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United States securities and exchange commission logo
August 16, 2021
Michelle Hook
Chief Financial Officer
Portillo's Inc.
2001 Spring Road, Suite 400
Oak Brook, IL 60523
Re: Portillo's Inc.
Draft Registration
Statement on Form S-1
Submitted July 19,
2021
CIK No. 0001871509
Dear Ms. Hook:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 submitted July 19, 2021
Prospectus Summary
Portillo's: Prepare to Get Obsessed, page 1
1. Provide the basis for
the statements on page 1 that Our restaurants generated best-in-
class AUVs and
Restaurant-Level EBITDA Margins (emphasis added) and on page 2
that the Company s
Restaurant-Level EBITDA Margin is industry-leading. Provide
similar disclosure
throughout the prospectus.
2. We note the disclosure
in the penultimate and final paragraphs on page 1 and throughout
the prospectus using
data from 2019. Revise to provide similar data for 2020/2021 and
clarify whether this
trend has continued into the time periods presented in the prospectus.
Michelle Hook
FirstName LastNameMichelle Hook
Portillo's Inc.
Comapany
August 16, NamePortillo's
2021 Inc.
August
Page 2 16, 2021 Page 2
FirstName LastName
Also, explain why comparing your business metrics to the companies you
cite is
appropriate given that their business models, menus and regional
presence, among other
things, differs from yours.
3. We note on page 3 your statement that the Company is proud that
Portillo s was recently
ranked the #1 restaurant company on America s 2021 Best Midsized
Employers by Forbes
magazine. Please revise the statement to clarify that Portillo s
was the highest ranked
restaurant but was ranked #99 on that list overall.
An Iconic and Beloved Brand with Obsessed Lifelong Fans, page 3
4. We note on page 3 your statement that As of June 8, 2021, [y]our
average Facebook post
generates 10x more engagement than the average restaurant brand post,
while [y]our
average Twitter post generates 40x more engagement than the average
restaurant brand
post based on industry research." Please expand to provide the basis
for these statements.
Proven Portability and Strong Unit Economics, page 6
5. We note your discussion of targeted cash-on-cash returns on page 7.
Expand your
discussion to define targeted cash-on-cash returns.
Expand Our Restaurant Base, page 8
6. We note your statement in the last sentence of this paragraph as well
as elsewhere in the
prospectus that you have a substantial runway for growth with a
long-term opportunity for
your brand to grow to more than 600 restaurants domestically and are
well-positioned for
global growth in the future. Please clarify the time period by which
you might grow to
over 600 restaurants and discuss any specific opportunities that you
currently have. In
addition, expand the disclosure here and elsewhere as applicable to
disclose the number of
locations you have historically added each year. We note that you have
a total of 67
locations currently and it appears on page 83 that you opened two new
restaurants in
2020.
Organizational Structure, page 10
7. Revise the discussion regarding the Tax Receivable Agreement on page
11 and elsewhere
as applicable to include estimated annual payments and how you intend
to fund the
required payments under the agreement. Also disclose in an appropriate
section the likely
impact on your liquidity from any known trends, events, or
uncertainties related to the Tax
Receivable Agreement payments. Please file the Tax Receivable
Agreement as an exhibit
or tell us why you believe it should not be filed.
Summary Historical and Pro Forma Consolidated Financial and Other Data, page 20
8. We note your presentation of Restaurant-Level EBITDA and
Restaurant-Level
EBITDA margin as non-GAAP performance measures. Please revise your
reconciliation
of these measures to begin with operating income which is the most
directly comparable
Michelle Hook
FirstName LastNameMichelle Hook
Portillo's Inc.
Comapany
August 16, NamePortillo's
2021 Inc.
August
Page 3 16, 2021 Page 3
FirstName LastName
GAAP measure. Also, where you discuss the limitations of these
measures on pages iv,
24 and 84-85, please add disclosure that the measures are not
indicative of your overall
results, and the fact that Restaurant-Level EBITDA does not accrue
directly to the benefit
of shareholders because corporate level expenses are excluded from the
measure.
9. We note your reconciliation of Adjusted EBITDA includes an adjustment
for pre-opening
expenses which represent normal, recurring, cash operating expenses
necessary to operate
your business. Please tell us your consideration of the guidance in
Question 100.01 of the
Non-GAAP Compliance and Disclosure Interpretations.
Our financial condition and results of operations have been and may continue to
be adversely
affected by the COVID-19 pandemic, page 26
10. Please revise, to the extent possible, to quantify the negative impact
COVID-19 has had
on the company's business and operations. Please include enough detail
so that investors
can appreciate the discussed risk.
