Portillo's Will Close Up to Nine Restaurants Outside Chicago

Portillo's will close a "mid- to high-single digit" number of underperforming restaurants outside its Chicago home base, mostly in the fourth quarter, as new CEO Brett Patterson resets the fast-casual chain's growth strategy. The company has not said which locations or markets will be affected.

The closures sit inside a wider turnaround plan built around stronger fundamentals, tighter site selection and a smaller footprint for future units.

What did the quarter actually deliver?

Same-store sales rose 1.4% in the third quarter, reported Thursday. That figure decomposes into a 2.1% increase in average check, driven mostly by higher prices, and a 0.7% decline in transactions. Revenue climbed 7% to $194.1 million. Net income reached $4.8 million, a $4 million increase.

Despite softer traffic, Portillo's raised full-year guidance. It now expects adjusted EBITDA of $98 million to $101 million, up from earlier projections of $92 million to $96 million. Price, not volume, is carrying the P&L. That is a fragile foundation if transactions keep falling.

Why is the chain shrinking to grow?

Patterson said leadership took an honest look at the business and confronted a "hard reality: Portillo's does not deliver the returns our investors expected."

He drew a sharp line between the brand's home turf and everything beyond it. "It's a towering strength for us," Patterson said of Chicagoland's affection for the brand. But expansion outside the region brought self-inflicted wounds.

"We did a little damage to ourselves with how we branded the restaurants [outside Chicago]," Patterson said. "In some of them, we have the name Portillo's. We took off what we do, what we serve. And, for new market penetration, if they don't know what you do, it's kind of hard for people to figure out."

In practice, unfamiliar markets got signage stripped of the food cues that sell the concept in Chicago. The fix is brand positioning, not just real estate pruning.

What changes operationally?

The plan touches labor structure, training and equipment:

• Field managers will oversee fewer restaurants, allowing more time in each unit.
• The company is investing in additional training.
• New technology and equipment target order accuracy and speed of service.
• A revamped marketing strategy will focus on Millennials through modernized digital channels.
• A simplified loyalty program aims to raise engagement and visit frequency.

Portillo's also hired its first-ever executive chef, Chris Hansen, previously of Guzman y Gomez. Hansen will prioritize menu quality and innovation.

How will future growth look different?

Growth does not stop. The 109-unit chain added seven restaurants this year, all in Texas, with one more opening in Chicago in the fourth quarter.

Going forward, Portillo's will infill existing markets and move into adjacent areas, but only after more rigorous site reviews tied to cash-on-cash return targets. The goal is returns above 20%, beginning in 2028.

New units will use a 4,600-square-foot prototype, roughly 40% smaller than the chain average, requiring 1.5 acres instead of the usual 3. Smaller boxes mean lower build costs and faster payback on each site, a direct lever on unit economics.

Patterson set a long-term target of 2% to 3% annual same-store sales growth. Within three years, the company expects to ramp new restaurant openings to a high-single-digit percentage annually while expanding margins.

Those targets depend on reversing the transaction decline. Closures, smaller prototypes and a 20% return hurdle will discipline the balance sheet, but the traffic number remains the unproven piece of the plan.