December 31, 2023. ** Adjusted EBITDA and Restaurant-Level Adjusted EBITDA are non-GAAP measures.
Biggest changeFiscal 2024: • Total revenue increased 3.0% or $21.5 million to $732.1 million • Same-restaurant sales decreased -0.5% • Operating income decreased $14.4 million to $43.7 million • Net income decreased $14.0 million to $21.1 million • Restaurant-Level Adjusted EBITDA* decreased $9.7 million to $158.4 million • Adjusted EBITDA* decreased $7.4 million to $97.3 million * Adjusted EBITDA and Restaurant-Level Adjusted EBITDA are non-GAAP measures.
If we do not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then we would not be required to make the related TRA payments.
If we do not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then we would not be required to make the related TRA payments.
Key Performance Indicators Change in Same-Restaurant Sales The change in same-restaurant sales is the percentage change in year-over-year revenue (excluding gift card breakage) for the comparable restaurant base, which is defined as the number of restaurants open for at least 24 full fiscal periods (the “Comparable Restaurant Base”).
Key Performance Indicators Change in Same-Restaurant Sales The change in same-restaurant sales is the percentage change in year-over-year revenue (excluding gift card and Perks breakage) for the comparable restaurant base, which is defined as the number of restaurants open for at least 24 full fiscal periods (the “Comparable Restaurant Base”).
Tax Receivable Agreement In connection with the IPO, we entered into a Tax Receivable Agreement ("TRA") with certain of our pre-IPO LLC Members, pursuant to which we will generally be required to pay 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that we actually realize or are deemed to realize, as a result of (i) our allocable share of existing tax basis in depreciable or amortizable assets relating to LLC Units acquired in the IPO, (ii) certain favorable tax attributes acquired by the Company from the Blocker Companies (including net operating losses and the Blocker Companies' allocable share of existing tax basis), (iii) increases in our allocable share of then existing tax basis in depreciable or amortizable assets, and adjustments to the tax basis of the tangible and intangible assets, of Portillo’s OpCo and its subsidiaries, as a result of (x) sales or exchanges of interests in Portillo’s OpCo (including the repayment of the redeemable preferred units) in connection with the IPO and (y) future redemptions or exchanges of LLC Units by pre-IPO LLC Members for Class A common stock and (iv) certain other tax benefits related to entering into the TRA, including payments made under the TRA.
Form 10-K | 30 Table of Contents Tax Receivable Agreement In connection with the IPO, we entered into a Tax Receivable Agreement ("TRA") with certain of our pre-IPO LLC Members, pursuant to which we will generally be required to pay 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that we actually realize or are deemed to realize, as a result of (i) our allocable share of existing tax basis in depreciable or amortizable assets relating to LLC Units acquired in the IPO, (ii) certain favorable tax attributes acquired by the Company from the Blocker Companies (including net operating losses and the Blocker Companies' allocable share of existing tax basis), (iii) increases in our allocable share of then existing tax basis in depreciable or amortizable assets, and adjustments to the tax basis of the tangible and intangible assets, of Portillo’s OpCo and its subsidiaries, as a result of (x) sales or exchanges of interests in Portillo’s OpCo (including the repayment of the redeemable preferred units) in connection with the IPO and (y) future redemptions or exchanges of LLC Units by pre-IPO LLC Members for Class A common stock and (iv) certain other tax benefits related to entering into the TRA, including payments made under the TRA.
Based upon current levels of operations and anticipated growth, we expect that cash flows from operations will be sufficient to meet our needs for at least the next twelve months and the foreseeable future.
Based upon current levels of operations and anticipated growth, we expect that cash flows from operations will be sufficient to meet our needs for at least the next twelve months and the foreseeable future. Portillo's Inc.
If we determine in the future that we will not be able to fully utilize all or part of the related tax benefits, we would de-recognize the portion of the liability related to the benefits not expected to be utilized.
If we determine in the future that we will not be able to fully utilize all or part of the related tax benefits, we would de-recognize the portion of the liability related to the benefits not expected to be utilized. Portillo's Inc.
Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base. We believe this measure provides a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of restaurant openings and enables investors to better understand and evaluate the Company’s historical and prospective operating performance.
Measuring our change in same-restaurant sales allows management to evaluate the performance of our existing restaurant base. We believe this measure provides a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of restaurant openings and enables investors to better understand and evaluate the Company’s historical and prospective operating performance.
(7) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenues, net. Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin Restaurant-Level Adjusted EBITDA is defined as revenue, less restaurant operating expenses, which include food, beverage and packaging costs, labor expenses, occupancy expenses and other operating expenses.
(8) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenues, net. Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin Restaurant-Level Adjusted EBITDA is defined as revenue, less restaurant operating expenses, which include food, beverage and packaging costs, labor expenses, occupancy expenses and other operating expenses.
We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important measures of operating performance because they eliminate the impact of expenses that do not relate to our core operating performance. Portillo's Inc.
We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important measures of operating performance because they eliminate the impact of expenses that do not relate to our core operating performance.
The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. For the tax year ended December 29, 2024, we did not record any unrecognized tax benefits. Portillo's Inc. Form 10-K | 34 Table of Contents
The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. For the tax year ended December 28, 2025, we did not record any unrecognized tax benefits. Portillo's Inc. Form 10-K | 34 Table of Contents
Occupancy Expenses Occupancy expenses primarily consist of rent, property insurance and property taxes, and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening expenses. Portillo's Inc.
Occupancy Expenses Occupancy expenses primarily consist of rent, property insurance and property taxes, and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening expenses.
Pre-Opening Expenses Pre-opening expenses consist primarily of wages, occupancy expenses, which represent rent expense recognized during the period between the date of possession of the restaurant facility and the restaurant opening date, travel for the opening team and other supporting team members, food, beverage, and the initial stocking of operating supplies.