In certain cases, payments under the Tax Receivable Agreement to the TRA
Parties may be
accelerated, page 46
11. Please briefly describe the certain mergers, assets sales, other
forms of business
combinations or other changes of control that would accelerate
payments under the Tax
Receivable Agreement, and disclose the amount that would become due
under the Tax
Receivable Agreement under present conditions, if estimable.
Our amended and restated certificate of incorporation will designate the Court
of Chancery of the
State of Delaware, page 59
12. We note here and on page 142 that your forum selection in your
certificate of
incorporation will designate the Court of Chancery of the State of
Delaware as the
exclusive forum for certain litigation, including any derivative
action. Please tell us
whether and to what extent this provision applies to actions arising
under the Exchange
Act. In that regard, we note that Section 27 of the Exchange Act
creates exclusive federal
jurisdiction over all suits brought to enforce any duty or liability
created by the Exchange
Act or the rules and regulations thereunder. If the provision does not
apply to actions
arising under the Exchange Act, please revise the disclosure to inform
investors that the
provision does not apply to any actions arising under the Exchange
Act. Also, clarify
your statement that the federal exclusive forum provision for
Securities Act claims "will
not preclude or contract the scope of exclusive federal jurisdiction
for suits brought under
the Exchange Act...," to help us understand the intent of this
language.
Capitalization, page 71
13. Please remove your redeemable preferred LLC units from the equity
section of the table.
Michelle Hook
FirstName LastNameMichelle Hook
Portillo's Inc.
Comapany
August 16, NamePortillo's
2021 Inc.
August
Page 4 16, 2021 Page 4
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Growth Strategies and Outlook, page 81
14. You acknowledge the risk elsewhere that your ability to open
additional restaurants in
2021 may be hindered by the COVID-19 pandemic. Revise to acknowledge
as much
where you discuss your intent to expand your restaurant base.
Key Performance Indicators, page 83
15. For each key performance indicator, revise the disclosures here to
include or clarify the
following information:
How it is calculated, including any estimates or assumptions
underlying the metric or
its calculation (e.g., new restaurant openings);
The reasons why the metric provides useful information to
investors; and
How management uses the metric in managing or monitoring the
performance of the
business.
For guidance, refer to SEC Release No. 33-10751.
16. We note the discussion on targeted cash-on cash returns on page 7. To
the extent that
targeted cash-on-cash returns is a key performance indicator, revise
the disclosure in this
section and quantify the measure in the chart.
Results of Operations, page 87
17. Where a material change in a line item is attributed to two or more
factors, including
offsetting factors, the contribution of each factor should be
described in quantified terms.
Refer to Item 303(b) of Regulation S-K.
Business
2020 Sales Mix, page 99
18. Elaborate upon your discussion of sales by channel to quantify those
sales made via
digital means. In this regard, you quantify this information by number
of orders
elsewhere in your prospectus but only for the period ended June 30,
2021.
Amended Portillo's OpCo Agreement, page 128
19. File the Amended LLC Agreement as an exhibit or tell us why you
believe it should not
be filed.
Certain Relationships and Related Party Transactions
Reorganization Agreement, page 128
20. Provide a more detailed summary of the Reorganization Agreement.
Please file the
Reorganization Agreement as an exhibit or tell us why you believe it
should not be filed.
Michelle Hook
Portillo's Inc.
August 16, 2021
Page 5
Consulting Agreement, page 132
21. Update to disclose whether the Consulting Agreement with Mr. Portillo
was extended
beyond July 2021 and file the agreement as an exhibit or tell us why
you believe it should
not be filed.
Registration Rights Agreement, page 132
22. Provide a summary of the Registration Rights Agreement both here and
under The
Offering on page 16. Please file the Registration Rights Agreement
as an exhibit or tell
us why you believe it should not be filed.
Consolidated Statement of Operations, page F-4
23. Please tell us your consideration of the guidance in the Interpretive
Response to SAB
Topic 6:B related to presenting income or loss applicable to common
units on the face of
the statement of operations.
Consolidated Statements of Changes in Redeemable Preferred Units and Common
Equity, page
F-5
24. We note your disclosure here and in the third paragraph on page F-19.
Please tell us your
consideration of the guidance in the Interpretive Response to Question
1 of SAB Topic
3:C related to recording the changes in the redemption value of
preferred units to retained
earnings.
General
25. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials,
if any, to us for our
review.
You may contact Tony Watson at 202-551-3318 or Angela Lumley at
202-551-3398 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Stacey K. Peikin at 202-551-6223 or Mara Ransom at 202-551-3264 with
any other
questions.
FirstName LastNameMichelle Hook Sincerely,
Comapany NamePortillo's Inc.
Division of
Corporation Finance
August 16, 2021 Page 5 Office of Trade
& Services
FirstName LastName