What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-25 · 154 added, 173 removed, 293 unchanged (53% of the section changed)

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The additional week (the "53rd week") in a 53-week fiscal year is added to the fourth quarter.

The f iscal year ended December 29, 2024 ("fiscal 2024") consisted of 52 weeks and the fiscal year ended December 31, 2023 ("fiscal 2023") consisted of 53 weeks.

The 53rd week in fiscal 2023 included Christmas day, resulting in six additional operating days.

The f iscal years ended December 28, 2025 ("fiscal 2025") and December 29, 2024 ("fiscal 2024") both consisted of 52 weeks.

Portillo’s serves iconic Chicago street food through high-energy, multichannel restaurants designed to ignite the senses and create a memorable dining experience.

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Recent Developments and Trends

Fiscal 2024 Highlights

Our fiscal 2024 financial highlights include:

Financial Highlights for Fiscal 2025 vs.

• Total revenue increased 3.0% or $21.5 million to $732.1 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 -0.5%

• 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.

• 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.

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Form 10-K | 22

In fiscal 2024, total revenue, operating income, net income, Restaurant-Level Adjusted EBITDA, and Adjusted EBITDA all improved versus the prior year.

We believe this improvement stemmed from maintaining concentration on our four strategic pillars, which guide our short-term objectives and form the basis for long-term growth as discussed in Part I.

In fiscal 2025, we continued to make progress against our long-term strategic priorities while managing significant operational and leadership transitions.

As further discussed in Part I, Item 1.

Business, we launched our loyalty program, Portillo’s Perks™ ("Perks"), and opened eight new restaurants, including our first location in Georgia and our first in-line restaurant.

In September 2025, the Company announced a strategic reset to its development strategy, following disappointing results from new market expansion, particularly in Texas.

Going forward, we plan to enter new markets more gradually, tapping into the pent up demand from Portillo's fans across the country, but recognizing that it takes time to build awareness and adoption among consumers who are not yet familiar with the brand.

Instead of rapidly building out markets, as we did in Dallas-Ft.

Worth and Houston, we will take a more measured approach with new restaurants separated by more time and distance.

We have implemented this roadmap to our entry into the Atlanta, Georgia market.

The first Portillo's opened in Kennesaw, Georgia in November of 2025 and the next restaurant will not open until 2027.

We also continue to refine our prototype to improve the unit economics while also maximizing the guest and team member experience.

In 2025, with the exception of one in-line restaurant and one Portillo's pickup restaurant, all new restaurant openings were our Restaurant of the Future ("RoTF 1.0") design, a 6,250 square foot restaurant.

All of the free standing restaurants scheduled to open in 2026 will follow that prototype.

In 2027, we plan to debut our Restaurant of the Future 2.0 design.

In fiscal 2025, total revenue grew 3.0%, primarily due to new restaurant openings in 2025 and 2024.

Same-restaurant sales declined 0.6% during fiscal 2024, compared to an increase of 5.7% during fiscal 2023.

Fiscal 2023 includes the positive impact of the 53rd week.

In fiscal 2024, we continued to see commodity inflation stabilize versus 2023 levels.

Same-restaurant sales declined 0.5% during fiscal 2025, compared to a decline of 0.6% during fiscal 2024.

Commodity inflation was 3.9% in fiscal 2025 compared to 4.2% in fiscal 2024.

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 are targeting 11% to 12% revenue growth and flat to 2% growth in same-restaurant sales.

We expect our overall commodity inflation to stay consistent with recent trends and are currently estimating commodity inflation to be 3% to 5%.

Additionally, we anticipate additional wage investments and are currently estimating 3% to 4% hourly wage inflation.

We will continue to strategically offset these expense increases through menu price increases and operational efficiencies, while monitoring the competitive landscape as well as consumer sentiment to inform our pricing decisions.

During January of 2025, we increased certain menu prices by approximately 1.5%.

We will continue to prioritize strategies to drive higher traffic and mix at our restaurants while optimizing returns and retaining our top talent.

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.

In 2026, we will focus on executing strategies that strengthen transaction growth across our restaurants while optimizing returns on our new restaurants.

We will leverage our Perks platform to drive trial and frequency, prioritize operational excellence, and invest in our team members.

These priorities support our commitment to positive free cash flow and delivering long-term value.

Development Highlights

During fiscal 2024, we opened 10 new restaurants in the Arizona, Florida, Illinois, Michigan, and Texas markets, for a total of 94 restaurants, including a restaurant owned by C&O.