Pre-Opening Expenses Pre-opening expenses consist primarily of wages, occupancy expenses, which represent rent expense recognized during the period between the date of possession and the restaurant opening date, travel for the opening team and other supporting team members, food, beverage, the initial stocking of operating supplies and legal fees.
Our ongoing capital expenditures are principally related to opening of new restaurants, existing capital investments (both for remodels and maintenance), as well as investments in our Restaurant Support Center infrastructure. Additionally, we continue to invest in technology, including the deployment of self-service kiosks and upgrades to our IT infrastructure, to improve operational efficiency and the guest experience.
Our ongoing capital expenditures are principally related to opening of new restaurants, existing capital investments (both for remodels and maintenance), as well as investments in our Restaurant Support Center infrastructure. Additionally, we continue to invest in technology, including upgrades to our IT infrastructure, to improve operational efficiency and the guest experience.
Liquidity and Capital Resources Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand, and availability under our 2023 Revolver Facility.
Liquidity and Capital Resources Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand, and availability under our 2025 Revolver Facility.
The payments that we are required to make will generally reduce the amount of overall cash flow that might have otherwise been available to us, but we expect the cash tax savings we will realize to fund the required payments. Assuming no Portillo's Inc.
The payments that we are required to make will generally reduce the amount of overall cash flow that might have otherwise been available to us, but we expect the cash tax savings we will realize to fund the required payments.
Additionally, we estimate the amount of TRA payments expected to be paid within the next 12 months and classify this amount as current on our consolidated balance sheet. This determination is based on our estimate of taxable income for the previous fiscal year and the timing of the anticipated payments.
Form 10-K | 33 Table of Contents Additionally, we estimate the amount of TRA payments expected to be paid within the next 12 months and classify this amount as current on our consolidated balance sheet. This determination is based on our estimate of taxable income for the previous fiscal year and the timing of the anticipated payments.
We expect a payment of $7.7 million relating to tax year 2023 to be made within the next 12 months.
We expect a payment of $7.9 million relating to tax year 2024 to be made within the next 12 months.
We may enter into purchase commitments relating to supply chain, construction, marketing and other service-related arrangements that occur in the normal course of business. Such commitments are typically short-term in nature and are not material as of December 29, 2024.
We may enter into purchase commitments relating to supply chain, construction, marketing and other service-related arrangements that occur in the normal course of business. Such commitments are typically short-term in nature and are not material as of December 28, 2025. Portillo's Inc.
Form 10-K | 33 Table of Contents Income Taxes We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Portillo’s OpCo and will be taxed at the prevailing corporate tax rates.
Income Taxes We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Portillo’s OpCo and will be taxed at the prevailing corporate tax rates.
As of December 29, 2024, we had $197.4 million of deferred tax assets, net of the recorded valuation allowance. Under the provisions of ASC 740— Income Taxes , as it relates to accounting for uncertainties in tax positions, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.
As of December 28, 2025, we had $211.3 million of deferred tax assets, net of the recorded valuation allowance. Under the provisions of ASC 740— Income Taxes , as it relates to accounting for uncertainties in tax positions, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.
For a comparison of results of operations and financial condition for fiscal years 2023 and 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended December 31, 2023, filed February 27, 2024.
For a comparison of results of operations and financial condition for fiscal years 2024 and 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended December 29, 2024, filed February 25, 2025.
The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to Portillo's Inc. and the non-controlling interest holders. Net income attributable to non-controlling interests for fiscal 2024 was $5.6 million, compared to $6.4 million for fiscal 2023.
The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to Portillo's Inc. and the non-controlling interest holders. Net income attributable to non-controlling interests for fiscal 2025 was $1.7 million, compared to $5.6 million for fiscal 2024. The decrease in net Portillo's Inc.
As a percentage of revenues, net, operating expenses increased 0.4%. General and Administrative Expenses General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations, including marketing and advertising costs incurred as well as legal and professional fees. General and administrative expenses also include equity-based compensation expense.
General and Administrative Expenses General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations, including marketing and advertising costs incurred as well as legal and professional fees. General and administrative expenses also include equity-based compensation expense.
Factors that influence labor costs include wage inflation and payroll tax legislation, health care costs and the staffing needs of our restaurants. Labor expenses for fiscal 2024 were $181.1 million compared to $173.9 million for fiscal 2023, an increase of $7.2 million or 4.2%.
Factors that influence labor costs include wage inflation and payroll tax legislation, health care costs and the staffing needs of our restaurants. Labor expenses for fiscal 2025 were $191.7 million compared to $181.1 million for fiscal 2024, an increase of $10.6 million or 5.9%.
Pre-opening expenses for fiscal 2024 were $9.2 million compared to $9.0 million for fiscal 2023, an increase of $0.2 million or 2.4%. This increase was due to the number, timing and location of executed and planned new restaurant openings for fiscal 2024 as compared to fiscal 2023.
Pre-opening expenses for fiscal 2025 were $8.8 million compared to $9.2 million for fiscal 2024, a decrease of $0.4 million or 4.7%. This decrease was due to the number, timing and location of executed and planned new restaurant openings for fiscal 2025 as compared to fiscal 2024.
As of December 29, 2024, we recognized $324.6 million of liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient future taxable income to utilize the related tax benefits.
As of December 28, 2025, we recognized $352.4 million of liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient future taxable income to utilize the related tax benefits.
Non-GAAP Financial Measures To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Adjusted EBITDA and Adjusted EBITDA Margin, and Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin.
Form 10-K | 28 Table of Contents Non-GAAP Financial Measures To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Adjusted EBITDA and Adjusted EBITDA Margin, and Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin.
The Tax Receivable Agreement liability adjustment was $9.1 million for the fiscal year ended December 29, 2024 related to a remeasurement primarily due to activity under equity-based compensation plans and effective state tax rate changes. The Tax Receivable Agreement liability adjustment was $3.3 million for the fiscal year ended December 31, 2023.
