PTLO - Portillos for life

I will probably eat Portillos the rest of my life.
How long will I hold the stock? Who knows.

One consideration I should have caught before buying yesterday, was that we should still be in lockup expiration period, and because Portillos was sold to a private equity firm by their founder, prior to the IPO, I think you can expect the equity firm to cash out a bit. Sometimes lockup expirations are nothingburgers, or the price may rise X amount from here and by the time you get a lockup expiry “dip” that dip price is still above today’s price. So who knows. But worth mentioning. It is about $30 now, the IPO price was closer to $25, so who knows where it could go (probably not lower than $20, but just a guess).

Why Portillos? It is somewhat unknown outside of midwest and certain locations in CA and AZ. They have never closed a store. They are profitable. They make more per restaurant than most. Their metrics per store are great (apparently - I am not a restaurant expert - going off articles read about them and from ER/CC). Their CEO is a Chicago guy, and why I think it is important is that the things that make Portillos great (their style of service, their fast drivethru ordering system, the quality of the food, the many types of different great food options, the interior decorating of their stores into cool-looking antique nostalgia factories, etc) are things he is familiar with and understands. His pedigree seems solid, too. Dick Portillo is founder and still around, and I assume on the board, but he is more like the Queen of England at this point…they listen respectfully but he can’t really dictate much now. No recent drama…current CEO replaced a CEO that led the initial expansion after private equity purchase and then he retired after a job well done. The CEO prior to that was Dick Portillo. Business has been around 50 years…they aren’t going anywhere.

About 67 restaurants now, and hope to get to 600.

Stock is and/or could continue to be beaten down a bit due to:

  1. supply chain / costs rising - impacting margins
  2. hiring is challenging since pandemic for all restaurants
  3. lingering covid dampens in-person dining revenues, but their drive-thru/delivery/catering tends to offset that a bit, but we can assume max efficiency and max revenues are attained in a non-covid-impacted environment.

To me, this is like Chipotle stock. I think it could be my next SPG (a value play that has growth coming. SPG growth was a rebound from covid, whereas Portillos will be more traditional growth via expansion, and will play out for years.

I will be looking to add under $30 from here.