Two restaurants in the Texas market were our Restaurant of the Future (“ROTF”) concept, a 6,250 square foot prototype restaurant.

We also opened our seventh restaurant in the Dallas-Fort Worth market to meet our goal of achieving minimum scale (6-8 restaurants) within 24 months of our first opening.

We also made significant strides in the Houston, Texas market with the opening of three new restaurants in the fourth quarter of 2024.

Below are the 10 restaurants opened since the beginning of fiscal 2024:

During fiscal 2025, we opened eight new restaurants in five markets, for a total of 102 restaurants, including a restaurant owned by C&O.

With the exception of one in-line restaurant and one Portillo's pickup restaurant, all new restaurant openings in 2025 were our RoTF 1.0 design, which is a smaller square footage prototype featuring a shorter, more efficient production line designed to reduce costs and provide excellent service to our guests.

Below are the restaurants opened in fiscal 2025:

Location Opening Month

Fiscal Quarter Opened

Denton, Texas

March 2024 Q1 2024

Surprise, Arizona

May 2024 Q2 2024

Livonia, Michigan

Tomball, Texas

July 2025 Q3 2025

Mansfield, Texas

Stafford, Texas

August 2025 Q3 2025

Richmond, Texas

October 2024 Q4 2024

December 2024 Q4 2024

Orlando, Florida

December 2024 Q4 2024

Houston, Texas (ROTF)

December 2024 Q4 2024

Grapevine, Texas (ROTF)

December 2024 Q4 2024

Orland Park, Illinois

Grand Prairie, Texas

August 2025 Q3 2025

Middleton, Florida (In-Line)

August 2025 Q3 2025

Chandler, Arizona

November 2025 Q4 2025

Plainfield, Illinois (Pickup) November 2025 Q4 2025

Kennesaw, Georgia

November 2025 Q4 2025

Lubbock, Texas

December 2025 Q4 2025

In fiscal 2025, we plan to open 12 new restaurants.

Our near-term restaurant growth strategy is focused on leveraging our proven unit economic model primarily in markets outside Chicagoland with favorable macro-economic tailwinds where we already have a presence.

Particularly, our current focus continues to be in the Sunbelt, primarily in Texas, with plans to enter the Atlanta, Georgia market.

Simultaneously, we will continue to fill-in existing markets, including Chicagoland and adjacent markets as opportunities come available.

In fiscal 2026, we plan to open eight new restaurants.

These openings will include our first airport location at Dallas–Fort Worth International Airport and our second in-line location.

Subsequent to December 28, 2025, we opened two of the eight planned restaurants for fiscal 2026, bringing our total restaurant count to 104, as of the filing of this Form 10-K, including a restaurant owned by C&O of which Portillo’s owns 50% of the equity.

Portillo's Inc.

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Net income attributable to equity method investment (1,275) (0.2) % (1,229) (0.2) %

Other income, net (312) — % (1,035) (0.2) %

Other loss (income), net

946 0.1 % (312) — %

OPERATING INCOME 43,677 6.0 % 58,033 8.2 %

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Tax Receivable Agreement liability adjustment (2,945) (0.4) % (9,149) (1.3) %

Loss on debt extinguishment — — % 3,465 0.5 %

INCOME BEFORE INCOME TAXES

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$ 19,345 2.6 % $ 29,517 4.2 %

We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

Except as noted below, the Company’s consolidated results of operations includes the 53rd week in fiscal 2023.

Revenues, Net

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Revenues for fiscal 2025 were $732.1 million compared to $710.6 million for fiscal 2024, an increase of $21.5 million or 3.0%.

The increase in total revenue was primarily attributed to the opening of ten restaurants during fiscal 2024 and twelve restaurants in fiscal 2023, partially offset by a negative impact of $13.9 million due to the additional operating week in fiscal 2023 and a decrease in our same-restaurant sales.

The increase in total revenue was primarily attributed to the opening of eight restaurants during fiscal 2025 and ten restaurants in fiscal 2024.

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%.

The higher average check was primarily driven by an approximate 4.6% increase in menu prices partially offset by product mix.

To mitigate inflationary cost pressures, we implemented targeted menu price adjustments in 2024, including a 1.5% increase in January, another 1.5% increase at the end of March, and a 1.0% increase in June.

The higher average check was primarily driven by an approximate 3.2% increase in menu prices, partially offset by a 1.2% decrease in product mix.

To mitigate inflationary cost pressures, we implemented targeted menu price adjustments in 2025, including a 1.5% increase in January 2025, a 1.0% increase in April 2025, and a 0.7% increase in June 2025.