The Tax Receivable Agreement liability adjustment was $2.9 million for fiscal 2025 related primarily to a remeasurement due to activity under equity-based compensation plans and effective state tax rate changes. The Tax Receivable Agreement liability adjustment was $9.1 million for fiscal 2024.
Under this scenario, we would be required to pay the TRA Parties approximately 85% of such amount, or $324.6 million, primarily over the next 15 years, declining in year 16 through year 47. During the year ended December 29, 2024, we made a TRA payment of $4.4 million relating to tax year 2022.
Under this scenario, we would be required to pay the TRA Parties approximately 85% of such amount, or $352.4 million, primarily over the next 15 years, declining in year 16 through year 47. During fiscal 2025, we made a TRA payment of $7.7 million relating to tax year 2023.
Other Income, Net Other income, net includes, among other items, income resulting from discounts received for timely filing of sales tax returns, management fee income associated with our investment in C&O, trading gains or losses on our deferred compensation plan and gains, losses on asset disposals, and asset impairment charges.
Other Loss (Income), Net Other loss (income), net includes, among other items, management fee income associated with our investment in C&O, trading gains or losses on our deferred compensation plan and gains, losses on asset disposals, and asset impairment charges, and income resulting from discounts Portillo's Inc.
As of December 29, 2024 and December 31, 2023, there were 71 an d 68 restaurants in our Comparable Restaurant Base, respectively. The Comparable Restaurant Base excludes C&O, as described in Note 2. Summary Of Significant Accounting Policies of our consolidated financial Portillo's Inc. Form 10-K | 28 Table of Contents statements.
As of December 28, 2025 and December 29, 2024, there were 80 an d 71 restaurants in our Comparable Restaurant Base, respectively. The Comparable Restaurant Base excludes C&O, as described in Note 2. Summary Of Significant Accounting Policies of our consolidated financial statements.
Overview Portillo’s serves iconic Chicago street food through high-energy, multichannel restaurants designed to ignite the senses and create a memorable dining experience. Refer to Part I, Item 1, "Business" of this document for additional information about our business.
The f iscal years ended December 28, 2025 ("fiscal 2025") and December 29, 2024 ("fiscal 2024") both consisted of 52 weeks. Overview Portillo’s serves iconic Chicago street food through high-energy, multichannel restaurants designed to ignite the senses and create a memorable dining experience. Refer to Part I, Item 1, "Business" of this document for additional information about our business.
To the extent our estimate differs from actual results, we may be required to reclassify portions of our liabilities under the TRA between current and non-current. We expect a payment of $7.7 million to be made within the next 12 months. See Note 19. Subsequent Events for information about a recent amendment to the TRA. Portillo's Inc.
To the extent our estimate differs from actual results, we may be required to reclassify portions of our liabilities under the TRA between current and non-current. We expect a payment of $7.9 million to be made within the next 12 months.
General and administrative expenses are impacted by changes in our team member count and costs related to strategic and growth initiatives. General and administrative expenses for fiscal 2024 were $75.1 million compared to $78.8 million for fiscal 2023, a decrease of $3.7 million or 4.8%.
General and administrative expenses are impacted by changes in our team member count and costs related to strategic and growth initiatives. General and administrative expenses for fiscal 2025 were $77.1 million compared to $75.1 million for fiscal 2024, an increase of $2.1 million or 2.7%.
(4) Represents loss on disposal of property and equipment and a technology asset impairment charge included within other income, net. (5) Represents certain expenses that management believes are not indicative of ongoing operations, consisting primarily of certain professional fees included within general and administrative expenses. (6) Represents remeasurement of the Tax Receivable Agreement liability.
(4) Represents loss on disposal of property and equipment, a legacy Barnelli's trade name impairment charge in fiscal 2025, and a technology asset impairment charge in fiscal 2024 included within other loss (income), net. (5) Represents certain expenses that management believes are not indicative of ongoing operations, consisting primarily of certain professional fees included within general and administrative expenses.
(2) Represents non-capitalized third-party consulting and software licensing costs incurred in connection with the implementation of new enterprise resource planning ("ERP") and human capital management ("HCM") systems which are included within general and administrative expenses. (3) Represents amortization of capitalized cloud-based ERP system implementation costs that are included within general and administrative expenses.
(2) Represents non-capitalized third-party consulting and software licensing costs incurred in connection with the implementation of a new ERP and HCM systems which are included within general and administrative expenses. Portillo's Inc. Form 10-K | 29 Table of Contents (3) Represents amortization of capitalized cloud-based ERP and HCM system implementation costs that are included within general and administrative expenses.
As a percentage of revenues, net, food, beverage and packaging costs remained flat during fiscal 2024 as the increase in average check and lower third-party delivery commissions were offset by an increase in certain commodity prices. Labor Expenses Labor expenses include hourly and management wages, bonuses and equity-based compensation, payroll taxes, workers’ compensation expense, and team member benefits.
As a percentage of revenues, net, food, beverage and packaging costs increased 0.4% during fiscal 2025. The increase was primarily due to an increase in certain commodity prices, partially offset by an increase in average check. Labor Expenses Labor expenses include hourly and management wages, bonuses and equity-based compensation, payroll taxes, workers’ compensation expense, and team member benefits.
Net Income Attributable to Non-controlling Interests We are the sole managing member of Portillo's OpCo. We manage and operate the business and control the strategic decisions and day-to-day operations of Portillo’s OpCo and we also have a substantial financial interest in Portillo’s OpCo.
We manage and operate the business and control the strategic decisions and day-to-day operations of Portillo’s OpCo and we also have a substantial financial interest in Portillo’s OpCo.
Form 10-K | 31 Table of Contents material changes in relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we estimate that the tax savings associated with all tax attributes described above would aggregate to approximately $381.9 million as of December 29, 2024.
Assuming no material changes in relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we estimate that the tax savings associated with all tax attributes described above would aggregate to approximately $414.6 million as of December 28, 2025.
