Portillo's Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the quarter ended September 27, 2026, was $194.1 million, a 7.0% increase ($12.6 million) compared to $181.4 million in the prior year period.
• Net income was $4.8 million, an increase of $4.0 million (508.2%) compared to $0.8 million in the prior year.
• Adjusted EBITDA was $26.5 million, an increase of $5.1 million (23.7%) compared to $21.4 million in the prior year.
• Restaurant-Level Adjusted EBITDA was $40.1 million, an increase of $3.4 million (9.3%) compared to $36.7 million in the prior year.
• Same-restaurant sales increased 1.4% (or $2.4 million), driven by a 2.1% increase in average check, partially offset by a 0.7% decrease in transactions.
• Total restaurant operating expenses were $154.0 million, a 6.4% increase compared to $144.7 million in the prior year.
• General and administrative expenses were $19.8 million, a 1.4% decrease compared to $20.0 million in the prior year.
• Operating income was $11.8 million, a 116.8% increase compared to $5.4 million in the prior year.
• Cash and cash equivalents and restricted cash totaled $24.8 million as of September 27, 2026, compared to $19.9 million as of December 28, 2025.
• Net cash provided by operating activities for the three quarters ended September 27, 2026, was $61.8 million, compared to $48.7 million in the prior year period.

Guidance and Future Outlook:

• Fiscal 2026 Adjusted EBITDA guidance was raised to $98-$101 million from a prior target of $92-$96 million.
• Fiscal 2026 Revenue guidance is $768-$773 million.
• Fiscal 2026 Restaurant-level Adjusted EBITDA margin guidance is 20.0% to 20.5%, up from a prior target of 19.5% to 20.5%.
• Fiscal 2026 General and administrative expenses guidance is $80-$82 million, up from a prior target of $78-$82 million.
• Fiscal 2026 Capital expenditures guidance is approximately $55 million, down from a prior target of $55-$60 million.
• The Company expects to deliver annual same-restaurant sales of 2% to 3%.
• The Company plans to ramp new restaurant growth to a high-single-digit percentage over the next three years.
• All new restaurants beginning in 2028 are targeted to achieve cash-on-cash returns greater than 20%.
• Labor inflation is expected to be low single digit, revised from a prior target of 3% to 3.5%.

Business Segments and Product Lines:

• The Company opened seven new restaurants during the three quarters ended September 27, 2026, bringing the total restaurant count to 109.
• One additional restaurant is planned for opening in the fourth quarter of 2026, which will be the second in-line location in Chicago, Illinois.
• The Company introduced a new 2028 restaurant prototype that is approximately 4,600 square feet (over 40% smaller than the previous average) and requires approximately 1.5 acres of land.
• The Company is modernizing its marketing technology stack and conducting a full assessment of its Portillo's Perks® loyalty program to simplify the offering and drive engagement.
• A new Executive Chef has been appointed to oversee menu strategy, core-menu quality, and the innovation pipeline.
• The Company is refining regional leadership structures to reduce the number of restaurants each field leader oversees.

Market and Competitive Landscape:

• Formal third-party research confirmed brand strength extends beyond food to emotional connections with guests in Chicagoland and beyond.
• The Company is prioritizing two distinct millennial audiences identified in research as meaningful growth potential.
• The Company is balancing infill development in existing markets with expansion into new, strategically adjacent markets.
• The Company is evaluating every restaurant in the system to optimize its portfolio.

Risks and Challenges:

• The Company expects to close a mid-to-high single digit number of underperforming restaurants outside of Chicagoland, with the majority occurring in the fiscal fourth quarter of 2026.
• The Company expects the restaurant closures to result in material cash and non-cash charges mostly in the fiscal fourth quarter of 2026.
• The Company noted that one quarter does not establish a trend and significant work remains to execute consistently.
• The Company faces risks related to food safety, labor market competition, unionization activities, and macroeconomic factors including inflation and recession concerns.

Management Commentary and Tone:

• CEO Brett Patterson stated results were delivered ahead of expectations and expressed encouragement regarding early progress from actions taken to strengthen operations.
• Patterson emphasized that the focus remains on executing consistently and building a foundation for durable profitable growth.
• The Company introduced a strategic plan centered on operational excellence, integrated marketing, disciplined development, and financial rigor.
• Management highlighted the decision to close underperforming locations as a commitment to disciplined growth and improving returns on invested capital.

Other Key Points:

• The Company is right-sizing its corporate structure and strengthening its leadership team.
• The Company exited future real estate agreements that lacked sufficient return potential.
• The Company implemented stricter standards for new site selection, requiring locations to meet cash-on-cash return targets.
• The Company is aligning incentive compensation with sales and profit growth to strengthen restaurant-level accountability.
• The Company plans to prioritize capital allocation by first investing in existing restaurants, then new restaurant growth with projected returns above the risk-adjusted cost of capital, and finally directing excess cash toward debt reduction.
• The Company owns 50% of the equity in one restaurant owned by C&O, which is included in the total restaurant count.
• The Comparable Restaurant Base for the quarter ended September 27, 2026, included 87 restaurants, compared to 76 in the prior year period.