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 as of December 29, 2024, sales for 71 restaurants were included in the Comparable

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).

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Restaurant Base (as defined in "Key Performance Indicators and Non-GAAP Financial Measures" below) as of the end of fiscal 2024.

The following table summarizes the Company's revenue for fiscal 2025 and fiscal 2024 (in thousands):

Fiscal Years Ended

December 29, 2024 December 31, 2023 $ Change

December 28, 2025 December 29, 2024 $ Change % Change

Same-restaurant sales (80 restaurants) (1)

$ 628,759 $ 631,705 $ (2,946) (0.5) %

Same-restaurant sales comparable week shift Impact (2)

— 13,362 (13,362) nm

Restaurants not yet in comparable base opened in fiscal 2025 (8 restaurants) (1)

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40,532 16,565 23,967 144.7 %

Restaurants not yet in comparable base opened in fiscal 2022 (0 restaurant) (3)

Restaurants not yet in comparable base opened in fiscal 2023 (3 restaurants) (1)

43,550 49,817 (6,267) (12.6) %

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Revenues, net $ 732,066 $ 710,554 $ 21,512 3.0 %

(1) We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

(2) Represents the impact from shifting comparable weeks for all periods in fiscal 2023 to compare like-for-like periods.

For fiscal 2023, same-restaurant sales includes sales from the 52 weeks from January 2, 2023 through December 31, 2023 rather than the 53 weeks from December 26, 2022 through December 31, 2023.

(1) Total restaurants indicated are as of December 28, 2025.

Revenue from fiscal 2022 reflects contributions from restaurants before they were added to the comparable store base.

Excludes a restaurant that is owned by C&O of which Portillo's owns 50% of the equity.

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The components of food, beverage and packaging costs are variable by nature, change with sales volume, are impacted by product and channel mix and are subject to increases or decreases in commodity costs, as well as geographic scale and proximity.

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%.

This increase was primarily driven by the opening of ten restaurants in fiscal 2024 and the opening of twelve restaurants in fiscal 2023 and a 4.2% increase in commodity prices, partially offset by lower third-party delivery commissions.

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.

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.

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

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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%.

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.

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.

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.

As a percentage of revenues, net, labor increased 0.7% during fiscal 2025 primarily due to lower transactions, incremental wage increases, and higher benefit costs, partially offset by labor efficiencies and an increase in our average check.

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.

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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.

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 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.

As a percentage of revenues, net, operating expenses increased 0.4%.

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%,

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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.

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.

General and Administrative Expenses

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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%.

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.

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%.

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.

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 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.

All such costs incurred prior to the opening are expensed in the period in which the expense was incurred.

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Additionally, restaurant openings in new geographic market areas will experience higher pre-opening expenses than our established geographic market areas, such as the Chicagoland area, where we have greater economies of scale and incur lower travel and lodging costs for our training team.

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.

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 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.

Depreciation and amortization expense for fiscal 2025 was $29.1 million compared to $27.3 million for fiscal 2024, an increase of $1.8 million or 6.6%.

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.

Net Income Attributable to Equity Method Investment

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We account for the investment and financial results in the consolidated financial statements under the equity method of accounting as we have significant influence but do not have control.

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.

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

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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.

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 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.

received for timely filing of sales tax returns.

Other loss (income), net for fiscal 2025 was a loss of $0.9 million compared to income of $0.3 million for fiscal 2024, a decrease of $1.3 million or 403.2%.

This decrease was primarily attributable to a legacy Barnelli's trade name impairment charge of $2.2 million, partially offset by an increase in trading gains in the rabbi trust used to fund our deferred compensation plan and a technology asset impairment charge in fiscal 2024.

Interest Expense

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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 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.

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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%.

This increase was primarily driven by converting our bank accounts to interest bearing during fiscal 2023.

Interest income for both fiscal 2025 and fiscal 2024 was $0.3 million.

Tax Receivable Agreement Liability Adjustment

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actually realizes or in some cases is deemed to realize as a result of certain transactions.

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.

Loss on Debt Extinguishment

There was no loss on debt extinguishment for fiscal 2024.

Loss on debt extinguishment for fiscal 2023 was $3.5 million due to the write-off of debt discount and deferred issuance costs associated with the payoff of the 2014 Credit Agreement as described in Note 9.

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.

Income Tax Expense

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federal, state and local income taxes with respect to our allocable share of any taxable income or loss of Portillo's OpCo, as well as any stand-alone income or loss generated by Portillo's Inc.