This increase in revenues was partially offset by a same-restaurant sales decrease of 0.6%, or $3.4 million. The same-restaurant sales decline was attributable to a 3.2% decrease in transactions, partially offset by an increase in average check of 2.6%. The higher average check was primarily driven by an approximate 4.6% increase in menu prices partially offset by product mix.
This increase in revenues was partially offset by a same-restaurant sales decrease of 0.5%, or $2.9 million. The same-restaurant sales decline was attributable to a 2.5% decrease in transactions, partially offset by an increase in average check of 2.0%.
Form 10-K | 25 Table of Contents Occupancy expenses for fiscal 2024 were $36.6 million compared to $33.4 million for fiscal 2023, an increase of $3.3 million or 9.8%, primarily driven by the opening of ten restaurants in fiscal 2024 and the opening of twelve restaurants in 2023. As a percentage of revenues, occupancy expenses increased 0.2% during fiscal 2024.
Occupancy expenses for fiscal 2025 were $40.6 million compared to $36.6 million for fiscal 2024, an increase of $4.0 million or 10.9%, primarily driven by the opening of eight restaurants in fiscal 2025 and the opening of ten restaurants in fiscal 2024. As a percentage of revenues, occupancy expenses increased 0.4% during fiscal 2025 primarily due to lower transactions.
(4) Includes revenue from direct shipping sales and non-traditional locations. *nm - not meaningful Food, Beverage and Packaging Costs Food, beverage and packaging costs include the direct costs associated with food, beverage and packaging of our menu items and third-party delivery commissions.
Excludes a restaurant that is owned by C&O of which Portillo's owns 50% of the equity. (2) Includes revenue from direct shipping sales and non-traditional locations. *nm - not meaningful Food, Beverage and Packaging Costs Food, beverage and packaging costs include the direct costs associated with food, beverage and packaging of our menu items and third-party delivery commissions.
The $23.6 million change in our operating asset and liability balances was primarily driven by operating assets and liabilities being a source of net cash of $25.7 million in fiscal 2024, compared to a source of net cash of $2.1 million in the fiscal 2023 driven by the change in accounts payable, deferred lease incentives, other current assets, and inventories.
The $13.0 million change in our operating asset and liability balances was primarily driven by operating assets and liabilities being a source of net cash of $12.7 million in fiscal 2025, compared to a source of net cash of $25.7 million in the fiscal 2024 driven by the change in accounts payable and trade receivables.
This increase was primarily driven by the change in operating assets and liabilities of $23.6 million and higher net income of $10.3 million, partially offset by the change in non-cash items of $6.6 million.
This decrease was primarily driven by a decrease in net income of $14.0 million and the change in operating assets and liabilities of $13.0 million, partially offset by the change in non-cash items of $0.9 million.
Average Unit Volume AUV is the total revenue (excluding gift card breakage) recognized in the Comparable Restaurant Base, including C&O, divided by the number of restaurants in the Comparable Restaurant Base, including C&O, by period. This key performance indicator allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.
Average Unit Volume AUV is the total revenue (excluding gift card and Perks breakage) recognized in the Comparable Restaurant Base, including C&O, divided by the number of restaurants in the Comparable Restaurant Base, including C&O, by period.
As a percentage of revenues, net, labor decreased 0.1% during fiscal 2024 primarily due to an increase in our average check and lower variable-based compensation, partially offset by the lower transactions and the aforementioned wage rate increases.
As a percentage of revenues, net, operating expenses increased 0.6% primarily due to the aforementioned increases in expenses and lower transactions, partially offset by an increase in our average check.
Amounts payable under the TRA are contingent upon, among other things, (i) generation of future taxable income over the term of the TRA and (ii) future changes in tax laws.
As of December 28, 2025, we estimate that our obligation for future payments under the TRA totaled $352.4 million. Amounts payable under the TRA are contingent upon, among other things, (i) generation of future taxable income over the term of the TRA and (ii) future changes in tax laws.
Fiscal 2024 consists of 52 weeks and fiscal 2023 consisted of 53 weeks. In order to compare like-for-like periods for fiscal 2024, same-restaurant sales compares the 52 weeks from January 1, 2024 through December 29, 2024 to the 52 weeks from January 2, 2023 through December 31, 2023.
(c) Due to the 53rd week in fiscal 2023, same-restaurant sales for fiscal 2024 compares the 52 weeks from January 1, 2024 through December 29, 2024 to the 52 weeks from January 2, 2023 through December 31, 2023.
The increase in net income for the fiscal 2024 was primarily due to higher revenue partially offset by the factors driving the aforementioned expenses as described in the consolidated results of operations for fiscal 2024 compared to fiscal 2023.
The decrease in net income for fiscal 2025 was primarily due to the benefits of higher revenue were more than offset by the expense factors described in the consolidated results of operations for fiscal 2025 compared to fiscal 2024.
As of December 29, 2024, we maintained cash and cash equivalents and restricted cash balance of $22.9 million and had $69.7 million of availability under our 2023 Revolver Facility, after giving effect to $5.3 million in outstanding letters of credit.
As of December 28, 2025, we maintained cash and cash equivalents and restricted cash balance of $20.0 million and had $55.6 million of availability under our 2025 Revolver Facility, after giving effect to $4.4 million in outstanding letters of credit.
This decrease was primarily driven by lower equity and variable-based compensation and insurance expenses, partially offset by an increase in advertising expenses driven by the Chicagoland ad campaign, and professional fees and software license fees related to our ERP and human capital management ("HCM") system implementations.
This was primarily driven by $5.1 million of dead site costs, an increase in wages and benefits, higher professional fees, higher software licensing fees related to our enterprise resource planning ("ERP") and human capital management ("HCM") system implementations, and higher advertising expenses, partially offset by lower equity- and variable-based compensation.
