Portillo's to close up to nine restaurants outside Chicago

Portillo's closures will hit a mid- to high-single-digit number of underperforming restaurants outside the Chicago area, mostly in the fourth quarter, the hot dog and Italian beef chain said alongside third-quarter results on November 5.

The board approved the closures on November 4. The company reviewed each restaurant's sales, margins and projected performance to decide which to cut, and has not named locations or an exact count.

Third-quarter revenue rose 7 percent to $194.1 million. Same-restaurant sales were up 1.4 percent, driven by a 2.1 percent rise in average check as transactions fell 0.7 percent. Net income was $4.8 million, up $4 million from a year earlier. Portillo's raised its full-year adjusted EBITDA guidance to $98 million to $101 million, from $92 million to $96 million.

Portillo's does not deliver the returns our investors expected.

A hard reality outside Chicago

"Portillo's does not deliver the returns our investors expected," chief executive Brett Patterson said on the earnings call. He said the chain has struggled to gain footing outside its home market, partly because some locations carry the Portillo's name without signaling what the restaurant actually serves. Chicago brand loyalty, he said, remains "a towering strength for us."

The company joined a run of restaurant closures this year as operators trim underperforming locations rather than chase growth at any cost.

A smaller, slower expansion

Portillo's now runs 109 restaurants. It opened seven this year, all in Texas, and plans one more in Chicago before year-end. Future growth will focus on filling in existing markets under stricter site reviews, targeting cash-on-cash returns above 20 percent starting in 2028. A new prototype, about 4,600 square feet and roughly 40 percent smaller than the chain average, needs 1.5 acres of land instead of three.

The chain also hired its first executive chef, Chris Hansen, previously of Guzman y Gomez, to focus on menu quality. Portillo's is adding staff training and order-accuracy technology, and is building a marketing push toward Millennial diners through a simplified loyalty programme.

Portillo's targets 2 to 3 percent annual same-restaurant sales growth going forward, with high-single-digit new-restaurant growth and wider margins within three years. The company has not said which restaurants will close, or when. The lease and severance charges tied to shutting them will show up in its annual filing, not this week's.