Portillo's Inc. (PTLO) Business

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”). 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"). 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.

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. 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. 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.

Overview of Portillo's

Portillo’s serves iconic Chicago street food in high-energy, multichannel restaurants designed to ignite the senses and create memorable dining experiences. Since our founding in 1963 in a small trailer that Dick Portillo called “The Dog House,” we have grown to become a treasured brand with a passionate (some might say obsessed) nationwide following. Our diverse menu features all-American favorites such as Chicago-style hot dogs and sausages, Italian beef sandwiches, char-broiled burgers, fresh chopped salads, crinkle-cut fries, homemade chocolate cake and our signature chocolate cake shake. 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. Nearly all of our restaurants were built with double lane drive-thrus and have been thoughtfully designed with a layout that accommodates a variety of access modes including dine-in, carryout, delivery and catering to quickly and efficiently serve our guests. We believe the combination of our craveable food, multichannel sales model, dedication to operational excellence, and distinctive team member-driven culture gives us a competitive advantage. Our business, including many of the elements described below, is subject to certain risks that may materially and adversely affect our ability to achieve our desired outcomes. 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. 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. 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.

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. No detail is too small, be it lighting, signage or even the stars subtly sparkling on the ceiling. Each restaurant also draws design elements from the local community. The layouts create comfortable spaces for individual diners, families, large groups, and even wedding parties.

Beyond the space itself, we believe the energy of Portillo’s is unique. 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!”). 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. 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 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.

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.

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. 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. 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.

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. 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. 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.

Our 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.

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.

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. 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. 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.

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 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. See our risk factor “Matters relating to employment and labor law could have a material adverse effect, result in litigation or union activities, add significant costs and divert management attention” identified in Part I, Item 1A of this Form 10-K.

Our Board of Directors and Board committees provide oversight of certain human capital programs. The Compensation Committee, with input from management and an independent third-party compensation consultant, has responsibility for administering and approving compensation, including our incentive and equity-based plans for executive officers. We discuss talent and succession plans annually for key positions and levels including the executive team. 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. People are the Heart of Portillo’s. 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. They represent a people-centric approach that impacts how we work, how we lead, and how we support one another every day. They are:

Leadership Development. We provide a full spectrum of resources, from skill building to leadership development, in the organization. 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.

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 growth, development, and retention strategies align on these leadership traits to build skills to be used both professionally and personally. We work with team members and managers to build individual development plans with training and experience, and we hold regularly scheduled development programs throughout the year for each level of leadership. 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. 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. 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. 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. 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. 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.

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.

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. 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.

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. 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. 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. 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 Sourcing and Supply Chain

Our supply chain approach is based on alignment with key strategic partners that are identified through a comprehensive evaluation process to ensure they meet our standards and expectations on a continual basis. We are committed to maintaining our high-quality food standards through fresh ingredients that meet our stringent specifications.

Portillo’s strongly believes in engaging with supplier partners who share a similar approach to our corporate values and practices. We align with key strategic partners that are identified through an evaluation process to ensure they can satisfy our standards and expectations. This approach affords our organization the opportunity for real-time performance assessments to identify any potential gaps and implement corrective measures where appropriate.

We review and update our contingency plans on a regular basis to provide a reliable supply of products and services to our business. As part of our risk assessment strategy, the supply chain team identifies areas critical to supporting the restaurants and makes any necessary adjustments or institutes alternate programs.

Suppliers and distribution partners are managed under both a supplier code of conduct and a pricing protocol that provides transparent insight to costing mechanisms. We expect all suppliers to meet rigorous standards set forth in the code, which cover areas such as human rights, business integrity, and environmental management. In addition, we engage directly with manufacturers to ensure compliance with negotiated contract pricing and requisite volume expectations.

Distribution. 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. We operate two commissaries to supply our network of restaurants with our signature beef, peppers and gravy for our Italian beef sandwiches and to ensure product consistency and quality. These ingredients are shipped to our restaurants where our team members will finish the preparation in our kitchens to serve our guests.

Quality Systems. 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. Our restaurant locations are audited for food safety and quality compliance through a combination of third-party organizations and the Portillo's-managed quality and food safety team. Our commissaries also undergo food safety and quality audits on a regular basis and are regulated by the U.S. Department of Agriculture ("USDA") and Food and Drug Administration ("FDA").

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. Our competition in these segments includes a variety of small, locally-owned restaurants, medium-sized regional restaurant concepts, and larger national restaurant concepts that provide some combination of dine-in, carry-out, drive-thru and delivery services to their guests. We believe competition with these restaurants is based primarily on quality and innovation in the food products offered, price and perceived value, quality of service experience (including technological and other innovations), speed of service, personnel, advertising and other marketing efforts, brand identification, restaurant location, and image and attractiveness of the restaurants.

The restaurant industry is often affected by changes in consumer tastes; national, regional or local economic conditions; demographic trends; traffic patterns; the type, number and location of competing restaurants; and consumers’ discretionary purchasing power. We compete within each market with national and regional chains and locally-owned restaurants for guests, management and hourly personnel and suitable real estate sites. 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.

Our Intellectual Property

Our intellectual property includes our trademarks and service marks registered with the United States Patent and Trademark Office (including Portillo’s® and other names used by our restaurants), the trade dress of our restaurants, our websites and domain names (including our website at portillos.com and other websites and domain names used by our restaurants) and other unregistered intellectual property. 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.

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. 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. Our team members are typically paid more than the applicable minimum wage in the area where they work, and increases in federal or state minimum wages or unemployment benefits may result in increases in the wage rates paid. We are also subject to the Americans with Disabilities Act (the “ADA”), which prohibits discrimination on the basis of disability in public accommodations and employment, which may require us to design or modify our restaurants to make reasonable accommodations for individuals with disabilities.

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. 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. 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 Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, statements of changes in beneficial ownership and amendments to those reports are available for free on our investor relations website as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases as part of our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by subscribing to email alerts. We also make certain corporate governance documents available on our investor relations website, including our corporate governance guidelines, board committee charters, and code of business conduct. Our code of business conduct applies to all team members, officers and directors. Any future amendments or waivers from our code of business conduct for our principal executive officer, principal financial officers, principal accounting officer or controller, or persons performing similar functions will be disclosed on our website promptly following the date of such amendment or waiver.

The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.