Income tax expense for fiscal 2024 was $6.8 million compared to $3.2 million for fiscal 2023, an increase of $3.6 million or 109.3%. Our effective income tax rate for fiscal 2024 was 16.2%, compared to 11.5% for fiscal 2023.
Income tax expense for fiscal 2025 was $3.0 million compared to $6.8 million for fiscal 2024, a decrease of $3.8 million or 55.9%. Our effective income tax rate for fiscal 2025 was 12.4%, compared to 16.2% for fiscal 2024.
Other income, net for fiscal 2024 was $0.3 million compared to $1.0 million for fiscal 2023, a decrease of $0.7 million or 69.9%. Other income, net decreased primarily due to a technology asset impairment charge. Interest Expense Interest expense primarily consists of interest and fees on our credit facilities and the amortization expense for debt discount and deferred issuance costs.
Interest Expense Interest expense primarily consists of interest and fees on our credit facilities and the amortization expense for debt discount and deferred issuance costs. Interest expense for fiscal 2025 was $22.8 million compared to $25.6 million for fiscal 2024, a decrease of $2.8 million or 11.0%.
This increase was primarily driven by the opening of ten restaurants in fiscal 2024 and the opening of twelve restaurants in fiscal 2023, and incremental investments to support our team members, including annual rate increases, partially offset by lower variable-based compensation.
This increase was primarily driven by the opening of eight restaurants in fiscal 2025 and the opening of ten restaurants in fiscal 2024, incremental investments to support our team members, and an increase in benefit expenses.
Critical Accounting Estimates This discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements.
Form 10-K | 32 Table of Contents Critical Accounting Estimates This discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with GAAP.
Investing Activities Net cash used in investing activities was $88.1 million for fiscal 2024 compared to net cash used in investing activities of $87.8 million for fiscal 2023, an increase of $0.3 million or 0.3%.
Form 10-K | 31 Table of Contents Investing Activities Net cash used in investing activities was $90.2 million for fiscal 2025 compared to net cash used in investing activities of $88.1 million for fiscal 2024, an increase of $2.1 million or 2.4%.
Fiscal Years Ended December 29, 2024 December 31, 2023 REVENUES, NET $ 710,554 100.0 % $ 679,905 100.0 % COST AND EXPENSES: Restaurant operating expenses: Food, beverage and packaging costs 241,679 34.0 % 230,869 34.0 % Labor 181,091 25.5 % 173,868 25.6 % Occupancy 36,632 5.2 % 33,358 4.9 % Other operating expenses 83,038 11.7 % 76,639 11.3 % Total restaurant operating expenses 542,440 76.3 % 514,734 75.7 % General and administrative expenses 75,089 10.6 % 78,835 11.6 % Pre-opening expenses 9,236 1.3 % 9,019 1.3 % Depreciation and amortization 27,297 3.8 % 24,313 3.6 % Net income attributable to equity method investment (1,229) (0.2) % (1,401) (0.2) % Other income, net (312) — % (1,035) (0.2) % OPERATING INCOME 58,033 8.2 % 55,440 8.2 % Interest expense 25,616 3.6 % 27,470 4.0 % Interest income (309) — % (212) — % Tax Receivable Agreement liability adjustment (9,149) (1.3) % (3,349) (0.5) % Loss on debt extinguishment — — % 3,465 0.5 % INCOME BEFORE INCOME TAXES 41,875 5.9 % 28,066 4.1 % Income tax expense 6,799 1.0 % 3,248 0.5 % NET INCOME 35,076 4.9 % 24,818 3.7 % Net income attributable to non-controlling interests 5,559 0.8 % 6,394 0.9 % NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. $ 29,517 4.2 % $ 18,424 2.7 % Note : We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.
Fiscal Years Ended December 28, 2025 December 29, 2024 REVENUES, NET $ 732,066 100.0 % $ 710,554 100.0 % COST AND EXPENSES: Restaurant operating expenses: Food, beverage and packaging costs 251,705 34.4 % 241,679 34.0 % Labor 191,691 26.2 % 181,091 25.5 % Occupancy 40,631 5.6 % 36,632 5.2 % Other operating expenses 89,637 12.2 % 83,038 11.7 % Total restaurant operating expenses 573,664 78.4 % 542,440 76.3 % General and administrative expenses 77,140 10.5 % 75,089 10.6 % Pre-opening expenses 8,802 1.2 % 9,236 1.3 % Depreciation and amortization 29,112 4.0 % 27,297 3.8 % Net income attributable to equity method investment (1,275) (0.2) % (1,229) (0.2) % Other loss (income), net 946 0.1 % (312) — % OPERATING INCOME 43,677 6.0 % 58,033 8.2 % Interest expense 22,808 3.1 % 25,616 3.6 % Interest income (275) — % (309) — % Tax Receivable Agreement liability adjustment (2,945) (0.4) % (9,149) (1.3) % INCOME BEFORE INCOME TAXES 24,089 3.3 % 41,875 5.9 % Income tax expense 2,997 0.4 % 6,799 1.0 % NET INCOME 21,092 2.9 % 35,076 4.9 % Net income attributable to non-controlling interests 1,747 0.2 % 5,559 0.8 % NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. $ 19,345 2.6 % $ 29,517 4.2 % Revenues, Net Revenues primarily represent the aggregate sales of food and beverages, net of discounts.
Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing and financing activities (in thousands): Fiscal Years Ended December 29, 2024 December 31, 2023 Net cash provided by operating activities $ 98,040 $ 70,781 Net cash used in investing activities (88,114) (87,837) Net cash provided by (used in) financing activities 2,512 (16,933) Net increase (decrease) in cash and cash equivalents and restricted cash 12,438 (33,989) Cash and cash equivalents and restricted cash at beginning of period 10,438 44,427 Cash and cash equivalents and restricted cash at end of period $ 22,876 $ 10,438 Note : We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.
Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing and financing activities (in thousands): Fiscal Years Ended December 28, 2025 December 29, 2024 Net cash provided by operating activities $ 71,911 $ 98,040 Net cash used in investing activities (90,193) (88,114) Net cash provided by financing activities 15,369 2,512 Net (decrease) increase in cash and cash equivalents and restricted cash (2,913) 12,438 Cash and cash equivalents and restricted cash at beginning of period 22,876 10,438 Cash and cash equivalents and restricted cash at end of period $ 19,963 $ 22,876 Operating Activities Net cash provided by operating activities for fiscal 2025 was $71.9 million compared to net cash provided by operating activities of $98.0 million for fiscal 2024, a decrease of $26.1 million or 26.7%.
For the purpose of calculating same-restaurant sales as of December 29, 2024, sales for 71 restaurants were included in the Comparable Portillo's Inc. Form 10-K | 24 Table of Contents Restaurant Base (as defined in "Key Performance Indicators and Non-GAAP Financial Measures" below) as of the end of fiscal 2024.
Restaurants not in our Comparable Restaurant Base contributed $27.4 million of the total year-over-year increase. For the purpose of calculating same-restaurant sales for the year ended December 28, 2025, sales for 80 restaurants were included in the Comparable Restaurant Base (as defined in "Key Performance Indicators and Non-GAAP Financial Measures" below). Portillo's Inc.
Due to their inherent uncertainty, these judgments and estimates may be subject to change, which could materially impact future periods.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. Due to their inherent uncertainty, these judgments and estimates may be subject to change, which could materially impact future periods.
Other Operating Expenses Other operating expenses consist of direct marketing expenses, utilities and other expenses incidental to operating our restaurants, such as credit card fees and repairs and maintenance.
Other Operating Expenses Other operating expenses consist of direct marketing expenses, utilities and other expenses incidental to operating our restaurants, such as credit card fees and repairs and maintenance. Other operating expenses for fiscal 2025 were $89.6 million compared to $83.0 million for fiscal 2024, an increase of $6.6 million or 7.9%, Portillo's Inc.
This increase is primarily due to the payment and borrowing of long-term debt in connection with our refinancing in fiscal 2023 as described in Note 9. Debt and higher proceeds from stock option exercises.
This increase is due to an increase in proceeds from short-term debt, partially offset by payments of long-term debt in connection with our refinancing in the first quarter of 2025, as described in Note 9.
Fiscal Years Ended December 29, 2024 December 31, 2023 Total Restaurants (a) 94 84 AUV (in millions) (a) $ 8.7 $ 9.1 Change in same-restaurant sales (b)(c) (0.6) % 5.7 % Adjusted EBITDA (in thousands) (b) $ 104,760 $ 102,282 Adjusted EBITDA Margin (b) 14.7 % 15.0 % Restaurant-Level Adjusted EBITDA (in thousands) (b) $ 168,114 $ 165,171 Restaurant-Level Adjusted EBITDA Margin (b) 23.7 % 24.3 % Note : We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.
Fiscal Years Ended December 28, 2025 December 29, 2024 Total Restaurants (a) 102 94 AUV (in millions) (a) $ 8.5 $ 8.7 Change in same-restaurant sales (b)(c) (0.5) % (0.6) % Adjusted EBITDA (in thousands) (b) $ 97,331 $ 104,760 Adjusted EBITDA Margin (b) 13.3 % 14.7 % Restaurant-Level Adjusted EBITDA (in thousands) (b) $ 158,402 $ 168,114 Restaurant-Level Adjusted EBITDA Margin (b) 21.6 % 23.7 % (a) Includes C&O, as described in Note 2.
Simultaneously, we will continue to fill-in existing markets, including Chicagoland and adjacent markets as opportunities come available. Portillo's Inc. Form 10-K | 23 Table of Contents Consolidated Results of Operations The following table summarizes our results of operations for fiscal 2024 and fiscal 2023 (in thousands).
Form 10-K | 23 Table of Contents Consolidated Results of Operations The following table summarizes our results of operations for fiscal 2025 and fiscal 2024 (in thousands).
This increase was primarily attributable to incremental depreciation of capital expenditures related to the opening of ten restaurants in fiscal 2024 and the opening of twelve restaurants in fiscal 2023.
This increase was primarily attributable to incremental depreciation of capital expenditures related to the opening of eight restaurants in fiscal 2025 and the opening of ten restaurants in fiscal 2024, partially offset by a reduction in depreciation expense due to fully depreciated assets and disposals compared to the prior year period.
Depreciation and Amortization Depreciation and amortization expenses consist of the depreciation of fixed assets, including leasehold improvements, fixtures and equipment and the amortization of definite-lived intangible assets, which are comprised of recipes. Depreciation and amortization expense for fiscal 2024 was $27.3 million compared to $24.3 million for fiscal 2023, an increase of $3.0 million or 12.3%.
Depreciation and Amortization Depreciation and amortization expenses consist of the depreciation of fixed assets, including land improvements, buildings and improvements, fixtures and equipment, leasehold improvements, and the amortization of definite-lived intangible assets, which are primarily comprised of recipes.
The increase was partially offset by an increase in payments made under the TRA of $3.6 million. 2023 Revolver Facility and Liens On February 2, 2023, Holdings, the Borrower, the other Guarantors party thereto from time to time, each lender party thereto from time to time and Fifth Third Bank, National Association, as Administrative Agent, L/C Issuer and Swing Line Lender entered into the 2023 Credit Agreement which provides for the 2023 Term Loan in an initial aggregate principal amount of $300.0 million and the 2023 Revolver Facility in an initial aggregate principal amount of $100.0 million.
Debt, and an increase in payments made under the TRA of $3.3 million. 2025 Revolver Facility and Liens On January 27, 2025, PHD Intermediate LLC, Portillo’s Holdings LLC, the other Guarantors party thereto, the Lenders from time to time party thereto and Fifth Third Bank, National Association, as Administrative Agent, the L/C Issuer and the Swing Line Lender entered into an amendment (the “Amendment”) to the 2023 Credit Agreement (as amended by the Amendment and as may be amended, restated, supplemented or otherwise modified from time to time thereafter, the “2025 Credit Agreement”).