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%.

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.

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

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share of taxable income of Portillo's OpCo, remeasurement of deferred tax assets due to effective state tax rate changes and recording of net operating losses in the prior year.

This was partially offset by the decrease in the valuation allowance and the exercise and vesting of equity-based awards.

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.

Osanloo and year-over-year impact of deferred tax asset remeasurement due to effective state tax rate changes, partially offset by an increase in the Company's ownership interest in Portillo's OpCo, which increases its share of taxable income (loss) of Portillo's OpCo.

Net Income Attributable to Non-controlling Interests

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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 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.

The weighted average ownership percentage decreased due to the Secondary Offering and Redemption of LLC units as discussed in Note 1.

Description Of Business of our consolidated financial statements.

The decrease in net

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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.

Key Performance Indicators and Non-GAAP Financial Measures Overview

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Restaurant-Level Adjusted EBITDA Margin (b) 21.6 % 23.7 %

We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

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Total restaurants indicated are as of a point in time.

AUV for fiscal 2024 and fiscal 2023 consist of 52 weeks and 53 weeks, respectively.

(b) Excludes C&O.

(c) 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.

For fiscal 2023, same-restaurant sales compares the 53 weeks from December 26, 2022 through December 31, 2023 to the 53 weeks from December 27, 2021 through January 1, 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.

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”).

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”).

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

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Summary Of Significant Accounting Policies of our consolidated financial statements.

A change in same-restaurant sales is the result of a change in restaurant transactions, average guest check, or a combination of the two.

We gather daily sales data and regularly analyze the guest transaction counts and the mix of menu items sold to strategically evaluate menu pricing and demand.

Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base.

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.

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.

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.

This key performance indicator allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.

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Non-GAAP Financial Measures

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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.

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The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA margin (in thousands):

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Interest income

Loss on debt extinguishment — 3,465

Income tax expense

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Transaction-related fees and expenses (5) 742 575

Strategic realignment costs (6) 6,474 —

Tax Receivable Agreement liability adjustment (7) (2,945) (9,149)

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Adjusted EBITDA Margin (8)

We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

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.

(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.

(4) Represents loss on disposal of property and equipment and a technology asset impairment charge included within other income, net.

(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.

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(3) Represents amortization of capitalized cloud-based ERP and HCM system implementation costs that are included within general and administrative expenses.

(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.

(6) Represents $4.4 million of costs related to the Company's strategic reset of its development and growth plans, $1.7 million in connection with the departure of our CEO, and $0.4 million in connection with the departure of our Chief Development Officer, which are included within general and administrative expenses.

(7) Represents remeasurement of the Tax Receivable Agreement liability.

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We believe that Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are important measures to evaluate the performance and profitability of our restaurants, individually and in the aggregate.

The following table reconciles operating income to Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin (in

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The following table reconciles operating income to Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin (in thousands):

Fiscal Years Ended

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Net income attributable to equity method investment (1,275) (1,229)

Other income, net (312) (1,035)

Other loss (income), net

Restaurant-Level Adjusted EBITDA $ 158,402 $ 168,114

Restaurant-Level Adjusted EBITDA Margin (1) 21.6 % 23.7 %

We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

(1) Restaurant-Level Adjusted EBITDA Margin is defined as Restaurant-Level Adjusted EBITDA divided by Revenues, net.

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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.

Additionally, we continue to invest in technology, including upgrades to our IT infrastructure, to improve operational efficiency and the guest experience.

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.

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Tax Receivable Agreement

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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.

Subsequent Events for information about a recent amendment to the TRA.

As of December 28, 2025, we estimate that our obligation for future payments under the TRA totaled $352.4 million.

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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.

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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.

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 the year ended December 29, 2024, we made a TRA payment of $4.4 million relating to tax year 2022.

During fiscal 2025, we made a TRA payment of $7.7 million relating to tax year 2023.

We expect a payment of $7.9 million relating to tax year 2024 to be made within the next 12 months.

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Net cash used in investing activities (90,193) (88,114)

Net cash provided by (used in) financing activities

2,512 (16,933)

Net increase (decrease) in cash and cash equivalents and restricted cash

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash

(2,913) 12,438

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Cash and cash equivalents and restricted cash at end of period $ 19,963 $ 22,876

We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31.

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.

Operating Activities

Net cash provided by operating activities for fiscal 2024 was $98.0 million compared to net cash provided by operating activities of $70.8 million for fiscal 2023, an increase of $27.3 million or 38.5%.