Financing Activities Net cash provided by financing activities was $2.5 million for fiscal 2024 compared to net cash used in financing activities of $16.9 million for fiscal 2023, an increase of $19.4 million or 114.8%.
This increase was primarily due to the number of restaurant openings and builds in process during 2025 and the planned restaurant openings for 2026. Financing Activities Net cash provided by financing activities was $15.4 million for fiscal 2025 compared to net cash provided by financing activities of $2.5 million for fiscal 2024, an increase of $12.9 million or 511.8%.
Portillo's Inc. Form 10-K | 26 Table of Contents Net income attributable to equity method investment for fiscal 2024 was $1.2 million compared to $1.4 million for fiscal 2023, a decrease of $0.2 million or 12.3%. This decrease was primarily driven by an increase in restaurant-level operating expenses, partially offset by an increase in sales.
Net income attributable to equity method investment for fiscal 2025 was $1.3 million compared to $1.2 million for fiscal 2024, an increase of $0.05 million or 3.7%. This increase was primarily driven by improved leverage of labor and operating expenses.
Commodity inflation was 4.2% in fiscal 2024 compared to 5.5% in fiscal 2023. In fiscal 2024, we experienced a decrease of 0.1% in labor expenses, as a percentage of revenue, compared to fiscal 2023 primarily due to an increase in average check and lower variable-based compensation, partially offset by lower transactions and additional wage investments.
In fiscal 2025, we experienced an increase of 0.7% in labor expenses, as a percentage of revenue, compared to fiscal 2024 primarily due to lower transactions, incremental wage rate increases, deleverage from our newer restaurant openings, and higher benefit costs, partially offset by labor efficiencies and a higher average check.
Form 10-K | 29 Table of Contents The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA margin (in thousands): Fiscal Years Ended December 29, 2024 December 31, 2023 Net income $ 35,076 $ 24,818 Net income margin 4.9 % 3.7 % Depreciation and amortization 27,297 24,313 Interest expense 25,616 27,470 Interest income (309) (212) Loss on debt extinguishment — 3,465 Income tax expense 6,799 3,248 EBITDA 94,479 83,102 Deferred rent (1) 5,255 5,096 Equity-based compensation 11,151 15,542 Cloud-based software implementation costs (2) 679 401 Amortization of cloud-based software implementation costs (3) 586 — Other loss (4) 1,184 590 Transaction-related fees and expenses (5) 575 900 Tax Receivable Agreement liability adjustment (6) (9,149) (3,349) Adjusted EBITDA $ 104,760 $ 102,282 Adjusted EBITDA Margin (7) 14.7 % 15.0 % Note : We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.
The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA margin (in thousands): Fiscal Years Ended December 28, 2025 December 29, 2024 Net income $ 21,092 $ 35,076 Net income margin 2.9 % 4.9 % Depreciation and amortization 29,112 27,297 Interest expense 22,808 25,616 Interest income (275) (309) Income tax expense 2,997 6,799 EBITDA 75,734 94,479 Deferred rent (1) 6,840 5,255 Equity-based compensation 6,493 11,151 Cloud-based software implementation costs (2) 267 679 Amortization of cloud-based software implementation costs (3) 1,091 586 Other loss (4) 2,635 1,184 Transaction-related fees and expenses (5) 742 575 Strategic realignment costs (6) 6,474 — Tax Receivable Agreement liability adjustment (7) (2,945) (9,149) Adjusted EBITDA $ 97,331 $ 104,760 Adjusted EBITDA Margin (8) 13.3 % 14.7 % (1) Represents the difference between cash rent payments and the recognition of straight-line rent expense recognized over the lease term.
Food, beverage and packaging costs for fiscal 2024 was $241.7 million compared to $230.9 million for fiscal 2023, an increase of $10.8 million or 4.7%.
Food, beverage and packaging costs for fiscal 2025 were $251.7 million compared to $241.7 million for fiscal 2024, an increase of $10.0 million or 4.1%. This increase was primarily driven by a 3.9% increase in commodity prices and the opening of eight restaurants in fiscal 2025 and the opening of ten restaurants in fiscal 2024.
The decrease in net income attributable to non-controlling interests for fiscal 2024 was primarily due to a decrease in the non-controlling interest holders' weighted average ownership from 25.9% for fiscal 2023 to 17.0% for fiscal 2024, partially offset by an increase in net income for fiscal 2024 compared to fiscal 2023.
Form 10-K | 27 Table of Contents income attributable to non-controlling interests for fiscal 2025 was primarily due to a decrease in net income and a decrease in the pre-IPO LLC Members' weighted average ownership to 8.3% for fiscal 2025 from 17.0% for fiscal 2024.
Our effective interest rate was 7.53% and 8.36% as of December 29, 2024 and December 31, 2023, respectively. Interest Income Interest income primarily consists of interest earned on our cash, cash equivalents and restricted cash. Interest income for fiscal 2024 was $0.3 million compared to $0.2 million for fiscal 2023, an increase of $0.1 million or 45.8%.
Interest Income Interest income primarily consists of interest earned on our cash, cash equivalents and restricted cash. Interest income for both fiscal 2025 and fiscal 2024 was $0.3 million.
Form 10-K | 30 Table of Contents thousands): Fiscal Years Ended December 29, 2024 December 31, 2023 Operating income $ 58,033 $ 55,440 Operating income margin 8.2 % 8.2 % Plus: General and administrative expenses 75,089 78,835 Pre-opening expenses 9,236 9,019 Depreciation and amortization 27,297 24,313 Net income attributable to equity method investment (1,229) (1,401) Other income, net (312) (1,035) Restaurant-Level Adjusted EBITDA $ 168,114 $ 165,171 Restaurant-Level Adjusted EBITDA Margin (1) 23.7 % 24.3 % Note : We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.
The following table reconciles operating income to Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin (in thousands): Fiscal Years Ended December 28, 2025 December 29, 2024 Operating income $ 43,677 $ 58,033 Operating income margin 6.0 % 8.2 % Plus: General and administrative expenses 77,140 75,089 Pre-opening expenses 8,802 9,236 Depreciation and amortization 29,112 27,297 Net income attributable to equity method investment (1,275) (1,229) Other loss (income), net 946 (312) Restaurant-Level Adjusted EBITDA $ 158,402 $ 168,114 Restaurant-Level Adjusted EBITDA Margin (1) 21.6 % 23.7 % (1) Restaurant-Level Adjusted EBITDA Margin is defined as Restaurant-Level Adjusted EBITDA divided by Revenues, net.
Other operating expenses for fiscal 2024 were $83.0 million compared to $76.6 million for fiscal 2023, an increase of $6.4 million or 8.3%, primarily due to the opening of ten restaurants in fiscal 2024 and the opening of twelve restaurants in 2023 and an increase in repair and maintenance expenses, IT expenses, and utilities, partially offset by a decrease in operating supplies and advertising expenses.
Form 10-K | 25 Table of Contents primarily due to the opening of eight restaurants in fiscal 2025 and the opening of ten restaurants in fiscal 2024 and an increase in utilities, repair and maintenance expenses, and advertising expense, partially offset by a decrease in cleaning expenses due to vendor renegotiation.
Fiscal 2024 consisted of 52 weeks and fiscal 2023 consisted of 53 weeks. The 53rd week in fiscal 2023 included Christmas day, resulting in six additional operating days. (a) Includes C&O, as described in Note 2. Summary Of Significant Accounting Policies in our consolidated financial statements. Total restaurants indicated are as of a point in time.
Summary Of Significant Accounting Policies in our consolidated financial statements. Total restaurants indicated are as of a point in time. (b) Excludes C&O.
The increase in our effective income tax rate for fiscal 2024 compared to fiscal 2023 was primarily driven by an increase in the Company's ownership interest in Portillo's OpCo, which increases its Portillo's Inc.
The decrease in our effective income tax rate for fiscal 2025 compared to fiscal 2024 was primarily driven by a decrease in the valuation allowance related to the separation of Mr.
Interest expense for fiscal 2024 was $25.6 million compared to $27.5 million for fiscal 2023, a decrease of $1.9 million or 6.7%. This decrease was primarily driven by a lower effective interest rate due to improved lending terms associated with our 2023 Term Loan and 2023 Revolver Facility.
This decrease was primarily driven by a lower effective interest rate attributable to the improved lending terms associated with our 2025 Credit Agreement amendment, partially offset by additional interest expense in connection with increased borrowings under our 2025 Revolver Facility. Our effective interest rate was 6.73% and 7.53% as of December 28, 2025 and December 29, 2024, respectively.
The $6.6 million change from fiscal 2023 in non-cash charges was primarily driven by lower equity-based compensation expense and the loss on debt extinguishment in the prior year, partially offset by higher depreciation and amortization and an increase in income tax expense in the current year.
The $0.9 million change from fiscal 2024 in non-cash charges was primarily driven by a lower Tax Receivable Agreement liability adjustments and an asset impairment charge related to the legacy's Barnelli's tradename, partially offset by lower equity-based compensation expense. Portillo's Inc.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 29, 2024 and December 31, 2023, we had a total of $313.8 million and $309.4 million, respectively, in outstanding borrowings under o ur 2023 Term Loan and 2023 Revolver Facility, excluding unamortized debt discount and deferred issuance costs. See Note 9.
Biggest changeAs of December 28, 2025 and December 29, 2024, we had a total of $336.9 million and $313.8 million, respectively, in outstanding borrowings , excluding unamortized debt discount and deferred issuance costs. See Note 9. Debt for individual balances for our Term Loan and Revolver Facility as of December 28, 2025 .
Factors that affect the price of commodities are generally outside of our control and include raw material inputs, geopolitical events, weather conditions, currency markets and global supply and demand dynamics, among other items.
We consistently monitor factors that affect the price of commodities that are generally outside of our control and include raw material inputs, geopolitical events, weather conditions, currency markets and global supply and demand dynamics, among other items.
Based on the terms of the 2023 Credit Agreement, as of December 29, 2024, a change of one hundred basis points in the applicable interest rate would cause an increase or decrease in interest expense of approximately $3.1 million on an annual basis. Effects of Inflation Inflation has the potential to impact restaurant operating expenses at all levels.
Based on the terms of the 2025 Credit Agreement, as of December 28, 2025, a change of one hundred basis points in the applicable interest rate would cause an increase or decrease in interest expense of approximately $3.4 million on an annual basis. Effects of Inflation Inflation has the potential to impact restaurant operating expenses at all levels.
In an effort to minimize the impact of fluctuations in price and availability, we monitor the primary commodities we purchase and may enter into purchasing contracts and pricing arrangements when considered to be advantageous.
In an effort to minimize the impact of fluctuations in price and availability, we monitor the primary commodities we purchase and may enter into purchasing contracts and pricing arrangements when considered to be advantageous. St ructured programs within our organization exist to mitigate adverse impacts and proactively manage risk across our portfolio of key products, services and energy platforms.
St ructured programs within our organization exist to mitigate adverse impacts and proactively direct risk management strategies across our portfolio of key products, services and energy platforms. Interest Rate Risk Our credit facilities incur interest at a floating rate. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities.
Interest Rate Risk Our credit facilities incur interest at a floating rate. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities.
Removed
Debt for individual balances for our 2023 Term Loan and 2023 Revolver Facility as of December 29, 2024 .

Other PTLO 10-K year-over-year comparisons