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.

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 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 $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.

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%.

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.

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.

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.

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.

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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%.

This increase was primarily due to the number of restaurant openings and builds in process during 2024 and the planned restaurant openings for 2025, partially offset by adopting a more cost effective restaurant format.

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 $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 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.

The increase was partially offset by an increase in payments made under the TRA of $3.6 million.

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%.

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.

Debt, and an increase in payments made under the TRA of $3.3 million.

2025 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.

Refer to Note 9.

Debt for additional information and Note 19.

Subsequent Events for information

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about further amendments to the 2023 Term Loan and 2023 Revolver Facility.

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”).

The Amendment provides for, among other things, (i) a $250 million term loan A facility (the “2025 Term Loan”) and (ii) revolving credit commitments in an initial aggregate principal amount of $150 million (the “2025 Revolver Facility” and, together with the Term Loan Facility, the “2025 Facilities”), the proceeds of which were used to refinance indebtedness under the 2023 Credit Agreement, for general corporate purposes and working capital needs and for other activities permitted under the 2025 Credit Agreement.

The loans under each of the 2025 Facilities mature on January 27, 2030.

As of December 28, 2025, we had $90.0 million of borrowings under the 2025 Revolver Facility, and letters of credit issued under the 2025 Revolver Facility totaled $4.4 million.

As a result, as of December 28, 2025, the Company had $55.6 million available under the 2025 Revolver Facility.

The 2025 Credit Agreement contains customary representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, negative pledges, dividends, junior financings and other fundamental changes.

As of December 28, 2025, the Company was in compliance with financial covenants in the 2025 Credit Agreement.

Material Cash Requirements

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Debt to the consolidated financial statements for further information of our obligations and the timing of expected payments.

Also, see Note 19.

Subsequent Events for information about further amendments to the 2023 Term Loan and 2023 Revolver Facility.

Lease obligations .

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Such commitments are typically short-term in nature and are not material as of December 28, 2025.

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Critical Accounting Estimates

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Due to their inherent uncertainty, these judgments and estimates may be subject to change, which could materially impact future periods.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived intangible assets are assessed for impairment annually or more frequently if events and circumstances indicate that it is more likely than not that the fair value of a reporting unit or an intangible asset is less than its carrying value.

The Company has one reporting unit and during fiscal 2025, the Company refined its methodology for estimating the fair value of its reporting unit.

In prior periods, the Company primarily utilized a market capitalization approach.

Beginning in fiscal 2025, the Company incorporated a weighted combination of the income and market approaches to estimate fair value.

Management believes this change provides a more comprehensive and representative valuation of the reporting unit by considering both the Company’s projected future cash flows and observable market data for comparable companies.

Under the income approach, the Company uses a discounted cash flow methodology, which requires management to make significant estimates and assumptions related to forecasted revenues, EBITDA margins, capital expenditures, perpetual growth rates, and long-term discount rates, among others.

The market approach incorporated both the guideline public company method and the guideline transaction method.

The guideline public company method involves analyzing valuation multiples of comparable publicly traded companies with similar operating and investment characteristics, while the guideline transaction method considers transaction multiples observed for comparable businesses.

The Company also reconciles the fair value of its reporting unit to its current market capitalization to assess reasonableness.

If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded for the difference between the fair value of the reporting unit and the carrying value of the reporting unit.

The Company’s indefinite-lived intangible assets consist of trade names and trademarks (collectively “trade names”).

The Company estimates the fair value of its trade names using a relief-from-royalty income approach.

If the fair value of the trade name is less than its carrying value, an impairment loss is recorded for the difference between the estimated fair value and carrying value of the intangible assets.

In the third quarter of 2025 , management identified impairment indicators that required a quantitative assessment of goodwill and trade names outside of the Company's annual impairment test.

Refer to Note 2.

Summary Of Significant Accounting Policies for a discussion of the impairment indicators identified during the period.

Significant changes in economic and market conditions could result in changes to expectations of future financial results and key valuation assumptions.

Such changes could result in revisions of our estimates of the fair value of our reporting unit and could result in an impairment of goodwill or intangibles in a future interim period or as of September 28, 2026, our next annual measurement date.

As of December 28, 2025, we had approximately $394.3 million of goodwill and $221.7 million of indefinite-lived intangible assets.

Liabilities Under Tax Receivable Agreement

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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.

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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.

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We expect a payment of $7.9 million to be made within the next 12 months.

Subsequent Events for information about a recent amendment to the TRA.

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We are subject to U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis