0001871509-22-000008 | 10-K | XBRL Viewer

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
CURRENT ASSETS:
Cash and cash equivalents and restricted cash	$ 39,263	$ 41,432
Accounts receivable	7,840	5,204
Inventory	6,078	5,075
Prepaid expenses	5,836	2,915
Total current assets	59,017	54,626
Property and equipment, net	190,834	174,769
OTHER ASSETS:
Goodwill	394,298	394,298
Trade names	223,925	223,925
Other intangible assets, net	35,832	42,255
Equity method investment	16,170	16,015
Deferred tax asset	74,455	0
Other assets	5,042	4,334
Total other assets	749,722	680,827
Total assets	999,573	910,222
CURRENT LIABILITIES:
Accounts payable	27,249	21,427
Current portion of long-term debt	3,324	3,324
Current deferred revenue	6,893	6,774
Accrued expenses	29,472	34,827
Total current liabilities	66,938	66,352
LONG-TERM LIABILITIES:
Long-term debt, net of current portion	315,829	466,380
Deferred rent	32,174	26,694
Tax receivable agreement liability	156,638	0
Other long-term liabilities	4,588	9,516
Total long-term liabilities	509,229	502,590
Total liabilities	576,167	568,942
COMMITMENTS AND CONTINGENCIES (NOTE 18)
REDEEMABLE PREFERRED UNITS, — and 100,000 units authorized, issued and outstanding as of December 26, 2021 and December 27, 2020, respectively (preferred liquidation amount 101%)	0	200,571
STOCKHOLDERS' EQUITY:
Member's Equity		140,709
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, — issued and outstanding	0	0
Additional paid-in-capital	186,856	0
Accumulated deficit	(15,950)	0
Total stockholders' equity attributable to Portillo's Inc.	171,264	140,709
Non-controlling interest	252,142	0
Total stockholders' equity	423,406	140,709
Total liabilities and members' equity	999,573	910,222
Class A Common Stock
STOCKHOLDERS' EQUITY:
Common stock, value	358	0
Class B Common Stock
STOCKHOLDERS' EQUITY:
Common stock, value	$ 0	$ 0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 26, 2021	Dec. 27, 2020
Redeemable preferred units authorized (in shares)	0	100,000
Redeemable preferred units outstanding (in shares)	0	100,000
Redeemable preferred units issued (in shares)	0	100,000
Redeemable preferred units, liquidation preference, percent	101.00%	101.00%
Preferred stock, par value (in dollars per share)	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000
Preferred stock, shares outstanding (in shares)	0
Preferred stock, shares issued (in shares)	0
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.01
Common units authorized (in shares)	380,000,000
Common units issued (in shares)	35,807,171
Common units outstanding (in shares)	35,807,171
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.00001
Common units authorized (in shares)	50,000,000
Common units issued (in shares)	35,673,321
Common units outstanding (in shares)	35,673,321

CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Income Statement [Abstract]
REVENUES, NET	$ 534,952,000	$ 455,471,000	$ 479,417,000
Restaurant operating expenses:
Cost of goods sold, excluding depreciation and amortization	166,764,000	142,446,000	149,063,000
Labor	138,788,000	115,991,000	134,206,000
Occupancy	28,060,000	24,920,000	24,538,000
Other operating expenses	59,258,000	50,169,000	54,540,000
Total restaurant operating expenses	392,870,000	333,526,000	362,347,000
General and administrative expenses	87,089,000	39,854,000	43,118,000
Pre-opening expenses	3,565,000	2,209,000	2,834,000
Depreciation and amortization	23,312,000	24,584,000	24,364,000
Net income attributable to equity method investment	(797,000)	(459,000)	(766,000)
Other income, net	(1,099,000)	(1,537,000)	(1,402,000)
OPERATING INCOME	30,012,000	57,294,000	48,922,000
Interest expense	39,694,000	45,031,000	43,367,000
Loss on debt extinguishment	7,265,000	0	0
(LOSS) INCOME BEFORE INCOME TAXES	(16,947,000)	12,263,000	5,555,000
Income tax benefit	(3,531,000)	0	0
NET (LOSS) INCOME	(13,416,000)	12,263,000	5,555,000
Less: Redeemable preferred units accretion	(21,176,000)	(20,524,000)	(18,424,000)
NET LOSS ATTRIBUTABLE TO COMMON HOLDERS	(34,592,000)	(8,261,000)	(12,869,000)
Net loss attributable to non-controlling interests	(19,408,000)	0	0
NET LOSS ATTRIBUTABLE TO PORTILLO'S INC.	$ (15,184,000)	$ (8,261,000)	$ (12,869,000)
Loss per common share attributable to Portillo's Inc.:
Basic (in dollars per share)	$ (0.42)	$ (0.16)	$ (0.25)
Diluted (in dollars per share)	$ (0.42)	$ (0.16)	$ (0.25)
Weighted-average common shares outstanding:
Basic (in shares)	35,807,171	51,189,017	51,175,785
Diluted (in shares)	35,807,171	51,189,017	51,175,785

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' AND MEMBERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Members' Equity	Members' Equity Cumulative Effect, Period of Adoption, Adjustment	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid-In Capital	Accumulated Deficit	Non-controlling interest
Beginning balance (in shares) at Dec. 31, 2018	100,000
Beginning balance at Dec. 31, 2018	$ 161,623
Preferred Units
Redeemable preferred units accretion	$ 18,424
Ending balance (in shares) at Dec. 29, 2019	100,000
Ending balance at Dec. 29, 2019	$ 180,047
Beginning balance at Dec. 31, 2018	158,762	$ 204	$ 158,762	$ 204	$ 0	$ 0	$ 0	$ 0	$ 0
Beginning balance (in shares) at Dec. 31, 2018					0	0
Total Equity
Net income	5,555		5,555
Unit-based compensation	1,286		1,286
Repayment of subscription receivable	251		251
Issuance of common units	100		100
Redeemable preferred units accretion	(18,424)		(18,424)
Ending balance at Dec. 29, 2019	147,734		147,734		$ 0	$ 0	0	0	0
Ending balance (in shares) at Dec. 29, 2019					0	0
Preferred Units
Redeemable preferred units accretion	$ 20,524
Ending balance (in shares) at Dec. 27, 2020	100,000
Ending balance at Dec. 27, 2020	$ 200,571
Total Equity
Net income	12,263		12,263
Unit-based compensation	960		960
Repayment of subscription receivable	250		250
Issuance of common units	26		26
Redeemable preferred units accretion	(20,524)		(20,524)
Ending balance at Dec. 27, 2020	140,709		140,709		$ 0	$ 0	0	0	0
Ending balance (in shares) at Dec. 27, 2020					0	0
Preferred Units
Redeemable preferred units accretion	$ 21,176
Payoff of redeemable preferred units (in shares)	(100,000)
Payoff of redeemable preferred units	$ (221,747)
Ending balance (in shares) at Dec. 26, 2021	0
Ending balance at Dec. 26, 2021	$ 0
Total Equity
Net income	(13,416)
Ending balance at Dec. 26, 2021	$ 423,406		$ 0		$ 358	$ 0	$ 186,856	$ (15,950)	$ 252,142
Ending balance (in shares) at Dec. 26, 2021					35,807,171	35,673,321

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' AND MEMBERS' EQUITY (Parenthetical) - USD ($) $ in Thousands		12 Months Ended
	Oct. 25, 2021	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Payments for in-process equity financings (offering costs)		$ 6,279	$ 0	$ 0
IPO
Payments for in-process equity financings (offering costs)	$ 29,100	29,100
Offering expenses	$ 7,100	$ 7,100

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ (13,416,000)	$ 12,263,000	$ 5,555,000
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	23,312,000	24,584,000	24,364,000
Amortization of debt issuance costs and discount	3,607,000	3,863,000	2,830,000
Loss on sales of assets	256,000	98,000	271,000
Equity-based compensation	29,389,000	960,000	1,286,000
Deferred rent and tenant allowance	4,120,000	3,888,000	3,159,000
Deferred income tax benefit	(3,532,000)	0	0
Amortization of deferred lease incentives	(388,000)	(330,000)	(251,000)
Gift card breakage	(715,000)	(700,000)	(774,000)
Loss on debt extinguishment	7,265,000	0	0
Changes in operating assets and liabilities:
Accounts receivables	(777,000)	(753,000)	33,000
Receivables from related parties	(152,000)	280,000	414,000
Inventory	(1,003,000)	(1,180,000)	(141,000)
Other current assets	(2,921,000)	(416,000)	1,804,000
Accounts payable	1,788,000	1,354,000	(1,785,000)
Accrued expenses and other liabilities	(4,521,000)	6,573,000	7,206,000
Deferred lease incentives	690,000	2,314,000	400,000
Other assets and liabilities	(128,000)	5,473,000	(1,046,000)
NET CASH PROVIDED BY OPERATING ACTIVITIES	42,874,000	58,271,000	43,325,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(36,183,000)	(21,452,000)	(22,045,000)
Purchase of investment securities	(200,000)	0	0
Proceeds from the sale of property and equipment	123,000	32,000	33,000
NET CASH USED IN INVESTING ACTIVITIES	(36,260,000)	(21,420,000)	(22,012,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of short-term debt	0	(15,000,000)
Repayments of short-term debt			9,000,000
Proceeds from long-term debt	0	0	464,110,000
Payments of long-term debt	(158,324,000)	(13,324,000)	(471,842,000)
Proceeds from Paycheck Protection Program loan	0	10,000,000	0
Payment of long-term debt prepayment penalty	(3,100,000)	0	0
Proceeds from equity offering, net of underwriting discounts	437,078,000	0	0
Repurchase of outstanding equity / Portillo's OpCo units	(57,010,000)	0	0
Payment of preferred units and preferred units liquidation	(221,747,000)	0	0
Payment of initial public offering issuance costs	(6,279,000)	0	0
Proceeds from issuance of common units	100,000	26,000	100,000
Repayment of stock subscription receivable	499,000	250,000	251,000
Payment of deferred financing costs	0	0	(13,340,000)
NET CASH USED IN FINANCING ACTIVITIES	(8,783,000)	(18,048,000)	(11,721,000)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(2,169,000)	18,803,000	9,592,000
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD	41,432,000	22,629,000	13,037,000
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD	39,263,000	41,432,000	22,629,000
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	43,544,000	34,294,000	36,506,000
Income tax paid	0	0	0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accrued capital expenditures	2,195,000	5,008,000	1,058,000
Redeemable preferred units accretion	(21,176,000)	(20,524,000)	(18,424,000)
Deferred offering costs in accounts payable	771,000	0	0
Establishment of liabilities under Tax Receivable Agreement	$ 156,638,000	$ 0	$ 0

DESCRIPTION OF BUSINESS	12 Months Ended
DESCRIPTION OF BUSINESS	Dec. 26, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	DESCRIPTION OF BUSINESS Portillo’s Inc. (the "Company") was formed and incorporated as a Delaware corporation on June 8, 2021. The Company was formed for the purpose of completing a public offering and related reorganization transactions (collectively, the "Transactions”) in order to carry on the business of PHD Group Holdings LLC and its subsidiaries ("Portillo's OpCo"). Following the consummation of the Transactions on October 20, 2021, the Company became the sole managing member of Portillo’s OpCo, and as sole managing member, the Company operates and controls all of the business and affairs of Portillo's OpCo. As a result, the Company consolidates the financial results of Portillo's OpCo and reports a non-controlling interest representing the economic interest in Portillo's OpCo held by the other members of Portillo's OpCo (the "pre-IPO LLC Members"). Unless the context otherwise requires, references to "we," "us," "our," "Portillo's," and the "Company" refer to Portillo's Inc. and its subsidiaries, including Portillo's OpCo. We operate fast-casual restaurants in Illinois, Indiana, California, Arizona, Florida, Wisconsin, Minnesota, Iowa and Michigan, along with two food production commissaries in Illinois. As of December 26, 2021 and December 27, 2020, the Company had 68 and 63 restaurants in operation, respectively. The Company also had 3 and 4 non-traditional locations in operation as of December 26, 2021 and December 27, 2020, respectively. These non-traditional locations include a food truck, ghost kitchen (small kitchen with no store-front presence, used to fill online orders), and concessions. Portillo's Inc., additionally has a 50% interest in a single restaurant in Chicago, IL, that is referred to in Note 7. "Equity Method Investment." There were no restaurant closings during any period presented in the financial statements. The Company’s principal corporate offices are located in Oak Brook, Illinois. Initial Public Offering The Company's registration statement on Form S-1, as amended (Registration No. 333-259810), related to its initial public offering ("IPO") was declared effective October 20, 2021, and the Company's Class A common stock began trading on the Nasdaq Global Select Market under the symbol "PTLO" on October 21, 2021. On October 25, 2021, the Company completed its IPO of 23,310,810 shares of the Company's Class A common stock (including 3,040,540 shares sold to the underwriters pursuant to their overallotment option), at an offering price of $20.00 per share. The Company received aggregate net proceeds of approximately $430.0 million after deducting underwriting discounts and commissions of $29.1 million and other offering expenses of approximately $7.1 million. In connection with the IPO, we completed the following: •We amended and restated the limited liability company agreement of Portillo’s OpCo ("LLC Agreement") to, among other things, convert all outstanding equity interests (except for those redeemable preferred units which were redeemed in connection with the IPO) into LLC Units. •We became the sole managing member of Portillo's OpCo. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Portillo’s OpCo and because we also have a substantial financial interest in Portillo’s OpCo, we consolidated the financial results of Portillo’s OpCo, and a portion of our net income was allocated to non-controlling interests to reflect the entitlement of the pre-IPO LLC Members who retained their equity ownership in Portillo's OpCo. In addition, because Portillo’s OpCo was under the common control of the pre-IPO LLC Members before and after the Transactions, we measured the assets and liabilities of Portillo’s OpCo at their carrying amounts as of the date of the completion of the Transactions. •We amended and restated our certificate of incorporation to authorize the issuance of two classes of common stock: Class A common stock and Class B common stock. Each share of Class A common stock and Class B common stock entitles its holder to one vote per share on all matters submitted to a vote of our stockholders. The Class B common stock is not entitled to economic interests in Portillo’s Inc. The net proceeds and cash on hand were used as follows: •to repay the redeemable preferred units in full (including the redemption premium) of $221.7 million; •to repay all of the borrowings outstanding under the Second Lien Credit Agreement (including any prepayment penalties) of $158.1 million; and •to purchase LLC Units or shares of Class A common stock from certain pre-IPO LLC Members of $57.0 million. In connection with the IPO, the Company entered into a Tax Receivable Agreement ("TRA") with certain pre-IPO LLC Members, in which the Company will be generally obligated to pay 85% of the amount of applicable cash savings, if any, in U.S. federal, state, and local income tax that the Company actually realizes or is 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 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 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. We will retain the benefit of the remaining 15% of these tax savings.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Dec. 26, 2021
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements as of December 26, 2021 and December 27, 2020 include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements, and therefore, does not separately present a statement of comprehensive income (loss). Fiscal Year In fiscal year 2019, the Company changed from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the Sunday prior to December 31, effective beginning with the first quarter of 2019. In a 52-week fiscal year, each quarterly period is comprised of 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter. Fiscal 2021, 2020 and 2019 each consisted of 52 weeks. The fiscal periods presented in this report are years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. Unless otherwise stated, references to years in this report relate to fiscal years. Segment Reporting The Company owns and operates fast-casual restaurants in the United States, along with two food production commissaries in Illinois. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer ("CEO"). As the CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis, the Company has one operating segment and one reportable segment. Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Significant estimates inherent in the preparation of the consolidated financial statements include useful lives and impairments of long-lived tangible and intangible assets, accounting for income taxes and related uncertain tax positions, the valuation of equity-based compensation and awards, and reserves for litigation and other contingencies, amongst others. Actual results could differ from those estimates. Cash and Cash Equivalents and Restricted Cash Cash includes amounts that are either held in the Company’s bank accounts or represent deposits in transit. Amounts receivable from credit card processors are considered cash equivalents because they are both short in term and highly liquid in nature and are typically converted to cash within three business days of the sales transactions. Restricted cash includes amounts that are held in the Company’s bank accounts subject to minimum balance requirements for medical claim disbursements and escrow requirements related to certain new restaurant construction projects. Accounts Receivable Accounts receivable consist primarily of vendor rebates, tenant improvement receivables, and delivery receivables as well as receivables from related parties (see Note 19. "Related Party Transactions"). The Company evaluates the collectability of its accounts receivable based on a variety of factors, including historical experience, current and future economic and market conditions and other factors. Based on these factors, no allowance for uncollectible accounts was recorded at December 26, 2021 or December 27, 2020. Inventory Inventory, which consists mainly of food products, is valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out (FIFO) method. The Company had no allowance and a $0.06 million allowance for excess and obsolete inventories as of December 26, 2021 and December 27, 2020, respectively. The estimate was based on the value of slow-moving catering trays and the likelihood that the overstocked volume will be sold prior to expiration date. No other adjustment is deemed necessary to reduce inventory to lower of cost or net realizable value due to the rapid turnover and high utilization of inventory. Certain of the Company’s inventories are held at its distributors on a short-term consignment basis. Inventories subject to these consignment arrangements are recorded on the Company’s consolidated balance sheet and totaled $0.4 million and $0.2 million as of December 26, 2021 and December 27, 2020, respectively. Long-Lived Assets and Valuation The Company’s long-lived assets include property and equipment and definite-lived intangible assets. Depreciation and amortization are computed using the straight-line method. Except for leasehold improvements, depreciation is computed over the estimated useful life of each asset (generally ranging from three to ten years). Leasehold improvements are amortized over the shorter of the estimated lives of the asset or the lease term. The Company reviews its long-lived assets, including property and equipment and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group might not be recoverable. Recoverability is measured by a comparison of the carrying amount to future undiscounted cash flows that are expected to be generated by the asset or asset group. If the carrying amount exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying value exceeds the estimated fair value. Restaurant-level assets are grouped by restaurant for the purpose of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No impairment charge was recorded for any period presented. Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are assessed for impairment annually in the fourth quarter 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 which is evaluated for impairment annually. Fair value of the reporting unit is estimated using the income approach and the market approach. Further given the timing of the Transactions, an IPO approach was also applied, which is a form of the market approach using the transactional method. Under the income approach, fair value is based on the present value of estimated future cash flows. The market approach is based upon both the price-earnings multiples of comparable public companies, transactional data from similar companies that were recently sold, and transactional data from the Company's IPO. 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 trade marks (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. Fair Value of Financial Instruments The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes three levels of the fair value hierarchy as follows: Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. Reverse Common Unit Split On October 20, 2021, the members of Portillo's OpCo amended the LLC Agreement, effecting a 7.4-for-1 reverse common unit split. All applicable unit data, per unit amounts and related information in the consolidated financial statements and notes thereto for the year ended December 27, 2020 and December 29, 2019 have been adjusted retroactively to give effect to the 7.4-for-1 reverse common unit split. Offering Costs In connection with the IPO, Portillo's OpCo incurred certain legal, accounting, and other IPO-related costs. Such costs are recorded in stockholders’ equity as a reduction from the proceeds of the offering. As of December 26, 2021, $7.1 million of offering costs had been recorded in stockholders' equity. Revenue Recognition Revenues from retail restaurants are presented net of discounts and recognized when food and beverage products are sold to the end customer. Sales taxes collected from customers are excluded from revenues and the obligation is included in accrued liabilities until the taxes are remitted to the appropriate taxing authorities. The Company offers delivery services to its customers. For delivery sales through Portillos.com or the Portillo's App, the Company recognizes revenue, including delivery fees, when the performance obligation is complete and the food is transferred to the customer. For delivery sales through a non-Company owned channel, such as the delivery partner’s website or app, as of the end of 2021, we recognize marketplace sales, including third-party delivery menu price premiums, as revenue when the control of the food is transferred to the delivery service, excluding any delivery or service fees charged to the customer. Prior to the end of 2021, this price premium was previously recorded in cost of goods sold, excluding depreciation and amortization. The amount of the price premium recorded in 2021 and prior periods is not material and there is no anticipated or actual impact on operating income or net income for any period. Generally, revenue is recognized as promised goods or services transfer to the guest or customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues are recognized when payment is tendered at the point of sale as the performance obligation has been satisfied. Refer to Note 3. "Revenue Recognition" for additional detail. Commitments The majority of the food products the Company purchases are subject to changes in price primarily due to the effect of supply and demand of the commodities, in particular, proteins, dairy, produce, and grains. Overall pricing agreements are established in an effort to maintain a more consistent food cost without creating long-term purchase commitments. Employee Benefits The Company sponsors a 401(k) plan for all employees that are eligible based upon age and length of service. The expenses incurred for Company matching contributions to the plan were approximately $0.5 million, $0.4 million and $0.4 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. The Company offers a non-qualified deferred compensation plan to certain officers and other members of management. Under the plan, eligible employees may defer up to 80% of their annual salary and annual bonus. The Company has elected to fund its deferred compensation obligations through a rabbi trust. The rabbi trust is subject to creditor claims in the event of insolvency, but such assets are not available for general corporate purposes. Assets held in the rabbi trust are invested in mutual funds, which are purchased and held principally for the purpose of selling them in the near term, and are classified as trading securities and carried at fair value. Equity-Based Compensation The Company has issued non-qualified stock options, restricted stock units, and performance based stock options. Equity-based compensation expense is measured based on the grant-date fair value of those awards and is recognized on a straight-line basis over the vesting period. Equity-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment to equity-based compensation expense will be recognized at that time. Equity-based compensation expense is included within general and administrative expenses and labor in the consolidated statements of operations. In connection with the IPO, each option under the 2014 Equity Incentive Plan ("2014 Plan") that was outstanding, whether vested or unvested, was substituted for an option to purchase a number of shares of Class A common stock under the 2021 Equity Incentive Plan ("2021 Plan"), and the option holders received a cash payment in respect of their options (whether vested or unvested) in an aggregate amount of approximately $6.6 million, which was recorded in the fourth quarter of 2021. In addition, as a result of the waiver and the resultant modification in the terms of certain performance-vesting awards we recorded compensation expense based on the fair value of the modified awards. Assuming all of the options vest and an offering price of $20.00 per share of Class A common stock, we recognized a cash compensation expense of approximately $1.3 million and non-cash compensation expense of approximately $26.2 million, each at the modification date in the fourth quarter of fiscal 2021. Advertising and Marketing Expenses The costs of producing advertising are expensed the first-time advertising takes place, while the costs of communicating advertising are expensed as services are received. Advertising and marketing expenses totaled $3.1 million, $2.6 million and $4.5 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. Advertising and marketing expenses included in other operating expenses in the consolidated statements of operations is primarily related to sponsorships, in-store merchandising, and charitable giving; those included in general and administrative expenses in the consolidated statements of operations primarily consist of branding initiatives. Leases The Company leases retail restaurants, commissaries, and office space under operating leases. Some lease agreements contain tenant improvement allowances, rent escalation clauses and/or contingent rent provisions. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date it takes possession of the leased space for construction purposes as the beginning of the term. For leases with renewal periods at the Company’s option, the Company determines the expected lease period based on whether the renewal of any option is reasonably assured at the inception of the lease. In addition to rental expense, certain leases require the Company to pay a portion of real estate taxes, utilities, building operating expenses, insurance, common area maintenance charges, and other charges. For rent escalations, and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the terms of the leases as reductions to occupancy expense. Leasehold improvements financed by the landlord through lease incentive allowances are recorded as deferred lease incentives. The Company classifies lease incentive allowances as deferred rent on the consolidated balance sheets and amortizes the lease incentives on a straight-line basis over the defined lease term as an adjustment to occupancy expense. In April 2020, the Financial Accounting Standards Board ("FASB") issued guidance related to rent concessions resulting from the COVID-19 pandemic. This guidance allows entities an election to account for eligible concessions, regardless of their form, either by (1) applying the modification framework for these concessions in accordance with FASB Accounting Standards Codification ("ASC") Topic 840, Leases or (2) accounting for the concessions as if they were made under the enforceable rights included in the original agreement. The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. During the fiscal year ended December 27, 2020, the Company received non-substantial concessions from certain landlords in the form of rent deferrals and abatements. The Company has elected to account for these rent concessions as if they were made under the enforceable rights included in the original agreements. The recognition of rent concessions resulting from the COVID-19 pandemic did not have a material impact on the Company's consolidated financial statements as of December 27, 2020. The Company did not receive any concessions from landlords during the fiscal year ended December 26, 2021 or December 29, 2019. Pre-Opening Expenses Pre-opening expenses consist primarily of occupancy expenses, which represent rent expense recognized during the period between the date of possession of the restaurant facility and the restaurant opening date, wages, travel for the opening team, food, beverage and the initial stocking of operating supplies. These are expensed as incurred prior to the restaurant opening for business. Income and Other Taxes We account for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. A valuation allowance is recognized if we determine it is more likely than not that all or a portion of a deferred tax asset will not be recognized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operations. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. It intended to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act also allowed eligible employers to defer the remittance of employer social security taxes otherwise payable during calendar year 2020 and remit half of such deferred amounts on or before December 31, 2021 and half on or before December 31, 2022. The Company deferred approximately $5.4 million of social security tax remittances under this provision as of December 27, 2020, of which $2.7 million was paid during the year ended December 31, 2021. The remaining deferred balance of $2.7 million as of December 26, 2021 was included in accounts payable in the consolidated balance sheet. The CARES Act provides refundable employee retention credits, which can be used to offset payroll tax liabilities. For the year ended December 27, 2020, the Company recorded a benefit of $0.3 million, which is included in other income in the consolidated statement of operations. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing the net income (loss) attributable to common shareholders by the weighted-average number of shares outstanding. Diluted earnings (loss) per share adjusts the basic earnings (loss) per unit attributable to shareholders and the weighted-average number of units of shares outstanding for the potential dilutive impact of shares, using the treasury-stock method. Diluted earnings (loss) per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common units would have an anti-dilutive effect. Recently Issued Accounting Standards In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"). The pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. The update is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company will adopt this standard on December 27, 2021, electing the optional transition method to apply the standard as of the transition date. As a result, we will not apply the standard to the comparative periods presented. We have elected the transition package of three practical expedients permitted under the new standard, which among other things, allows us to carryforward our historical lease classifications. We also made certain accounting policy elections for new leases post-transition, including the election to combine components. The adoption will have a significant impact to our consolidated balance sheet given the extent of our real estate lease portfolio. We will record a right-of-use asset and lease liability for those leases as well as all other existing leases, the majority of which are real estate operating leases. We expect the adoption to result in a net increase of between $230 million to $270 million in right-of-use assets and $260 million to $300 million in lease liabilities. The difference between the right-of-use assets and lease liabilities, will be recorded as an adjustment through equity. Our existing operating leases will not have a material impact on our statement of operations post-transition. We are substantially complete with our implementation efforts. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference rates but does not expect a significant impact on its consolidated financial statements. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended by multiple standards updates. The update was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for GAAP and International Financial Reporting Standards (“IFRS”). The FASB approved a one-year deferral of the effective date of ASU 2014-09, such that it became effective for the annual period beginning after December 15, 2018. The Company adopted the standard effective January 1, 2019 and applied the amendments using the modified retrospective method applied to contracts that were not completed as of the date of adoption. The adoption did not have a material impact on restaurant sales but did impact gift card breakage. The Company sells gift cards to customers, records the sale as a contract liability and recognizes the associated revenue as the gift card is redeemed. A portion of these gift cards are not redeemed by the customer, which is recognized by the Company as revenue in proportion to the pattern of rights exercised by the customer. The expected breakage amount recognized was determined based on a portfolio assessment of historical data on gift card redemption patterns. Upon adoption of this standard, the Company’s retained earnings increased by approximately $0.2 million. Refer to Note 3. "Revenue Recognition" for additional information. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company adopted this standard effective December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements that is a service contract. The Company adopted this standard effective December 28, 2020. Subsequent to the adoption of ASU 2018-15, the Company capitalized such costs within other current assets or other assets on its consolidated balance sheets. The Company amortizes the implementation costs once the system is ready for its intended use, on a straight-line basis, over the term of the related service agreements, including all reasonably certain renewals. The amortization expense related to cloud computing arrangements that are service contracts are recorded within general and administrative expenses or other operating expenses on the Company's consolidated statements of operations. The adoption of this new standard did not have a material effect on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), which modifies certain technical guidelines for accounting for income taxes. ASU 2019-12 is effective for reporting periods beginning after December 15, 2022, and early adoption is permitted. The Company adopted the new standard as of December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), an amendment that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendment simplifies accounting for convertible instruments by removing major separation models required under current accounting guidance. In addition, the amendment removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception, and also simplifies the diluted earnings per share calculation in certain areas. The amendment is effective beginning after December 15, 2023, and early adoption is permitted. The Company adopted the new standard as of December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to its consolidated financial statements.

REVENUE RECOGNITION

12 Months Ended

Dec. 26, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Revenues from retail restaurants are presented net of discounts and recognized when food and beverage products are sold to the end customer. Sales taxes collected from customers are excluded from revenues and the obligation is included in accrued liabilities until the taxes are remitted to the appropriate taxing authorities.

The Company offers delivery services to its customers. Delivery services are fulfilled by the Company and third-party service providers. In some cases, the Company makes delivery sales through Portillos.com or the Portillo's App ("Dispatch Sales"). In other cases, the Company makes delivery sales through a non-Company owned channel, such as the delivery partner’s website or app (“Marketplace Sales”).

With respect to Dispatch Sales, delivery may be performed by the Company or through a third-party service provider. The Company recognizes revenue, including delivery fees, when the performance obligation is complete and the food is transferred to the customer. For these sales, the Company receives payment directly from the customer at the time of sale.

With respect to Marketplace Sales, the Company recognizes revenue, excluding delivery fees collected by the delivery partner, when the performance obligation is complete, and control of the food is transferred to the delivery partner. The Company receives payment subsequent to the transfer of food. The payment terms with respect to Marketplace Sales are short-term in nature and are generally paid one week in arrears.

The Company sells gift cards which do not have expiration dates. The Company records the sale of the gift card as a contract liability and recognizes revenue from gift cards when: (i) the gift card is redeemed by the customer; or (ii) in the event a gift card is not expected to be redeemed, in proportion to the pattern of rights exercised by the customer (gift card breakage). The Company has determined that 11% of gift card sales will not be redeemed and will be retained by us based on a portfolio assessment of historical data on gift card redemption patterns. Gift card breakage is recorded within revenues in the consolidated statements of operations. The Company recognized gift card breakage of $0.7 million in each of the years ended December 26, 2021 and December 27, 2020 and $0.8 million for the year ended December 29, 2019, respectively.

The Company’s revenue related to performance obligations not yet satisfied is revenue from gift cards sold but not yet redeemed. The gift card liability is included in current deferred revenue on the consolidated balance sheets as follows (in thousands):


	December 26, 2021		December 27, 2020
Gift card liability	$	6,606	$	6,216

Revenue recognized in the consolidated statements of operations for the redemption of gift cards that were included in their respective liability balances at the beginning of the year is as follows (in thousands):


	Fiscal Years Ended
		December 26, 2021		December 27, 2020		December 29, 2019
Revenue recognized from gift card liability balance at the beginning of the year		$	3,279	$	3,197	$	7,111

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

INVENTORIES

12 Months Ended

Dec. 26, 2021

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIESInventories consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Raw materials	$	4,181	$	3,999
Work in progress	114		112
Finished goods	1,395		715
Consigned inventory	388		249
	$	6,078	$	5,075

PROPERTY & EQUIPMENT, NET

12 Months Ended

Dec. 26, 2021

Property, Plant and Equipment [Abstract]

PROPERTY & EQUIPMENT, NET

Property and equipment, net consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Land improvements	$	15,451	$	15,039
Furniture, fixtures, and equipment	115,187		105,059
Leasehold improvements	138,923		115,695
Transportation equipment	2,203		2,285
Construction-in-progress	8,300		10,711
	280,064		248,789
Less accumulated depreciation	(89,230)		(74,020)
	$	190,834	$	174,769

Depreciation expense was $16.9 million, $15.8 million, and $15.6 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 respectively, and was included in depreciation and amortization in the consolidated statements of operations.

GOODWILL & INTANGIBLE ASSETS

12 Months Ended

Dec. 26, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL & INTANGIBLE ASSETS

GOODWILL & INTANGIBLE ASSETSThe Company has one reporting unit for goodwill which is evaluated for impairment annually in the fourth quarter of each fiscal year. The Company used the income approach and market approach to test goodwill. Further given the timing of the Transactions, an IPO approach was also applied in 2021, which is a form of the market approach using the transactional method. Under the income approach, fair value is based on the present value of estimated future cash flows. The most significant assumptions utilized in the fair value estimate of the income approach include projected annual revenue, earnings before interest, taxes, depreciation and amortization ("EBITDA"), capital expenditures and the discount rate. Growth assumptions were primarily based on a combination of historical performance, expected comparable store sales growth, the number of new restaurant additions, and performance of new restaurants. The market approach utilized both the price-earnings multiples of comparable public companies, as well as transactional data from similar companies that were recently sold. Adjustments were then made for any dissimilarities, to appropriately compare and correlate the market transactions used in this method. In estimating the fair value of the Company under the market approach, the most significant assumptions include the selection of the guideline public companies used in the analysis and the selection of EBITDA multiples. The IPO approach utilized a range of contemplated share offering prices as well as shares outstanding.

For indefinite-lived intangibles, the relief-from-royalty method estimates the fair value of an intangible asset based on what a third party would pay for the right to use that asset. The most significant assumptions utilized in the relief-from-royalty method are projected revenues and the royalty rate.

No impairment charges were recognized for goodwill or indefinite-lived intangible assets for the years ended December 26, 2021, December 27, 2020 and December 29, 2019.

Intangibles, net consisted of the following (in thousands):


	As of December 26, 2021

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(21,427)		34,690
Covenants not-to-compete	40,799		(40,799)		—
Favorable rental contracts	2,991		(1,849)		1,142
	$	323,832	$	(64,075)	$	259,757

	As of December 27, 2020

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(18,538)		37,579
Covenants not-to-compete	40,799		(37,515)		3,284
Favorable rental contracts	2,991		(1,599)		1,392
	$	323,832	$	(57,652)	$	266,180

Amortization expense was $6.4 million, $8.8 million, and $8.8 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 respectively, and was included in depreciation and amortization in the consolidated statements of operations.

The estimated aggregate amortization expense for the intangibles for the next five years and thereafter are $3.1 million, $3.1 million, $3.1 million, $3.0 million, $2.9 million and $20.6 million, respectively.

EQUITY METHOD INVESTMENT

12 Months Ended

Dec. 26, 2021

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENT

The Company has a 50% interest in a single restaurant owned by C&O. The Company accounts for the investment and financial results in the consolidated financial statements under the equity method of accounting as the Company has significant influence but does not have control. The investment is adjusted to reflect the Company’s share of C&O’s earnings and losses to date and any distributions received.

A summary of financial information for C&O is as follows (in thousands):


	December 26, 2021		December 27, 2020
Assets:
Current assets	$	1,957	$	1,349
Property, plant, and equipment, net of accumulated depreciation $5,951 and $5,838 in 2021 and 2020, respectively	817		837
Total assets	2,774		2,186

Liabilities:
Current liabilities	757		681
Non-current liabilities
Deferred rent	1,211		1,193
Total liabilities	1,968		1,874
Members’ equity	806		312
Total liabilities and members' equity	$	2,774	$	2,186


	Fiscal Years Ended
		December 26, 2021		December 27, 2020		December 29, 2019
Results from operations:
Revenues, net		$	12,268	$	10,885	$	16,143
Net income		1,595		918		1,533

FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 26, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying value of the Company's cash and cash equivalents and restricted cash, accounts receivable, accounts payable and all other current assets and liabilities approximate fair values due to the short-term nature of these financial instruments.

Other assets consist of a deferred compensation plan with related assets held in a rabbi trust.

Deferred Compensation Plan - The Company maintains a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, which are designated as trading securities carried at fair value. The fair value measurement of these trading securities is considered Level 1 of the fair value hierarchy as they are measured using quoted market prices.

As of December 26, 2021 and December 27, 2020, the fair value of the mutual fund investments and deferred compensation obligations were as follows (in thousands):


	December 26, 2021		December 27, 2020
	Level 1
Assets - Investments designated for deferred compensation plan
Cash/money accounts	$	1,482	$	481
Mutual Funds	3,185		3,643
Total assets	$	4,667	$	4,124

As of December 26, 2021 and December 27, 2020 we had no Level 2 or Level 3 assets.

The mutual fund investments and deferred compensation obligations are included in other assets, accrued expenses and other long-term liabilities in the consolidated balance sheets. Changes in the fair value of securities held in the rabbi trust are recognized as trading gains and losses and included in other income in the consolidated statements of operations and offsetting increases or decreases in the deferred compensation obligation are recorded in other long-term liabilities in the consolidated balance sheets.

Refer to Note 10. "Debt" for additional information relating to the fair value of the Company's outstanding debt instruments.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets and liabilities that are measured at fair value on a non-recurring basis include property and equipment, net, equity-method investment, goodwill and indefinite-lived intangible assets. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairment charges recognized during the years ended December 26, 2021, December 27, 2020 and December 29, 2019.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

SUPPLEMENTAL BALANCE SHEET INFORMATION

12 Months Ended

Dec. 26, 2021

Balance Sheet Related Disclosures [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Prepaid insurance	$	2,869	$	445
Prepaid occupancy	494		526
Other prepaid expenses	2,473		1,944
	$	5,836	$	2,915

Prepaid insurance increased related to an increase in director's and officer liability insurance coverage in connection with our IPO as described in Note 1. "Description Of Business."

Accrued expenses consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Salaries, wages, and other compensation	$	18,065	$	15,243
Interest	1,597		9,377
Rent and real estate taxes	5,111		4,807
Insurance	2,572		2,837
Sales tax	1,970		1,609
Other accrued expenses	157		954
	$	29,472	$	34,827

DEBT

12 Months Ended

Dec. 26, 2021

Debt Disclosure [Abstract]

DEBT

Debt consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
First Lien Term B-3 Loans	$	325,752	$	329,076
Revolving Loans	—		—
Second Lien Term B-3 Loans	—		155,000
Unamortized discount and debt issuance costs	(6,599)		(14,372)
Total debt, net	319,153		469,704
Less: current portion	(3,324)		(3,324)
Long-term debt, net	$	315,829	$	466,380

First Lien

PHD Intermediate LLC (“Holdings”), Portillo’s Holdings LLC (the “Borrower”) and certain of its subsidiaries entered into the First Lien Credit Agreement ("First Lien Credit Agreement"), dated as of August 1, 2014 and as amended October 25, 2016, May 18, 2018 and December 6, 2019, with UBS AG, Stamford Branch, as the administrative agent and collateral agent, and other lenders from time to time party thereto (the “First Lien Lenders”). The First Lien Lenders extended credit in the form of (i) first lien initial term loans in an initial aggregate principal amount of $335.0 million and (ii) a revolving credit facility in an original principal amount equal to $30.0 million, including a letter of credit sub-facility with a $7.5 million sublimit (the “Revolving Facility” and the loans thereunder, the “Revolving Loans”).

On December 6, 2019, the Borrower entered a third amendment to the First Lien Credit Agreement (the “Third Amendment to First Lien Credit Agreement”) whereby the aggregate principal amount of the term loans as of the effective date of the Third Amendment to First Lien Credit Agreement was $332.4 million (the “First Lien Term B-3 Loans”), and the Revolving Facility was increased by $50 million. The maturity date with respect to the First Lien Term B-3 Loans was extended to September 6, 2024 and the maturity date with respect to the Revolving Loans date was extended to June 6, 2024.

In connection with the Third Amendment to First Lien Credit Agreement, the interest rates spread for the First Lien Term B-3 Loans increased by 100 basis points to 5.50% for the adjusted London interbank offered rate ("Eurocurrency Rate") loans. As of December 26, 2021, the interest rate on the Term Loans was 6.50%. As of December 26, 2021, December 27, 2020 and December 29, 2019, the effective interest rate on the Term Loans was 7.63%, 7.38% and 7.90%, respectively. Beginning with December 31, 2019, the Company is required to pay on the last business day of each calendar quarter, March 31, June 30, September 30, and December 31, an aggregate principal amount of $0.8 million.

As of December 26, 2021 and December 27, 2020, the Company had zero borrowings under the Revolver outstanding. As of December 26, 2021, December 27, 2020 and December 29, 2019, the interest rate on the Revolver was 3.25%, 3.25% and 3.50%, respectively, subject to change based on a consolidated first lien net leverage ratio as defined in the First Lien Credit Agreement. As of December 26, 2021, December 27, 2020 and December 29, 2019, the commitment fees, pursuant to the First Lien, to maintain the Revolver were 0.250%, 0.250% and 0.375% respectively. Also pursuant to the First Lien Credit Agreement, as of December 26, 2021, December 27, 2020 and December 29, 2019, letter of credit fronting fees were 0.125%, respectively. Commitment fees and letter of credit fronting fees were recorded as interest expense in the consolidated statements of operations.

The Company had $5.0 million and $5.8 million of letters of credit issued against the Revolving Facility as of December 26, 2021 and December 27, 2020, respectively. As of December 26, 2021, the Company had $45.0 million of availability under the Revolving Facility.

Second Lien

Holdings, the Borrower and certain of its subsidiaries entered into the Second Lien Credit Agreement (the “Second Lien Credit Agreement”) dated as of August 1, 2014 and as amended on October 25, 2016 and December 6, 2019 with UBS AG, Stamford Branch, as administrative agent and collateral agent, and other lenders from time to time party thereto (the “Second Lien Lenders”). The Second Lien Lenders extended

credit in the form of initial second lien term loans in an initial aggregate principal amount of $80.0 million.

On December 6, 2019, the Borrower entered into second amendment to the Second Lien Credit Agreement (the “Second Amendment to Second Lien Credit Agreement”) whereby the aggregate principal amount of the term loans as of the effective date of the Second Amendment to the Second Lien Credit Agreement was $155.0 million (the “Second Lien Term B-3 Loans”). The maturity date of the Second Lien Term B-3 Loans was extended to December 6, 2024. In addition to the increased principal amount, the interest rates spread for the Second Lien Term B-3 Loans increased by 150 basis points to 9.50% for Eurocurrency Rate loans. The Borrower determined interest on the Second Lien at the Eurocurrency Rate, plus 9.50%.

In connection with the IPO, the Company received aggregate net proceeds of approximately $430.0 million after deducting underwriting discounts and commissions and offering expenses. Net proceeds of $158.1 million were used to repay the Second Lien Term B-3 Loans in full, including a $3.1 million prepayment penalty, which was recorded as a loss on debt extinguishment during the year ended December 26, 2021 in the consolidated statement of operations.

Maturities of long-term debt

Principal payments on long-term debt (excluding the Revolving Facility) outstanding at December 26, 2021 for each year through maturity are as follows (in thousands):


2022	$	3,324
2023	4,155
2024	318,273

	$	325,752

Discount and Debt Issuance Costs

In connection with entering into the Third Amendment to First Lien Credit Agreement and the Second Amendment to Second Lien Credit Agreement, in each case, dated as of December 6, 2019, the Borrower paid debt issuance costs of $14.5 million, of which $13.3 million were capitalized and are being amortized over the term of the related debt agreements, and $1.2 million were expensed as incurred.

In connection with the repayment of the Second Lien Term B-3 Loans as described above, deferred financing costs and original issuance discount of $4.2 million were recorded as a loss on debt extinguishment during the year ended December 26, 2021 in the consolidated statement of operations.

The Company amortized $2.1 million, $2.2 million and $2.6 million of deferred financing costs, respectively, during each of the years ended December 26, 2021, December 27, 2020 and December 29, 2019, which was included in interest expense in the consolidated statements of operations. In addition, the Company also amortized $1.5 million, $1.6 million and $0.3 million in original issue discount related to the long-term debt, respectively, during each of the years ended December 26, 2021, December 27, 2020 and December 29, 2019 which was included in interest expense in the consolidated statements of operations.

Total interest costs incurred were $39.7 million, $45.0 million and $43.4 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019. Total loss on debt extinguishment was $7.3 million for the year ended December 26, 2021. There was no such loss for the years ended December 27, 2020 and December 29, 2019.

As of December 26, 2021 and December 27, 2020, the fair value of long-term debt approximates the carrying value as it is variable rate debt. The fair value measurement of this debt is considered Level 2 of the fair value hierarchy as inputs to interest are observable, unadjusted quoted prices in active markets for similar assets or liabilities.

Borrowings under the First Lien Credit Agreement and Second Lien Credit Agreement are guaranteed by Holdings, the Borrower and certain of the Borrower’s subsidiaries, and Holdings, the Borrower and certain of the Borrower’s subsidiaries have pledged substantially all tangible and intangible assets as collateral, subject to certain exclusions and exceptions.

The Borrower is subject to certain financial and reporting covenants pursuant to the terms of the First Lien Credit Agreement. These covenants are customary for these types of debt agreements. As of December 26, 2021, the Company was in compliance with all covenants.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

OPERATING LEASES

12 Months Ended

Dec. 26, 2021

Leases [Abstract]

OPERATING LEASES

The Company leases retail restaurants, commissaries, and office space under various long-term operating lease agreements. The leases for the Company’s restaurant locations generally have an initial term of 10 years to 20 years and typically provide for renewal options in five-year increments, as well as rent escalations. These leases expire or become subject to renewal clauses at various dates from 2024 to 2068. Some of the leases provide for base rent, plus additional rent based on gross sales, as defined in each lease agreement. The Company is also generally obligated to pay certain real estate taxes, utilities, building operating expenses, insurance and various other expenses associated with the properties.

The Company does not own the real properties of any of its restaurant or commissary locations.

A summary of rent expense under operating lease agreements is as follows (in thousands):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Minimum rentals	$	22,363	$	19,787	$	19,311
Contingent rentals	679		486		615
Total rental expense	$	23,042	$	20,273	$	19,926

A schedule by year of future minimum rental payments required under operating leases, excluding contingent rent, that have initial or remaining noncancellable lease terms in excess of one year, as of December 26, 2021, is as follows (in thousands):


Year Ending	Minimum Amount
2022	$	20,298
2023	20,784
2024	21,099
2025	20,969
2026	21,254
Thereafter	508,217
Total minimum payments required	$	612,621

REDEEMABLE PREFERRED UNITS	12 Months Ended
REDEEMABLE PREFERRED UNITS	Dec. 26, 2021
Temporary Equity [Abstract]
REDEEMABLE PREFERRED UNITS	REDEEMABLE PREFERRED UNITS Pursuant to a unit purchase agreement, dated August 1, 2014, between the Company and Broad Street Principal Investments (the “Preferred Investor”), Portillo's OpCo issued 100,000 preferred units in exchange for a capital contribution of $97.7 million, net of discounts and fees as agreed between the parties. The Preferred Units had all the rights, privileges, and obligations as provided for in the previous Amended and Restated Limited Liability Company Agreement of the OpCo, which included redemption rights and the amounts payable upon liquidation, but excluded dividend and conversion rights. In connection with the IPO, the Company received aggregate net proceeds of approximately $430.0 million after deducting underwriting discounts and commissions and offering expenses. Net proceeds of $221.7 million were used to repay the redeemable preferred units in full including the preferred liquidation amount of $2.2 million. As of December 26, 2021 and December 27, 2020, the Company had recorded $0.0 million and $200.6 million respectively, as Redeemable Preferred Units. These transactions were recorded in accordance with FASB ASC 480 Distinguishing Between Liabilities and Equity. As a result of the probability of the redemption by holder feature, the Preferred Units were classified outside of permanent equity within the consolidated balance sheets.

STOCKHOLDERS' EQUITY	12 Months Ended
STOCKHOLDERS' EQUITY	Dec. 26, 2021
Equity [Abstract]
STOCKHOLDERS' EQUITY	STOCKHOLDER'S EQUITY Amended and Restated Certificate of Incorporation In connection with the IPO, we amended and restated our certificate of incorporation to, among other things, provide for the (i) authorization of 380,000,000 shares of Class A common stock, par value $0.01 per share; (ii) authorization of 50,000,000 shares of Class B common stock, par value $0.00001; (iii) authorization of 10,000,000 shares of preferred stock, par value $0.01 per share; and (iv) provides that our Board will be elected annually to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. Holders of shares of our Class A common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. Holders of shares of our Class A common stock are entitled to receive dividends when and if declared by our Board out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Each share of Class B common stock will entitle its holder to one vote per share on all matters submitted to a vote of our stockholders. The Class B common stock is not entitled to economic interests in Portillo’s Inc. Holders of our Class B common stock do not have any right to receive dividends. We must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by us (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities). Amended and Restated LLC Agreement As described in Note 1. "Description Of Business", we amended and restated the LLC agreement of Portillo’s OpCo to, among other things, convert all outstanding equity interests into LLC Units. The LLC Agreement also provides that holders of LLC Interests may, from time to time, redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis. Upon receipt of a redemption request, we may, instead, elect to effect a direct exchange of LLC Interests directly with the holder. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest. Additionally, an equivalent number of shares of Class B common stock will be surrendered and canceled. The amendment also requires that Portillo's OpCo, at all times, maintain (i) a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by us and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by the pre-IPO LLC Members and the number of LLC Interests owned by the pre-IPO LLC Members. Initial Public Offering As described in Note 1. "Description Of Business", on October 25, 2021, we completed an IPO of 23,310,810 shares of the Company's Class A common stock (including 3,040,540 shares sold to the underwriters pursuant to their overallotment option) at an offering price of $20.00 per share. The Company received aggregate net proceeds of approximately $430.0 million after deducting underwriting discounts and commissions of $29.1 million and other offering expenses of approximately $7.1 million. In connection with our IPO, we issued 12,496,361 shares of Class A common stock to pre-IPO LLC Members and 35,673,321 shares of Class B common stock to pre-IPO LLC Members. Following the completion of the Transactions, Portillo's Inc. owns 50.1% of Portillo’s OpCo. The other pre-IPO LLC Members own the remaining 49.9% of Portillo’s OpCo.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

NONCONTROLLING INTERESTS	12 Months Ended
NONCONTROLLING INTERESTS	Dec. 26, 2021
Noncontrolling Interest [Abstract]
NONCONTROLLING INTERESTS	NON-CONTROLLING INTERESTS In connection with the Transactions described in Note 1. "Description Of Business" we are the sole managing member of Portillo's OpCo, and as a result, consolidated the financial results of Portillo's OpCo. We report a non-controlling interest representing the LLC interests in Portillo's OpCo held by pre-IPO LLC Members. Changes in our ownership interest in Portillo's OpCo while we retain our controlling interest in Portillo's OpCo will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC interests in Portillo's OpCo by the pre-IPO LLC members will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital. As of December 26, 2021, there were 71,480,492 LLC interests outstanding, of which we owned 35,807,171 LLC Interests, representing a 50.1% ownership interest in Portillo's OpCo.

EQUITY-BASED COMPENSATION

12 Months Ended

Dec. 26, 2021

Share-based Payment Arrangement [Abstract]

EQUITY-BASED COMPENSATION

2021 Equity Incentive Plan

In connection with the IPO, the Company adopted the 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan is administered and interpreted by the Company's Board, including the authority to select persons to participate in the 2021 Plan, determine the form and substance of awards under the 2021 Plan, determine the conditions and restrictions, if any, subject to which such awards will be made, modify the terms of awards, accelerate the vesting of awards, and make determinations regarding a participant’s termination of employment or service for purposes of an award. The types of awards available under the 2021 Plan include stock options (both incentive and non-qualified), stock appreciation rights ("SARs"), restricted stock awards, restricted stock units ("RSUs"), and stock-based awards. All awards granted to participants under the 2021 Plan will be represented by an award agreement. Approximately 7.1 million shares of Class A common stock are available for awards.

In connection with the IPO, we granted approximately 882,875 RSUs under the 2021 Plan to certain employees and directors, including our named executive officers. The outstanding RSUs have time-based vesting criteria. Outstanding time-based RSUs will vest one-third (1/3rd) on each of the first three (3) anniversaries of the date of grant subject to continued service on such date. In addition, in connection with the IPO, we granted 1,794,195 performance based stock options on our Class A common stock (“PSOs”) under the 2021 Plan to certain executives. These PSOs will be eligible to vest in three (3) tranches based on stock performance conditions.

Restricted Stock Units

Activity for the Company's RSUs was as follows:


	Restricted Stock Units (in thousands)	Weighted-average grant date fair value per share
Non-Vested, December 27, 2020	—	$	—
Granted	883	20.00
Vested	—	—
Forfeited	—	—
Expired	—	—
Non-Vested, December 26, 2021	883	$	20.00

As of December 26, 2021, there was $15.2 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to vest over a weighted-average period of 2.8 years.

Performance Stock Options

In connection with the IPO, the Company granted PSOs to certain executives that will be eligible to vest in three (3) tranches based on stock performance conditions (i) one-third (1/3rd) of the PSOs will vest on the third anniversary of the date of grant if the 20-day volume-weighted average price ("VWAP") for a share of common stock is $30.00 per share (1.5 times the IPO price) measured over any twenty (20) consecutive trading day period commencing on the second anniversary of the date of grant and ending on the last trading day immediately preceding the third anniversary of the date of grant; (ii) one-third (1/3rd) of the PSOs will vest on the fourth anniversary of the date of grant if the 20-day VWAP for a share of common stock is $40.00 per share (2 times the IPO price) measured over any twenty (20) consecutive trading day period commencing on the third anniversary of the date of grant and ending on the last trading day immediately preceding the fourth anniversary of the date of grant; and (iii) one-third (1/3rd) of the PSOs will vest on the fifth anniversary of the date of grant if the 20-day VWAP for a share of common stock is $50.00 per share (2.5 times the IPO price) measured over any twenty (20) consecutive trading day period commencing on the fourth anniversary of the date of grant and ending on the last trading day immediately preceding the fifth anniversary of the date of grant. All PSOs are subject to continued service at each tranche date and if any tranches fail to vest, the unvested portion of such PSOs will be forfeited and will not be eligible to vest in subsequent years. The awards granted are exercisable within a 10-year period from the date of grant.

The grant date fair value of these awards was determined using a Monte-Carlo simulation model. The fair value and weighted average assumptions used to estimate the fair value of these PSOs were as follows:


						2021
Fair value						$7.58
Stock price						$20.00
Risk-free interest rate						0.93%
Expected life (years)						4.0
Annualized equity volatility						54.4%

Activity for the Company's PSOs was as follows:


	PSOs (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value
Outstanding-December 27, 2020	—	$	—	—	$	—
Granted	1,794	20.00		9.8	—
Exercised	—	—		—	—
Forfeited	—	—		—	—
Expired	—	—		—	—
Outstanding-December 26, 2021	1,794	20.00		9.8	32,906
Exercisable-December 26, 2021	—	—		—	—
Vested and expected to vest-December 26, 2021	1,476	$	20.00	9.8	$	27,068

As of December 26, 2021, there was $10.7 million of total unrecognized compensation cost related to unvested PSOs, which is expected to be recognized over a weighted average period of 3.8 years.

2014 Equity Incentive Plan

Prior to the IPO, the Company had granted stock options under its 2014 Equity Incentive Plan, as amended (the “2014 Plan”). The 2014 Plan permitted the granting of awards to employees, officers, directors and consultants of the Company and affiliates in the form of options, unit appreciation rights, Restricted Class A Units, unrestricted Class A Units, Performance Awards and awards convertible into or otherwise based on Class A Units. Prior to the IPO, the 2014 Plan gave broad powers to the Company’s board of managers for its administration and interpretation, including the authority to select the individuals to be granted awards and rights to prescribe the particular form and conditions of each award to be granted. Under the 2014 Plan, the number of shares and exercise price of each option were determined by the board of managers, or a committee designated by the board of managers. The awards granted were generally exercisable within a 10-year period from the date of grant.

The unit option grants were equally divided between (i) options subject to time-based vesting, and (ii) options subject to both time-based and performance based vesting. The time-based vesting options vest, in general, in equal annual installments over a 5-year period and have a 10-year term from the date of the grant. The options subject to both time-based and performance-based vesting have a ten-year term from the date of the grant and vest, in general, in equal annual installments over a 5-year period from the date of grant, subject to acceleration in the event of a sale transaction, and have a performance condition that is satisfied upon achievement of a specified internal rate of return and a minimum multiple of invested capital. In connection with the IPO, the performance condition was waived and all such options became subject to time-based vesting only. As a result of the waiver and resultant modification in the terms of the performance-vesting awards, we recognized a cash compensation expense of approximately $1.3 million and a non-cash compensation expense of approximately $26.2 million, each at the modification date in the fourth quarter of fiscal 2021.

In connection with the IPO, each option outstanding, whether vested or unvested, was substituted for an option to purchase a number of shares of Class A common stock. Following the IPO, no further options will be granted under the 2014 Plan.

Activity under the 2014 Plan for the year ended December 26, 2021 was as follows:


	Options (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value
Outstanding-December 27, 2020	7,047	$	4.51	5.9	$	3,740
Granted	433	5.68		9.3	—
Exercised	—	—		—	—
Forfeited	(1,054)	3.37		—	—
Expired	—	—		—	—
Outstanding-December 26, 2021	6,426	4.53		5.6	217,286
Vested-December 26, 2021	4,766	4.34		4.9	162,022
Vested and expected to vest-December 26, 2021	6,294	$	4.51	5.5	$	212,908

Stock Options Valuation - The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which greatly affect the fair value of each stock option. The weighted average assumptions used to estimate the fair value of stock options granted during the years ended December 26, 2021 and December 27, 2020 were as follows:


	2021	2020
Fair value of stock option	$2.16	$3.40
Risk-free interest rate	1.21%	1.86%
Expected life (years)	6.5	6.5
Expected dividend yield	—	—
Volatility	54.7%	43.8%

As of December 26, 2021, there was $12.0 million of total unrecognized compensation cost related to unvested options under the 2014 plan, which is expected to be recognized over a weighted average period of 2.7 years.

Equity-Based Compensation Expense

Equity-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment to equity-based compensation expense will be recognized at that time.

Equity-based compensation expense included in the Company’s consolidated statements of operations was as follows:


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Labor	$	561	$	—	$	—
General and administrative expenses	30,147		960		1,286
Total equity-based compensation expense	$	30,708	$	960	$	1,286

Total equity-based compensation expense increased from prior year primarily because the Company recognized a cash compensation expense of approximately $1.3 million and a non-cash compensation expense of approximately $26.2 million, due to the aforementioned modification of performance-vesting awards.

INCOME TAXES

12 Months Ended

Dec. 26, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

As a result of the IPO and Transactions described in Note 1. "Description Of Business" we became the sole managing member of Portillo's OpCo, and as a result, began consolidating the financial results of Portillo's OpCo. Portillo's OpCo is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Portillo's OpCo is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Portillo's OpCo is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. Beginning in Fiscal 2021, we are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of Portillo's OpCo subsequent to the IPO and Transactions, as well as any stand-alone income or loss generated by Portillo's Inc.

Income Tax (Benefit) Expense

The components of income tax (benefit) expense are as follows (in thousands):


	December 26, 2021
Current income taxes:
Federal	$	—
State and local	1
Total current income taxes	1
Deferred income taxes:
Federal	(2,653)
State and local	(879)
Total deferred income taxes	(3,532)
Income tax (benefit) expense	$	(3,531)

Reconciliations of income tax (benefit) expense computed at the U.S. federal statutory income tax rate to the recognized income tax (benefit) expense and the U.S. statutory income tax rate to our effective tax rates are as follows (in thousands):


	December 26, 2021
Expected U.S. federal income taxes at statutory rate	$	(3,559)	21.0	%
State and local income taxes, net of federal benefit	(878)		5.2	%


Non-controlling interest	4,076		(24.0)	%
LLC flow-through structure	(4,608)		27.2	%
Other	1,438		(8.5)	%
Income tax expense (benefit)	$	(3,531)	20.9	%

Our effective income tax rate for the year ended December 26, 2021 was 20.9%. The Company’s annual effective tax rate was less than the statutory rate of 21% primarily because the Company is not liable for income taxes on the portion of OpCo’s earnings that are attributable to non-controlling interests.

Deferred Tax Assets

The components of deferred tax assets and liabilities are as follows (in thousands):


	December 26, 2021
Deferred tax assets:
Investment in partnership	$	67,865
Tax Receivable Agreement	30,910



Net operating loss carryforwards	12,806
Other assets	1,289
Total gross deferred tax assets	112,870
Valuation allowance	(38,415)




Net deferred tax assets	$	74,455

As described in Note 1. "Description Of Business" and Note 14. "Stockholder's Equity", we acquired 35,807,171 LLC interests in connection with the IPO and Transactions. During the year ended December 26, 2021, we recognized a deferred tax asset in the amount of $67.9 million associated with the basis difference in our investment in Portillo's OpCo from acquiring these LLC Interests.

During the year ended December 26, 2021, we also recognized $30.9 million of deferred tax assets related to additional tax basis increases generated from expected future payments under the TRA and related deductions for imputed interest on such payments.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. During the year ended December 26, 2021, the Company recognized a deferred tax asset of $67.9 million associated with the basis difference in its investment in Portillo's OpCo from acquiring these LLC interests. However, a portion of the total basis difference will only reverse upon the eventual sale of its interest in Portillo's OpCo, which we expect would result in a capital loss. As of December 26, 2021, the Company established a valuation allowance in the amount of $38.4 million against the deferred tax asset.

Uncertain Tax Positions

No uncertain tax positions existed as of December 26, 2021 and December 27, 2020. Portillo's Inc. was formed in June 2021 and did not engage in any operations prior to the IPO and Transactions. Portillo's Inc. will first file tax returns for tax year 2021, which is the first tax year subject to examination by taxing authorities for U.S. federal and state income tax purposes. Additionally, although Portillo's OpCo is treated as a partnership for U.S. federal and state income taxes purposes, it is still required to file an annual U.S. Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS").

Tax Receivable Agreement

Pursuant to the Company's election under Section 754 of the Internal Revenue Code (the "Code"), the Company expects to obtain an increase in its share of the tax basis in the net assets of Portillo's OpCo when LLC Units are exchanged by other members. The Company intends to treat any exchanges of LLC Units as direct purchases of LLC Units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that would otherwise be paid in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

In connection with the IPO, the Company entered into a TRA and recorded a liability under the TRA of $156.6 million as of December 26, 2021 through equity as part of the Transactions. Under the TRA, the Company will be generally required to pay certain of our pre-IPO LLC Members 85% of the amount of cash savings, if any, in U.S. federal, state, or local tax that the Company actually realizes (or is deemed to realize in certain circumstances) 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 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. The Company expects to benefit from the remaining 15% of any tax savings. No payment is expected to be paid within the next 12 months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

EARNINGS (LOSS) PER SHARE

12 Months Ended

Dec. 26, 2021

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

Basic net earnings (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to Portillo's Inc. by the weighted-average number of Class A common stock outstanding.

As described in Note 1. "Description Of Business", in connection with the IPO, the Portillo's OpCo LLC Agreement was amended and restated to, among other things, (i) to authorize the issuance of two classes of common stock and (ii) convert all outstanding equity interests (except for those redeemable preferred units which were redeemed in connection with the IPO) into LLC Units. For purposes of calculating earnings per share, the prior period amounts have been retroactively adjusted to give effect to the above-mentioned amendment and resulting recapitalization. The computations of earnings per share for periods prior to our IPO do not consider the 23,310,810 shares of Class A common stock issued to investors in our IPO.

Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to Portillo's Inc. by the weighted-average number of dilutive securities, using the treasury stock method.

The computations of basic and diluted earnings (loss) per share for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 are as follows (in thousands, except per share amounts):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Net loss attributable to common unit holders	$	(34,592)	$	(8,261)	$	(12,869)
Net loss attributable to non-controlling interests	(19,408)		—		—
Net loss attributable to Portillo's Inc.	$	(15,184)	$	(8,261)	$	(12,869)

Shares:
Weighted-average number of common shares outstanding-basic	35,807		51,189		51,176
Dilutive unit awards	—		—		—
Weighted-average number of common shares outstanding-diluted	35,807		51,189		51,176

Basic net loss per share attributable to Portillo's Inc.	$	(0.42)	$	(0.16)	$	(0.25)
Diluted net loss per share attributable to Portillo's Inc.	$	(0.42)	$	(0.16)	$	(0.25)

Shares of the Company’s Class B Common Stock do not participate in the earnings or losses of Portillo's Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under the two-class method has not been presented.

The following table presents potentially dilutive securities excluded from the computation of diluted net loss per share for the period presented because their effect would have been anti-dilutive (in thousands):

Fiscal Years Ended

December 26, 2021

December 27, 2020

December 29, 2019

Total shares excluded from diluted loss per share

1,224

679

260

CONTINGENCIES	12 Months Ended
CONTINGENCIES	Dec. 26, 2021
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES	CONTINGENCIES The Company is party to legal proceedings and potential claims arising in the normal conduct of business, including claims related to employment matters, contractual disputes, customer injuries, and property damage. Although the ultimate outcome of these claims and lawsuits cannot be predicted with certainty, management believes that the resulting liability, if any, will not have a material effect on the Company’s consolidated financial statements. The Company is subject to unclaimed property laws by states in the ordinary course of business. These laws generally require entities to report and remit abandoned and unclaimed property to the state which includes unclaimed wages, gift card funds, vendor payments, and customer refunds. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability. The Company routinely remits payments to states in compliance with applicable unclaimed property laws. As of December 26, 2021 and December 27, 2020, the Company recorded a $0.0 million and $0.9 million loss contingency related to the probable loss that may arise from an obligation to report and deliver unclaimed gift card funds from 2018. The 2018 loss contingency was resolved during the year ended December 26, 2021 for $0.8 million.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 26, 2021

RELATED PARTY TRANSACTIONS

As of December 26, 2021 and December 27, 2020, the related parties’ receivables consisted of a receivable balance due from C&O of $0.4 million and $0.2 million, respectively, which was included in accounts receivable in the consolidated balance sheets.

Stock Subscription Receivable

The Company previously issued 195,933 common units to the CEO and President for a unit subscription receivable of $1.0 million. As of December 26, 2021 and December 27, 2020, the Company had $0.0 million and $0.5 million recorded as subscription receivable, respectively. On August 13, 2021, the remaining stock subscription receivable of $0.2 million was fully repaid.

Olo, Inc.

Noah Glass, a member of the Company's Board, is the founder and CEO of Olo, Inc. ("Olo"), a platform the Company uses in connection with our mobile ordering application and delivery.

The Company incurred the following Olo-related costs for the years ended December 26, 2021 and December 27, 2020 (in thousands):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Cost of goods sold, excluding depreciation and amortization	$	633	$	731	$	667
Other operating expenses	469		541		336
Net Olo-related costs	$	1,102	$	1,272	$	1,003

As of December 26, 2021 and December 27, 2020, $0.0 million and $0.2 million was payable to Olo and was included in accounts payable in the consolidated balance sheets.

In connection with the IPO, each option outstanding, whether vested or unvested, was substituted for an option to purchase a number of shares of Class A common stock, and the option holders received a cash payment. Mr. Glass received $0.1 million with respect to these payments.

Operating Leases and Consulting Agreement

Additionally, the Company leases 23 real properties from entities owned and controlled by Richard Portillo. Mr. Portillo was the former President, CEO, and Owner of the Company, as comprised at the date of the merger transaction in August 2014 through which the Company was acquired by funds affiliated or managed by Berkshire Partners LLC. The Company made $7.9 million, $7.1 million and $7.1 million in rental payments, during each of the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. Beginning in 2014 through July 31, 2021, Mr. Portillo served as a consultant, under an agreement with Portillo's Holdings, LLC (the "Consulting Agreement"). Under the terms of the Consulting Agreement, $2.0 million was paid annually for various consulting services, which was included in general and administrative expenses in the statements of operations. The Consulting Agreement terminated on July 31, 2021 and was not renewed.

Tax Receivable Agreement

As described in Note 16. "Income Taxes", we entered into a TRA with certain members of Portillo's OpCo that provides for the payment by us of 85% of the amount of tax benefits, if any, that Portillo's Inc. actually realizes or in some cases is deemed to realize as a result of certain transactions.


	Fiscal Years Ended
(in thousands)	December 26, 2021
Tax receivable agreement liability	$	156,638

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 26, 2021
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSThe Company opened one new restaurant subsequent to December 26, 2021 for a total of 69 restaurants, excluding a restaurant owned by related party C&O, of which Portillo's owns 50% of the equity.

Schedule II: Valuation and Qualifying Accounts

12 Months Ended

Dec. 26, 2021

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II: Valuation and Qualifying Accounts


			Additions
(in thousands)	Balance at beginning of period		Charged to costs and expenses		Charged to other accounts			Reductions		Balance at end of period
Deferred tax asset valuation allowance:


Fiscal year ended December 26, 2021	$	—	$	1,904	$	36,511	(1)	$	—	$	38,415

(1) Amounts relate to a valuation allowance established on deferred tax assets related to our investment in Portillo's OpCo.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 26, 2021
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements as of December 26, 2021 and December 27, 2020 include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements, and therefore, does not separately present a statement of comprehensive income (loss).
Fiscal Year	Fiscal Year In fiscal year 2019, the Company changed from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the Sunday prior to December 31, effective beginning with the first quarter of 2019. In a 52-week fiscal year, each quarterly period is comprised of 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter. Fiscal 2021, 2020 and 2019 each consisted of 52 weeks. The fiscal periods presented in this report are years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. Unless otherwise stated, references to years in this report relate to fiscal years.
Segment Reporting	Segment Reporting The Company owns and operates fast-casual restaurants in the United States, along with two food production commissaries in Illinois. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer ("CEO"). As the CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis, the Company has one operating segment and one reportable segment.
Use of Estimates	Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Significant estimates inherent in the preparation of the consolidated financial statements include useful lives and impairments of long-lived tangible and intangible assets, accounting for income taxes and related uncertain tax positions, the valuation of equity-based compensation and awards, and reserves for litigation and other contingencies, amongst others. Actual results could differ from those estimates.
Cash and Cash Equivalents and Restricted Cash	Cash and Cash Equivalents and Restricted Cash Cash includes amounts that are either held in the Company’s bank accounts or represent deposits in transit. Amounts receivable from credit card processors are considered cash equivalents because they are both short in term and highly liquid in nature and are typically converted to cash within three business days of the sales transactions. Restricted cash includes amounts that are held in the Company’s bank accounts subject to minimum balance requirements for medical claim disbursements and escrow requirements related to certain new restaurant construction projects.
Accounts Receivable	Accounts Receivable Accounts receivable consist primarily of vendor rebates, tenant improvement receivables, and delivery receivables as well as receivables from related parties (see Note 19. "Related Party Transactions"). The Company evaluates the collectability of its accounts receivable based on a variety of factors, including historical experience, current and future economic and market conditions and other factors.
Inventory	Inventory Inventory, which consists mainly of food products, is valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out (FIFO) method. The Company had no allowance and a $0.06 million allowance for excess and obsolete inventories as of December 26, 2021 and December 27, 2020, respectively. The estimate was based on the value of slow-moving catering trays and the likelihood that the overstocked volume will be sold prior to expiration date. No other adjustment is deemed necessary to reduce inventory to lower of cost or net realizable value due to the rapid turnover and high utilization of inventory. Certain of the Company’s inventories are held at its distributors on a short-term consignment basis. Inventories subject to these consignment arrangements are recorded on the Company’s consolidated balance sheet and totaled $0.4 million and $0.2 million as of December 26, 2021 and December 27, 2020, respectively.
Long-Lived Assets and Valuation	Long-Lived Assets and Valuation The Company’s long-lived assets include property and equipment and definite-lived intangible assets. Depreciation and amortization are computed using the straight-line method. Except for leasehold improvements, depreciation is computed over the estimated useful life of each asset (generally ranging from three to ten years). Leasehold improvements are amortized over the shorter of the estimated lives of the asset or the lease term. The Company reviews its long-lived assets, including property and equipment and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group might not be recoverable. Recoverability is measured by a comparison of the carrying amount to future undiscounted cash flows that are expected to be generated by the asset or asset group. If the carrying amount exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying value exceeds the estimated fair value. Restaurant-level assets are grouped by restaurant for the purpose of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Long-Lived Assets and Valuation	Long-Lived Assets and Valuation The Company’s long-lived assets include property and equipment and definite-lived intangible assets. Depreciation and amortization are computed using the straight-line method. Except for leasehold improvements, depreciation is computed over the estimated useful life of each asset (generally ranging from three to ten years). Leasehold improvements are amortized over the shorter of the estimated lives of the asset or the lease term. The Company reviews its long-lived assets, including property and equipment and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group might not be recoverable. Recoverability is measured by a comparison of the carrying amount to future undiscounted cash flows that are expected to be generated by the asset or asset group. If the carrying amount exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying value exceeds the estimated fair value. Restaurant-level assets are grouped by restaurant for the purpose of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Indefinite-Lived Intangible Assets	Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are assessed for impairment annually in the fourth quarter 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 which is evaluated for impairment annually. Fair value of the reporting unit is estimated using the income approach and the market approach. Further given the timing of the Transactions, an IPO approach was also applied, which is a form of the market approach using the transactional method. Under the income approach, fair value is based on the present value of estimated future cash flows. The market approach is based upon both the price-earnings multiples of comparable public companies, transactional data from similar companies that were recently sold, and transactional data from the Company's IPO. 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 trade marks (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.
Goodwill	Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are assessed for impairment annually in the fourth quarter 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 which is evaluated for impairment annually. Fair value of the reporting unit is estimated using the income approach and the market approach. Further given the timing of the Transactions, an IPO approach was also applied, which is a form of the market approach using the transactional method. Under the income approach, fair value is based on the present value of estimated future cash flows. The market approach is based upon both the price-earnings multiples of comparable public companies, transactional data from similar companies that were recently sold, and transactional data from the Company's IPO. 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 trade marks (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.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes three levels of the fair value hierarchy as follows: Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
Offering Costs	Offering CostsIn connection with the IPO, Portillo's OpCo incurred certain legal, accounting, and other IPO-related costs. Such costs are recorded in stockholders’ equity as a reduction from the proceeds of the offering.
Revenue Recognition	Revenue Recognition Revenues from retail restaurants are presented net of discounts and recognized when food and beverage products are sold to the end customer. Sales taxes collected from customers are excluded from revenues and the obligation is included in accrued liabilities until the taxes are remitted to the appropriate taxing authorities. The Company offers delivery services to its customers. For delivery sales through Portillos.com or the Portillo's App, the Company recognizes revenue, including delivery fees, when the performance obligation is complete and the food is transferred to the customer. For delivery sales through a non-Company owned channel, such as the delivery partner’s website or app, as of the end of 2021, we recognize marketplace sales, including third-party delivery menu price premiums, as revenue when the control of the food is transferred to the delivery service, excluding any delivery or service fees charged to the customer. Prior to the end of 2021, this price premium was previously recorded in cost of goods sold, excluding depreciation and amortization. The amount of the price premium recorded in 2021 and prior periods is not material and there is no anticipated or actual impact on operating income or net income for any period. Generally, revenue is recognized as promised goods or services transfer to the guest or customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues are recognized when payment is tendered at the point of sale as the performance obligation has been satisfied.
Commitments	Commitments The majority of the food products the Company purchases are subject to changes in price primarily due to the effect of supply and demand of the commodities, in particular, proteins, dairy, produce, and grains. Overall pricing agreements are established in an effort to maintain a more consistent food cost without creating long-term purchase commitments.
Employee Benefits	Employee Benefits The Company sponsors a 401(k) plan for all employees that are eligible based upon age and length of service. The expenses incurred for Company matching contributions to the plan were approximately $0.5 million, $0.4 million and $0.4 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. The Company offers a non-qualified deferred compensation plan to certain officers and other members of management. Under the plan, eligible employees may defer up to 80% of their annual salary and annual bonus. The Company has elected to fund its deferred compensation obligations through a rabbi trust. The rabbi trust is subject to creditor claims in the event of insolvency, but such assets are not available for general corporate purposes. Assets held in the rabbi trust are invested in mutual funds, which are purchased and held principally for the purpose of selling them in the near term, and are classified as trading securities and carried at fair value.
Equity-Based Compensation	Equity-Based Compensation The Company has issued non-qualified stock options, restricted stock units, and performance based stock options. Equity-based compensation expense is measured based on the grant-date fair value of those awards and is recognized on a straight-line basis over the vesting period. Equity-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment to equity-based compensation expense will be recognized at that time. Equity-based compensation expense is included within general and administrative expenses and labor in the consolidated statements of operations. In connection with the IPO, each option under the 2014 Equity Incentive Plan ("2014 Plan") that was outstanding, whether vested or unvested, was substituted for an option to purchase a number of shares of Class A common stock under the 2021 Equity Incentive Plan ("2021 Plan"), and the option holders received a cash payment in respect of their options (whether vested or unvested) in an aggregate amount of approximately $6.6 million, which was recorded in the fourth quarter of 2021. In addition, as a result of the waiver and the resultant modification in the terms of certain performance-vesting awards we recorded compensation expense based on the fair value of the modified awards. Assuming all of the options vest and an offering price of $20.00 per share of Class A common stock, we recognized a cash compensation expense of approximately $1.3 million and non-cash compensation expense of approximately $26.2 million, each at the modification date in the fourth quarter of fiscal 2021.
Advertising and Marketing Expenses	Advertising and Marketing Expenses The costs of producing advertising are expensed the first-time advertising takes place, while the costs of communicating advertising are expensed as services are received. Advertising and marketing expenses totaled $3.1 million, $2.6 million and $4.5 million for the years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively. Advertising and marketing expenses included in other operating expenses in the consolidated statements of operations is primarily related to sponsorships, in-store merchandising, and charitable giving; those included in general and administrative expenses in the consolidated statements of operations primarily consist of branding initiatives.
Leases	Leases The Company leases retail restaurants, commissaries, and office space under operating leases. Some lease agreements contain tenant improvement allowances, rent escalation clauses and/or contingent rent provisions. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date it takes possession of the leased space for construction purposes as the beginning of the term. For leases with renewal periods at the Company’s option, the Company determines the expected lease period based on whether the renewal of any option is reasonably assured at the inception of the lease. In addition to rental expense, certain leases require the Company to pay a portion of real estate taxes, utilities, building operating expenses, insurance, common area maintenance charges, and other charges. For rent escalations, and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the terms of the leases as reductions to occupancy expense. Leasehold improvements financed by the landlord through lease incentive allowances are recorded as deferred lease incentives. The Company classifies lease incentive allowances as deferred rent on the consolidated balance sheets and amortizes the lease incentives on a straight-line basis over the defined lease term as an adjustment to occupancy expense. In April 2020, the Financial Accounting Standards Board ("FASB") issued guidance related to rent concessions resulting from the COVID-19 pandemic. This guidance allows entities an election to account for eligible concessions, regardless of their form, either by (1) applying the modification framework for these concessions in accordance with FASB Accounting Standards Codification ("ASC") Topic 840, Leases or (2) accounting for the concessions as if they were made under the enforceable rights included in the original agreement. The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. During the fiscal year ended December 27, 2020, the Company received non-substantial concessions from certain landlords in the form of rent deferrals and abatements. The Company has elected to account for these rent concessions as if they were made under the enforceable rights included in the original agreements.
Pre-Opening Expenses	Pre-Opening Expenses Pre-opening expenses consist primarily of occupancy expenses, which represent rent expense recognized during the period between the date of possession of the restaurant facility and the restaurant opening date, wages, travel for the opening team, food, beverage and the initial stocking of operating supplies. These are expensed as incurred prior to the restaurant opening for business.
Income and Other Taxes	Income and Other Taxes We account for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. A valuation allowance is recognized if we determine it is more likely than not that all or a portion of a deferred tax asset will not be recognized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operations. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. It intended to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act also allowed eligible employers to defer the remittance of employer social security taxes otherwise payable during calendar year 2020 and remit half of such deferred amounts on or before December 31, 2021 and half on or before December 31, 2022. The Company deferred approximately $5.4 million of social security tax remittances under this provision as of December 27, 2020, of which $2.7 million was paid during the year ended December 31, 2021. The remaining deferred balance of $2.7 million as of December 26, 2021 was included in accounts payable in the consolidated balance sheet. The CARES Act provides refundable employee retention credits, which can be used to offset payroll tax liabilities.
Earnings (Loss) Per Share	Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing the net income (loss) attributable to common shareholders by the weighted-average number of shares outstanding. Diluted earnings (loss) per share adjusts the basic earnings (loss) per unit attributable to shareholders and the weighted-average number of units of shares outstanding for the potential dilutive impact of shares, using the treasury-stock method. Diluted earnings (loss) per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common units would have an anti-dilutive effect.
Recently Issued and Adopted Accounting Standards	Recently Issued Accounting Standards In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"). The pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. The update is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company will adopt this standard on December 27, 2021, electing the optional transition method to apply the standard as of the transition date. As a result, we will not apply the standard to the comparative periods presented. We have elected the transition package of three practical expedients permitted under the new standard, which among other things, allows us to carryforward our historical lease classifications. We also made certain accounting policy elections for new leases post-transition, including the election to combine components. The adoption will have a significant impact to our consolidated balance sheet given the extent of our real estate lease portfolio. We will record a right-of-use asset and lease liability for those leases as well as all other existing leases, the majority of which are real estate operating leases. We expect the adoption to result in a net increase of between $230 million to $270 million in right-of-use assets and $260 million to $300 million in lease liabilities. The difference between the right-of-use assets and lease liabilities, will be recorded as an adjustment through equity. Our existing operating leases will not have a material impact on our statement of operations post-transition. We are substantially complete with our implementation efforts. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference rates but does not expect a significant impact on its consolidated financial statements. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended by multiple standards updates. The update was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for GAAP and International Financial Reporting Standards (“IFRS”). The FASB approved a one-year deferral of the effective date of ASU 2014-09, such that it became effective for the annual period beginning after December 15, 2018. The Company adopted the standard effective January 1, 2019 and applied the amendments using the modified retrospective method applied to contracts that were not completed as of the date of adoption. The adoption did not have a material impact on restaurant sales but did impact gift card breakage. The Company sells gift cards to customers, records the sale as a contract liability and recognizes the associated revenue as the gift card is redeemed. A portion of these gift cards are not redeemed by the customer, which is recognized by the Company as revenue in proportion to the pattern of rights exercised by the customer. The expected breakage amount recognized was determined based on a portfolio assessment of historical data on gift card redemption patterns. Upon adoption of this standard, the Company’s retained earnings increased by approximately $0.2 million. Refer to Note 3. "Revenue Recognition" for additional information. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company adopted this standard effective December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements that is a service contract. The Company adopted this standard effective December 28, 2020. Subsequent to the adoption of ASU 2018-15, the Company capitalized such costs within other current assets or other assets on its consolidated balance sheets. The Company amortizes the implementation costs once the system is ready for its intended use, on a straight-line basis, over the term of the related service agreements, including all reasonably certain renewals. The amortization expense related to cloud computing arrangements that are service contracts are recorded within general and administrative expenses or other operating expenses on the Company's consolidated statements of operations. The adoption of this new standard did not have a material effect on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), which modifies certain technical guidelines for accounting for income taxes. ASU 2019-12 is effective for reporting periods beginning after December 15, 2022, and early adoption is permitted. The Company adopted the new standard as of December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), an amendment that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendment simplifies accounting for convertible instruments by removing major separation models required under current accounting guidance. In addition, the amendment removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception, and also simplifies the diluted earnings per share calculation in certain areas. The amendment is effective beginning after December 15, 2023, and early adoption is permitted. The Company adopted the new standard as of December 28, 2020. The adoption of this new standard did not have a material effect on our consolidated financial statements. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to its consolidated financial statements.

REVENUE RECOGNITION (Tables)

12 Months Ended

Dec. 26, 2021

Revenue from Contract with Customer [Abstract]

Summary of Gift Card Liability

The gift card liability is included in current deferred revenue on the consolidated balance sheets as follows (in thousands):


	December 26, 2021		December 27, 2020
Gift card liability	$	6,606	$	6,216


	Fiscal Years Ended
		December 26, 2021		December 27, 2020		December 29, 2019
Revenue recognized from gift card liability balance at the beginning of the year		$	3,279	$	3,197	$	7,111

INVENTORIES (Tables)

12 Months Ended

Dec. 26, 2021

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Raw materials	$	4,181	$	3,999
Work in progress	114		112
Finished goods	1,395		715
Consigned inventory	388		249
	$	6,078	$	5,075

PROPERTY & EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 26, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Land improvements	$	15,451	$	15,039
Furniture, fixtures, and equipment	115,187		105,059
Leasehold improvements	138,923		115,695
Transportation equipment	2,203		2,285
Construction-in-progress	8,300		10,711
	280,064		248,789
Less accumulated depreciation	(89,230)		(74,020)
	$	190,834	$	174,769

GOODWILL & INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 26, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Indefinite-Lived Intangibles, net

Intangibles, net consisted of the following (in thousands):


	As of December 26, 2021

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(21,427)		34,690
Covenants not-to-compete	40,799		(40,799)		—
Favorable rental contracts	2,991		(1,849)		1,142
	$	323,832	$	(64,075)	$	259,757

	As of December 27, 2020

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(18,538)		37,579
Covenants not-to-compete	40,799		(37,515)		3,284
Favorable rental contracts	2,991		(1,599)		1,392
	$	323,832	$	(57,652)	$	266,180

Schedule of Finite-Lived Intangibles, net

Intangibles, net consisted of the following (in thousands):


	As of December 26, 2021

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(21,427)		34,690
Covenants not-to-compete	40,799		(40,799)		—
Favorable rental contracts	2,991		(1,849)		1,142
	$	323,832	$	(64,075)	$	259,757

	As of December 27, 2020

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Indefinite-lived intangible assets:
Trade names	$	223,925	$	—	$	223,925
Intangibles subject to amortization:
Recipes	56,117		(18,538)		37,579
Covenants not-to-compete	40,799		(37,515)		3,284
Favorable rental contracts	2,991		(1,599)		1,392
	$	323,832	$	(57,652)	$	266,180

EQUITY METHOD INVESTMENT (Tables)

12 Months Ended

Dec. 26, 2021

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investment Financial Information

A summary of financial information for C&O is as follows (in thousands):


	December 26, 2021		December 27, 2020
Assets:
Current assets	$	1,957	$	1,349
Property, plant, and equipment, net of accumulated depreciation $5,951 and $5,838 in 2021 and 2020, respectively	817		837
Total assets	2,774		2,186

Liabilities:
Current liabilities	757		681
Non-current liabilities
Deferred rent	1,211		1,193
Total liabilities	1,968		1,874
Members’ equity	806		312
Total liabilities and members' equity	$	2,774	$	2,186


	Fiscal Years Ended
		December 26, 2021		December 27, 2020		December 29, 2019
Results from operations:
Revenues, net		$	12,268	$	10,885	$	16,143
Net income		1,595		918		1,533

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 26, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Mutual Fund Investments and Deferred Compensation Obligations

As of December 26, 2021 and December 27, 2020, the fair value of the mutual fund investments and deferred compensation obligations were as follows (in thousands):


	December 26, 2021		December 27, 2020
	Level 1
Assets - Investments designated for deferred compensation plan
Cash/money accounts	$	1,482	$	481
Mutual Funds	3,185		3,643
Total assets	$	4,667	$	4,124

SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables)

12 Months Ended

Dec. 26, 2021

Balance Sheet Related Disclosures [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Prepaid insurance	$	2,869	$	445
Prepaid occupancy	494		526
Other prepaid expenses	2,473		1,944
	$	5,836	$	2,915

Schedule of Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
Salaries, wages, and other compensation	$	18,065	$	15,243
Interest	1,597		9,377
Rent and real estate taxes	5,111		4,807
Insurance	2,572		2,837
Sales tax	1,970		1,609
Other accrued expenses	157		954
	$	29,472	$	34,827

DEBT (Tables)

12 Months Ended

Dec. 26, 2021

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Debt consisted of the following (in thousands):


	December 26, 2021		December 27, 2020
First Lien Term B-3 Loans	$	325,752	$	329,076
Revolving Loans	—		—
Second Lien Term B-3 Loans	—		155,000
Unamortized discount and debt issuance costs	(6,599)		(14,372)
Total debt, net	319,153		469,704
Less: current portion	(3,324)		(3,324)
Long-term debt, net	$	315,829	$	466,380

Schedule of Maturities of Long-term Debt

Principal payments on long-term debt (excluding the Revolving Facility) outstanding at December 26, 2021 for each year through maturity are as follows (in thousands):


2022	$	3,324
2023	4,155
2024	318,273

	$	325,752

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

OPERATING LEASES (Tables)

12 Months Ended

Dec. 26, 2021

Leases [Abstract]

Schedule of Rent Expense Under Operating Leases

A summary of rent expense under operating lease agreements is as follows (in thousands):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Minimum rentals	$	22,363	$	19,787	$	19,311
Contingent rentals	679		486		615
Total rental expense	$	23,042	$	20,273	$	19,926

Schedule of Future Minimum Rental Payments Under Operating Leases


Year Ending	Minimum Amount
2022	$	20,298
2023	20,784
2024	21,099
2025	20,969
2026	21,254
Thereafter	508,217
Total minimum payments required	$	612,621

EQUITY-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 26, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Non-Option Award Activity

Activity for the Company's RSUs was as follows:


	Restricted Stock Units (in thousands)	Weighted-average grant date fair value per share
Non-Vested, December 27, 2020	—	$	—
Granted	883	20.00
Vested	—	—
Forfeited	—	—
Expired	—	—
Non-Vested, December 26, 2021	883	$	20.00

Activity for the Company's PSOs was as follows:


	PSOs (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value
Outstanding-December 27, 2020	—	$	—	—	$	—
Granted	1,794	20.00		9.8	—
Exercised	—	—		—	—
Forfeited	—	—		—	—
Expired	—	—		—	—
Outstanding-December 26, 2021	1,794	20.00		9.8	32,906
Exercisable-December 26, 2021	—	—		—	—
Vested and expected to vest-December 26, 2021	1,476	$	20.00	9.8	$	27,068

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value and weighted average assumptions used to estimate the fair value of these PSOs were as follows:


						2021
Fair value						$7.58
Stock price						$20.00
Risk-free interest rate						0.93%
Expected life (years)						4.0
Annualized equity volatility						54.4%

The weighted average assumptions used to estimate the fair value of stock options granted during the years ended December 26, 2021 and December 27, 2020 were as follows:


	2021	2020
Fair value of stock option	$2.16	$3.40
Risk-free interest rate	1.21%	1.86%
Expected life (years)	6.5	6.5
Expected dividend yield	—	—
Volatility	54.7%	43.8%

Summary of Option Activity

Activity under the 2014 Plan for the year ended December 26, 2021 was as follows:


	Options (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value
Outstanding-December 27, 2020	7,047	$	4.51	5.9	$	3,740
Granted	433	5.68		9.3	—
Exercised	—	—		—	—
Forfeited	(1,054)	3.37		—	—
Expired	—	—		—	—
Outstanding-December 26, 2021	6,426	4.53		5.6	217,286
Vested-December 26, 2021	4,766	4.34		4.9	162,022
Vested and expected to vest-December 26, 2021	6,294	$	4.51	5.5	$	212,908

Share-based Payment Arrangement, Expensed and Capitalized, Amount

Equity-based compensation expense included in the Company’s consolidated statements of operations was as follows:


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Labor	$	561	$	—	$	—
General and administrative expenses	30,147		960		1,286
Total equity-based compensation expense	$	30,708	$	960	$	1,286

INCOME TAXES (Tables)

12 Months Ended

Dec. 26, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax (benefit) expense are as follows (in thousands):


	December 26, 2021
Current income taxes:
Federal	$	—
State and local	1
Total current income taxes	1
Deferred income taxes:
Federal	(2,653)
State and local	(879)
Total deferred income taxes	(3,532)
Income tax (benefit) expense	$	(3,531)

Schedule of Effective Income Tax Rate Reconciliation


	December 26, 2021
Expected U.S. federal income taxes at statutory rate	$	(3,559)	21.0	%
State and local income taxes, net of federal benefit	(878)		5.2	%


Non-controlling interest	4,076		(24.0)	%
LLC flow-through structure	(4,608)		27.2	%
Other	1,438		(8.5)	%
Income tax expense (benefit)	$	(3,531)	20.9	%

Schedule of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities are as follows (in thousands):


	December 26, 2021
Deferred tax assets:
Investment in partnership	$	67,865
Tax Receivable Agreement	30,910



Net operating loss carryforwards	12,806
Other assets	1,289
Total gross deferred tax assets	112,870
Valuation allowance	(38,415)




Net deferred tax assets	$	74,455

EARNINGS (LOSS) PER SHARE (Tables)

12 Months Ended

Dec. 26, 2021

Earnings Per Share [Abstract]

Schedule of Computations of Basic and Diluted Earnings (Loss) per Unit

The computations of basic and diluted earnings (loss) per share for the years ended December 26, 2021, December 27, 2020 and December 29, 2019 are as follows (in thousands, except per share amounts):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Net loss attributable to common unit holders	$	(34,592)	$	(8,261)	$	(12,869)
Net loss attributable to non-controlling interests	(19,408)		—		—
Net loss attributable to Portillo's Inc.	$	(15,184)	$	(8,261)	$	(12,869)

Shares:
Weighted-average number of common shares outstanding-basic	35,807		51,189		51,176
Dilutive unit awards	—		—		—
Weighted-average number of common shares outstanding-diluted	35,807		51,189		51,176

Basic net loss per share attributable to Portillo's Inc.	$	(0.42)	$	(0.16)	$	(0.25)
Diluted net loss per share attributable to Portillo's Inc.	$	(0.42)	$	(0.16)	$	(0.25)

Schedule of Units Excluded from Calculation of Diluted Earnings per Share

Fiscal Years Ended

December 26, 2021

December 27, 2020

December 29, 2019

Total shares excluded from diluted loss per share

1,224

679

260

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 26, 2021

Summary of Related Party Transactions

The Company incurred the following Olo-related costs for the years ended December 26, 2021 and December 27, 2020 (in thousands):


	Fiscal Years Ended
	December 26, 2021		December 27, 2020		December 29, 2019
Cost of goods sold, excluding depreciation and amortization	$	633	$	731	$	667
Other operating expenses	469		541		336
Net Olo-related costs	$	1,102	$	1,272	$	1,003


	Fiscal Years Ended
(in thousands)	December 26, 2021
Tax receivable agreement liability	$	156,638

DESCRIPTION OF BUSINESS (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 25, 2021 USD ($) $ / shares shares	Dec. 26, 2021 USD ($) foodProductionCommissary restaurant	Dec. 27, 2020 USD ($) restaurant	Dec. 29, 2019 USD ($)	Mar. 10, 2022 restaurant
Schedule of Equity Method Investments [Line Items]
Number of food production commissaries \| foodProductionCommissary		2
Number of restaurants \| restaurant		68	63
Number of non-traditional locations \| restaurant		3	4
Sale of stock, price per share (in dollars per share) \| $ / shares	$ 20.00
Payments for in-process equity financings (offering costs)		$ 6,279	$ 0	$ 0
Repayment of redeemable preferred units	$ 221,700
Payments of long-term debt		$ 158,324	$ 13,324	$ 471,842
Payments for repurchase of common stock	$ 57,000
Tax payable as a percent of tax savings	85.00%
Tax savings retained, percent	15.00%	15.00%
Subsequent Event
Schedule of Equity Method Investments [Line Items]
Number of restaurants \| restaurant					69
Second Lien Term B-3 Loans
Schedule of Equity Method Investments [Line Items]
Payments of long-term debt	$ 158,100
IPO
Schedule of Equity Method Investments [Line Items]
Number of shares issued in transaction (in shares) \| shares	23,310,810
Proceeds from stock offering	$ 430,000
Payments for in-process equity financings (offering costs)	29,100	$ 29,100
Offering expenses	$ 7,100	$ 7,100
Over-Allotment Option
Schedule of Equity Method Investments [Line Items]
Number of shares issued in transaction (in shares) \| shares	3,040,540
C&O
Schedule of Equity Method Investments [Line Items]
Ownership percentage		50.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)		3 Months Ended	12 Months Ended
	Oct. 20, 2021 USD ($)	Dec. 26, 2021 USD ($) foodProductionCommissary	Dec. 26, 2021 USD ($) foodProductionCommissary segment reporting_unit	Dec. 27, 2020 USD ($)	Dec. 29, 2019 USD ($)	Dec. 27, 2021 USD ($)	Oct. 25, 2021 $ / shares	Jan. 01, 2019 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of food production commissaries \| foodProductionCommissary		2	2
Number of operating segments \| segment			1
Number of reportable segments \| segment			1
Allowance for excess and obsolete inventory		$ 0	$ 0	$ 60,000.00
Consigned inventory		400,000	$ 400,000	200,000
Number of reporting units \| reporting_unit			1
Reverse stock split, conversion ratio	0.1351
Deferred offering costs		$ 7,100,000	$ 7,100,000
Employee benefit expense			$ 500,000	400,000	$ 400,000
Maximum employee subscription rate		80.00%	80.00%
Sale of stock, price per share (in dollars per share) \| $ / shares							$ 20.00
Equity-based compensation			$ 29,389,000	960,000	1,286,000
Advertising and marketing expense			3,100,000	2,600,000	$ 4,500,000
Deferred payroll taxes, CARES Act		$ 2,700,000	2,700,000	5,400,000
Payments for deferred payroll taxes, CARES Act			2,700,000
Adjustment to payroll tax liability for employee retention credit				300,000
Accumulated deficit		(15,950,000)	$ (15,950,000)	$ 0
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Sale of stock, price per share (in dollars per share) \| $ / shares							$ 20.00
Accounting Standards Update 2014-09
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accumulated deficit								$ 200,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Property, plant and equipment, useful life			3 years
Minimum \| Forecast \| Accounting Standards Update 2016-02
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Operating lease, right-of-use asset						$ 230,000,000
Operating lease, liability						260,000,000
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Property, plant and equipment, useful life			10 years
Maximum \| Forecast \| Accounting Standards Update 2016-02
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Operating lease, right-of-use asset						270,000,000
Operating lease, liability						$ 300,000,000
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments of option substitution bonus		6,600,000
Noncash compensation expense		$ 1,300,000
Equity-based compensation	$ 26,200,000

REVENUE RECOGNITION (Details) - USD ($) $ in Thousands	12 Months Ended
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Revenue from External Customer [Line Items]
Gift card sales that will not be redeemed, percent	11.00%
Gift card breakage	$ 715	$ 700	$ 774
Gift Card
Revenue from External Customer [Line Items]
Gift card liability	6,606	6,216
Revenue recognized from gift card liability balance at the beginning of the year	$ 3,279	$ 3,197	$ 7,111

INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 4,181	$ 3,999
Work in progress	114	112
Finished goods	1,395	715
Consigned inventory	388	249
Total inventory	$ 6,078	$ 5,075

PROPERTY & EQUIPMENT, NET (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Property, Plant and Equipment [Line Items]
Property and equipment	$ 280,064	$ 248,789
Less accumulated depreciation	(89,230)	(74,020)
Total property and equipment	190,834	174,769
Depreciation expense	16,900	15,800	$ 15,600
Land improvements
Property, Plant and Equipment [Line Items]
Property and equipment	15,451	15,039
Furniture, fixtures, and equipment
Property, Plant and Equipment [Line Items]
Property and equipment	115,187	105,059
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	138,923	115,695
Transportation equipment
Property, Plant and Equipment [Line Items]
Property and equipment	2,203	2,285
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment	$ 8,300	$ 10,711

GOODWILL & INTANGIBLE ASSETS - Narrative (Details) $ in Millions	12 Months Ended
	Dec. 26, 2021 USD ($) reporting_unit	Dec. 27, 2020 USD ($)	Dec. 29, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Number of reporting units \| reporting_unit	1
Amortization expense	$ 6.4	$ 8.8	$ 8.8
Intangible asset, expected amortization, year one	3.1
Intangible asset, expected amortization, year two	3.1
Intangible asset, expected amortization, year three	3.1
Intangible asset, expected amortization, year four	3.0
Intangible asset, expected amortization, year five	2.9
Intangible asset, expected amortization, thereafter	$ 20.6

GOODWILL & INTANGIBLE ASSETS - Summary of Intangible Assets, Net (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 223,925	$ 223,925
Accumulated Amortization	(64,075)	(57,652)
Gross Carrying Amount	323,832	323,832
Net Carrying Amount	259,757	266,180
Recipes
Finite-Lived Intangible Assets [Line Items]
Intangibles subject to amortization, gross	56,117	56,117
Accumulated Amortization	(21,427)	(18,538)
Intangibles subject to amortization, net	34,690	37,579
Covenants not-to-compete
Finite-Lived Intangible Assets [Line Items]
Intangibles subject to amortization, gross	40,799	40,799
Accumulated Amortization	(40,799)	(37,515)
Intangibles subject to amortization, net	0	3,284
Favorable rental contracts
Finite-Lived Intangible Assets [Line Items]
Intangibles subject to amortization, gross	2,991	2,991
Accumulated Amortization	(1,849)	(1,599)
Intangibles subject to amortization, net	$ 1,142	$ 1,392

EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands	12 Months Ended
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Assets:
Current assets	$ 59,017	$ 54,626
Property and equipment, net	190,834	174,769
Total assets	999,573	910,222
Accumulated depreciation	89,230	74,020
Liabilities:
Current liabilities	66,938	66,352
Deferred rent	32,174	26,694
Total liabilities	576,167	568,942
Members’ equity	171,264	140,709
Total liabilities and members' equity	999,573	910,222
Results from operations:
Net income	$ (15,184)	(8,261)	$ (12,869)
C&O
Schedule of Equity Method Investments [Line Items]
Ownership percentage	50.00%
Assets:
Current assets	$ 1,957	1,349
Property and equipment, net	817	837
Total assets	2,774	2,186
Accumulated depreciation	5,951	5,838
Liabilities:
Current liabilities	757	681
Deferred rent	1,211	1,193
Total liabilities	1,968	1,874
Members’ equity	806	312
Total liabilities and members' equity	2,774	2,186
Results from operations:
Revenues, net	12,268	10,885	16,143
Net income	$ 1,595	$ 918	$ 1,533

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Recurring - Level 1 - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, fair value	$ 4,667	$ 4,124
Cash/money accounts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, fair value	1,482	481
Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, fair value	$ 3,185	$ 3,643

SUPPLEMENTAL BALANCE SHEET INFORMATION - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Balance Sheet Related Disclosures [Abstract]
Prepaid insurance	$ 2,869	$ 445
Prepaid occupancy	494	526
Other prepaid expenses	2,473	1,944
Prepaid expenses	$ 5,836	$ 2,915

SUPPLEMENTAL BALANCE SHEET INFORMATION - Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Balance Sheet Related Disclosures [Abstract]
Salaries, wages, and other compensation	$ 18,065	$ 15,243
Interest	1,597	9,377
Rent and real estate taxes	5,111	4,807
Insurance	2,572	2,837
Sales tax	1,970	1,609
Other accrued expenses	157	954
Accrued expenses	$ 29,472	$ 34,827

DEBT - Summary of Debt (Details) - USD ($) $ in Thousands	Dec. 26, 2021	Dec. 27, 2020
Debt Instrument [Line Items]
Long-term debt, gross	$ 325,752
Unamortized discount and debt issuance costs	(6,599)	$ (14,372)
Total debt, net	319,153	469,704
Current portion of long-term debt	(3,324)	(3,324)
Long-term debt, net of current portion	315,829	466,380
Line of Credit
Debt Instrument [Line Items]
Long-term debt, gross		0
First Lien Term B-3 Loans
Debt Instrument [Line Items]
Long-term debt, gross	325,752	329,076
Second Lien Term B-3 Loans
Debt Instrument [Line Items]
Long-term debt, gross	$ 0	$ 155,000

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

DEBT - Narrative (Details) - USD ($)			3 Months Ended	12 Months Ended
DEBT - Narrative (Details) - USD ($)	Oct. 25, 2021	Dec. 06, 2019	Dec. 26, 2021	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019	Aug. 01, 2014
Debt Instrument [Line Items]
Payments of long-term debt				$ 158,324,000	$ 13,324,000	$ 471,842,000
Payment of long-term debt prepayment penalty				3,100,000	0	0
Debt issuance costs		$ 14,500,000
Debt issuance costs, capitalized amount		13,300,000
Debt issuance costs, amount expensed		1,200,000
Loss on debt extinguishment				(7,265,000)	0	0
Amortization of debt issuance costs				2,100,000	2,200,000	2,600,000
Amortization of debt discount				1,500,000	1,600,000	300,000
Interest expense				$ 39,694,000	$ 45,031,000	$ 43,367,000
IPO
Debt Instrument [Line Items]
Proceeds from stock offering	$ 430,000,000
Revolving Loans
Debt Instrument [Line Items]
Line of credit maximum borrowing capacity							$ 30,000,000
Interest rate at period end			3.25%	3.25%	3.25%	3.50%
Revolving loans			$ 0	$ 0	$ 0
Commitment fee percentage				0.25%	0.25%	0.375%
Remaining borrowing capacity			45,000,000	$ 45,000,000
Letter of Credit
Debt Instrument [Line Items]
Line of credit maximum borrowing capacity							7,500,000
Revolving loans			$ 5,000,000	$ 5,000,000	$ 5,800,000
Fronting fee, percentage			0.125%	0.125%	0.125%	0.125%
First Lien Term B-3 Loans
Debt Instrument [Line Items]
Debt, principal amount		332,400,000
Interest rate, effective percentage			7.63%	7.63%	7.38%	7.90%
Debt instrument, periodic payment, principal			$ 800,000
First Lien Term B-3 Loans \| London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt instrument, increase (decrease) in basis spread on variable rate			1.00%	1.00%
Debt instrument, basis spread on variable rate				5.50%
Interest rate at period end			6.50%	6.50%
First Lien Term B-3 Loans \| Term Loans
Debt Instrument [Line Items]
Debt, principal amount							335,000,000
First Lien Term B-3 Loans \| Revolving Loans
Debt Instrument [Line Items]
Debt, limit increase		50,000,000
Second Lien Term B-3 Loans
Debt Instrument [Line Items]
Debt, principal amount		$ 155,000,000					$ 80,000,000
Payments of long-term debt	$ 158,100,000
Loss on debt extinguishment				$ (4,200,000)
Second Lien Term B-3 Loans \| London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt instrument, increase (decrease) in basis spread on variable rate		15000.00%
Debt instrument, basis spread on variable rate		9.50%

Debt - Maturities of Long-term Debt (Details) $ in Thousands	Dec. 26, 2021 USD ($)
Debt Disclosure [Abstract]
2022	$ 3,324
2023	4,155
2024	318,273
Long-term debt	$ 325,752

OPERATING LEASES - Narrative (Details)	12 Months Ended
OPERATING LEASES - Narrative (Details)	Dec. 26, 2021
Operating Leased Assets [Line Items]
Operating lease, renewal term	5 years
Minimum
Operating Leased Assets [Line Items]
Operating lease, term of contract	10 years
Maximum
Operating Leased Assets [Line Items]
Operating lease, term of contract	20 years

OPERATING LEASES - Summary of Rent Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Leases [Abstract]
Minimum rentals	$ 22,363	$ 19,787	$ 19,311
Contingent rentals	679	486	615
Total rental expense	$ 23,042	$ 20,273	$ 19,926

OPERATING LEASES - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 26, 2021 USD ($)
Leases [Abstract]
2022	$ 20,298
2023	20,784
2024	21,099
2025	20,969
2026	21,254
Thereafter	508,217
Total minimum payments required	$ 612,621

REDEEMABLE PREFERRED UNITS (Details) - USD ($) $ in Thousands	Oct. 25, 2021	Aug. 01, 2014	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019	Dec. 31, 2018
Class of Stock [Line Items]
Redeemable preferred units outstanding (in shares)		100,000	0	100,000	100,000	100,000
Capital contribution		$ 97,700
Repayment of redeemable preferred units	$ 221,700
Preferred stock, liquidation preference, value	2,200
Redeemable preferred units			$ 0	$ 200,571	$ 180,047	$ 161,623
IPO
Class of Stock [Line Items]
Proceeds from stock offering	$ 430,000

- Definition

Carrying amount, attributable to parent, of an entity's issued and outstanding stock which is not included within permanent equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. Includes stock with a put option held by an ESOP and stock redeemable by a holder only in the event of a change in control of the issuer.

+ References + Details

STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands		2 Months Ended	12 Months Ended
	Oct. 25, 2021	Dec. 26, 2021	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Temporary Equity [Line Items]
Preferred stock, shares authorized (in shares)		10,000,000	10,000,000
Preferred stock, par value (in dollars per share)		$ 0.01	$ 0.01
Sale of stock, price per share (in dollars per share)	$ 20.00
Payments for in-process equity financings (offering costs)			$ 6,279	$ 0	$ 0
Portillo's Opco
Temporary Equity [Line Items]
Ownership percentage by parent		50.10%	50.10%
Ownership percentage by noncontrolling owners		49.90%	49.90%
IPO
Temporary Equity [Line Items]
Number of shares issued in transaction (in shares)	23,310,810
Proceeds from stock offering	$ 430,000
Payments for in-process equity financings (offering costs)	29,100		$ 29,100
Offering expenses	$ 7,100		$ 7,100
Over-Allotment Option
Temporary Equity [Line Items]
Number of shares issued in transaction (in shares)	3,040,540
Class A Common Stock
Temporary Equity [Line Items]
Common units authorized (in shares)		380,000,000	380,000,000
Common stock, par value (in dollars per share)		$ 0.01	$ 0.01
Sale of stock, price per share (in dollars per share)	$ 20.00
Class A Common Stock \| Common Stock
Temporary Equity [Line Items]
Effect of the Transactions (in shares)		12,496,361
Class B Common Stock
Temporary Equity [Line Items]
Common units authorized (in shares)		50,000,000	50,000,000
Common stock, par value (in dollars per share)		$ 0.00001	$ 0.00001
Class B Common Stock \| Common Stock
Temporary Equity [Line Items]
Effect of the Transactions (in shares)		35,673,321

NONCONTROLLING INTERESTS (Details)	Dec. 26, 2021 shares
Portillo's Opco
Noncontrolling Interest [Line Items]
Shares outstanding (in shares)	35,807,171
Ownership percentage by parent	50.10%
Portillo's Opco
Noncontrolling Interest [Line Items]
Shares outstanding (in shares)	71,480,492

EQUITY-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	12 Months Ended
	Oct. 20, 2021	Dec. 26, 2021	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense			$ 30,708	$ 960	$ 1,286
Noncash compensation expense			29,389	$ 960	$ 1,286
Share-based cost not yet recognized, amount		$ 12,000	$ 12,000
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			882,875
Share-based compensation not yet recognized, amount		15,200	$ 15,200
Share-based compensation not yet recognized, period for recognition			2 years 9 months 18 days
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			1,794,195
Share-based compensation not yet recognized, amount		$ 10,700	$ 10,700
Share-based compensation not yet recognized, period for recognition			3 years 9 months 18 days
Termination period			10 years
Weighted Average Remaining Term, Outstanding			9 years 9 months 18 days	0 years
Performance Shares \| Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of trading days used to calculate volume-weighted average price			20 days
Threshold volume-weighted average price for vesting of awards (in dollars per share)		$ 30.00	$ 30.00
Threshold volume-weighted average price as a percent of IPO price			150.00%
Vesting period			3 years
Performance Shares \| Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of trading days used to calculate volume-weighted average price			20 days
Threshold volume-weighted average price for vesting of awards (in dollars per share)		40.00	$ 40.00
Threshold volume-weighted average price as a percent of IPO price			200.00%
Vesting period			4 years
Performance Shares \| Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of trading days used to calculate volume-weighted average price			20 days
Threshold volume-weighted average price for vesting of awards (in dollars per share)		$ 50.00	$ 50.00
Threshold volume-weighted average price as a percent of IPO price			250.00%
Vesting period			5 years
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation not yet recognized, period for recognition			2 years 8 months 12 days
Termination period			10 years
Vesting period			5 years
Equity-based compensation expense		$ 1,300
Noncash compensation expense	$ 26,200
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options available for issuance (in shares)		7,100,000	7,100,000

EQUITY-BASED COMPENSATION - Restricted Stock Units and Performance Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020
Restricted Stock Units
Number of Awards:
Non-vested RSUs at the beginning of the period (in shares)	0
Granted (in shares)	882,875
Vested (in shares)	0
Forfeited (in shares)	0
Expired (in shares)	0
Non-Unvested RSUs at the end of the period (in shares)	883,000	0
Weighted-average grant date fair value per share
Non-vested RSUs at the beginning of the period (in dollars per share)	$ 0
Granted (in dollars per share)	20.00
Vested (in dollars per share)	0
Forfeited (in dollars per share)	0
Expired (in dollars per share)	0
Non-vested RSUs at the end of the period (in dollars per share)	$ 20.00	$ 0
Performance Shares
Number of Awards:
Non-vested RSUs at the beginning of the period (in shares)	0
Granted (in shares)	1,794,195
Exercised (in shares)	0
Forfeited (in shares)	0
Expired (in shares)	0
Non-Unvested RSUs at the end of the period (in shares)	1,794,000	0
Exercisable (in shares)	0
Vested and expected to vest (in shares)	1,476,000
Weighted-average grant date fair value per share
Non-vested RSUs at the beginning of the period (in dollars per share)	$ 0
Granted (in dollars per share)	20.00
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	0
Expired (in dollars per share)	0
Non-vested RSUs at the end of the period (in dollars per share)	20.00	$ 0
Exercisable (in dollars per share)	0
Vested and expected to vest (in dollars per share)	$ 20.00
Weighted Average Remaining Term, Outstanding	9 years 9 months 18 days	0 years
Weighted Average Remaining Term, Granted	9 years 9 months 18 days
Weighted Average Remaining Term, Vested and expected to vest	9 years 9 months 18 days
Aggregate Intrinsic Value, Outstanding	$ 32,906	$ 0
Aggregate Intrinsic Value, Vested and expected to vest	$ 27,068

EQUITY-BASED COMPENSATION - Summary of Valuation Assumptions (Details) - $ / shares	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock option (in dollars per share)	$ 7.58
Stock price (in dollars per share)	$ 20.00
Risk-free interest rate	0.93%
Expected life (years)	4 years
Volatility	54.40%
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock option (in dollars per share)	$ 2.16	$ 3.40
Risk-free interest rate	1.21%	1.86%
Expected life (years)	6 years 6 months	6 years 6 months
Expected dividend yield	0.00%	0.00%
Volatility	54.70%	43.80%

EQUITY-BASED COMPENSATION - Schedule of Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020
Options
Outstanding, beginning balance (in shares)	7,047
Granted (in shares)	433
Exercised (in shares)	0
Forfeited (in shares)	(1,054)
Expired (in shares)	0
Outstanding, ending balance (in shares)	6,426	7,047
Vested, end of period (in shares)	4,766
Vested and expected to vest, end of period (in shares)	6,294
Weighted Average Exercise Price
Outstanding, beginning balance (in dollars per share)	$ 4.53	$ 4.51
Granted (in dollars per share)	5.68
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	3.37
Expired (in dollars per share)	0
Outstanding, ending balance (in dollars per share)	4.53	$ 4.51
Vested, end of period (in dollars per share)	4.34
Vested and expected to vest, end of period (in dollars per share)	$ 4.51
Options outstanding, weighted average remaining contractual term	5 years 7 months 6 days	5 years 10 months 24 days
Options granted, weighted average remaining contractual term	9 years 3 months 18 days
Options vested, weighted average remaining contractual term	4 years 10 months 24 days
Options vested and expected to vest, weighted average remaining contractual term	5 years 6 months
Options outstanding, intrinsic value	$ 217,286	$ 3,740
Options vested, intrinsic value	162,022
Options vested and expected to vest, intrinsic value	$ 212,908

EQUITY-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation expense	$ 30,708	$ 960	$ 1,286
Labor
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation expense	561	0	0
General and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation expense	$ 30,147	$ 960	$ 1,286

INCOME TAXES - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Current income taxes:
Federal	$ 0
State and local	1
Total current income taxes	1
Deferred income taxes:
Federal	(2,653)
State and local	(879)
Total deferred income taxes	(3,532)	$ 0	$ 0
Income tax (benefit) expense	$ (3,531)	$ 0	$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

INCOME TAXES - Reconciliation of Effective Tax Rates (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Effective Income Tax Rate Reconciliation, Amount
Expected U.S. federal income taxes at statutory rate	$ (3,559)
State and local income taxes, net of federal benefit	(878)
Non-controlling interest	4,076
LLC flow-through structure	(4,608)
Other	1,438
Income tax (benefit) expense	$ (3,531)	$ 0	$ 0
Effective Income Tax Rate Reconciliation, Percent
Expected U.S. federal income taxes at statutory rate	21.00%
State and local income taxes, net of federal benefit	5.20%
Non-controlling interest	(24.00%)
LLC flow-through structure	27.20%
Others, net	(8.50%)
Total	20.90%

INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	Oct. 25, 2021	Dec. 26, 2021	Dec. 27, 2020
Income Tax Contingency [Line Items]
Expected U.S. federal income taxes at statutory rate		21.00%
Effective income tax rate		20.90%
Investment in partnership		$ 67,865
Deferred tax assets, tax receivable agreement		30,910
Valuation allowance		38,415
Tax receivable agreement liability		$ 156,638	$ 0
Tax payable as a percent of tax savings	85.00%
Tax savings retained, percent	15.00%	15.00%
Portillo's Opco
Income Tax Contingency [Line Items]
Shares outstanding (in shares)		35,807,171

INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) $ in Thousands	Dec. 26, 2021 USD ($)
Deferred tax assets:
Investment in partnership	$ 67,865
Tax Receivable Agreement	30,910
Net operating loss carryforwards	12,806
Other assets	1,289
Total gross deferred tax assets	112,870
Valuation allowance	(38,415)
Net deferred tax assets	$ 74,455

EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 25, 2021	Dec. 26, 2021	Dec. 27, 2020	Dec. 29, 2019
Class of Stock [Line Items]
Net loss attributable to common unit holders		$ (34,592)	$ (8,261)	$ (12,869)
Net loss attributable to non-controlling interests		(19,408)	0	0
NET LOSS ATTRIBUTABLE TO PORTILLO'S INC.		$ (15,184)	$ (8,261)	$ (12,869)
Shares:
Weighted average number of common shares outstanding - basic (in shares)		35,807,171	51,189,017	51,175,785
Dilutive unit awards (in shares)		0	0	0
Weighted average number of common shares outstanding - diluted (in shares)		35,807,171	51,189,017	51,175,785
Basic net loss per share attributable to Portillo's Inc. (in dollars per share)		$ (0.42)	$ (0.16)	$ (0.25)
Diluted net loss per share attributable to Portillo's Inc. (in dollars per share)		$ (0.42)	$ (0.16)	$ (0.25)
Total shares excluded from diluted loss per share (in shares)		1,224,000	679,000	260,000
IPO
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)	23,310,810

CONTINGENCIES (Details) - USD ($) $ in Millions	3 Months Ended
CONTINGENCIES (Details) - USD ($) $ in Millions	Dec. 26, 2021	Dec. 27, 2020
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ 0.0	$ 0.9
Loss contingency, loss in period	$ 0.8

RELATED PARTY TRANSACTIONS (Details) $ in Thousands			3 Months Ended	12 Months Ended
RELATED PARTY TRANSACTIONS (Details) $ in Thousands	Oct. 25, 2021	Aug. 13, 2021 USD ($)	Dec. 26, 2021 USD ($) property	Dec. 26, 2021 USD ($) property	Dec. 27, 2020 USD ($)	Dec. 29, 2019 USD ($) shares
Related Party Transaction [Line Items]
Tax payable as a percent of tax savings	85.00%
Tax receivable agreement liability			$ 156,638	$ 156,638	$ 0
Options
Related Party Transaction [Line Items]
Payments of option substitution bonus			6,600
Equity Method Investee \| C&O
Related Party Transaction [Line Items]
Accounts receivable, related parties			400	400	200
CEO
Related Party Transaction [Line Items]
Common units issued (in shares) \| shares						195,933
Stock subscription receivable			0	0	500	$ 1,000
Proceeds from subscriptions received		$ 200
Director
Related Party Transaction [Line Items]
Related party expenses				1,102	1,272	1,003
Accounts payable, related parties			0	0	200
Director \| Options
Related Party Transaction [Line Items]
Payments of option substitution bonus			$ 100
Director \| Cost of Goods Sold
Related Party Transaction [Line Items]
Related party expenses				633	731	667
Director \| Other Operating Expenses
Related Party Transaction [Line Items]
Related party expenses				$ 469	541	336
Former CEO
Related Party Transaction [Line Items]
Number of leased properties \| property			23	23
Rent payments				$ 7,900	$ 7,100	$ 7,100
Consulting fees			$ 2,000	$ 2,000

SUBSEQUENT EVENTS (Details) - restaurant	2 Months Ended
SUBSEQUENT EVENTS (Details) - restaurant	Mar. 10, 2022	Dec. 26, 2021	Dec. 27, 2020
Subsequent Event [Line Items]
Number of restaurants		68	63
C&O
Subsequent Event [Line Items]
Ownership percentage		50.00%
Subsequent Event
Subsequent Event [Line Items]
Number of new restaurants	1
Number of restaurants	69

Schedule II: Valuation and Qualifying Accounts (Details) - Deferred tax asset valuation allowance: $ in Thousands	12 Months Ended
	Dec. 26, 2021 USD ($)
Movement in Valuation Allowances and Reserves
Balance at beginning of period	$ 0
Charged to costs and expenses	1,904
Charged to other accounts	36,511
Reductions	0
Balance at end of period	$ 38,415

Label	Element	Value
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	$ 492,000
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	28,897,000
Preferred Stock, Accretion of Redemption Discount	us-gaap_PreferredStockAccretionOfRedemptionDiscount	21,176,000
Adjustment To Additional Paid-In Capital, Deferred Tax Adjustment Under Tax Receivable Agreement	ptlo_AdjustmentToAdditionalPaidInCapitalDeferredTaxAdjustmentUnderTaxReceivableAgreement	85,715,000
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	100,000
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	372,891,000
Common Stock, Shares Subscribed But Unissued, Repayment Of Subscription Receivable	ptlo_CommonStockSharesSubscribedButUnissuedRepaymentOfSubscriptionReceivable	499,000
Adjustments To Additional Paid-In Capital, Reorganization	ptlo_AdjustmentsToAdditionalPaidInCapitalReorganization	125,000
Adjustments to Additional Paid in Capital, Allocation of Equity Reverse Recapitalization	ptlo_AdjustmentsToAdditionalPaidInCapitalAllocationOfEquityReverseRecapitalization	0
Members Equity [Member]
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	492,000
Preferred Stock, Accretion of Redemption Discount	us-gaap_PreferredStockAccretionOfRedemptionDiscount	21,176,000
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	100,000
Common Stock, Shares Subscribed But Unissued, Repayment Of Subscription Receivable	ptlo_CommonStockSharesSubscribedButUnissuedRepaymentOfSubscriptionReceivable	499,000
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest	us-gaap_IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest	21,942,000
Adjustments To Additional Paid-In Capital, Reorganization	ptlo_AdjustmentsToAdditionalPaidInCapitalReorganization	(142,566,000)
Retained Earnings [Member]
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest	us-gaap_IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest	(15,950,000)
Additional Paid-in Capital [Member]
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	14,477,000
Adjustment To Additional Paid-In Capital, Deferred Tax Adjustment Under Tax Receivable Agreement	ptlo_AdjustmentToAdditionalPaidInCapitalDeferredTaxAdjustmentUnderTaxReceivableAgreement	85,715,000
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	372,658,000
Adjustments To Additional Paid-In Capital, Reorganization	ptlo_AdjustmentsToAdditionalPaidInCapitalReorganization	71,416,000
Adjustments to Additional Paid in Capital, Allocation of Equity Reverse Recapitalization	ptlo_AdjustmentsToAdditionalPaidInCapitalAllocationOfEquityReverseRecapitalization	(185,980,000)
Noncontrolling Interest [Member]
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	14,420,000
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest	us-gaap_IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest	(19,408,000)
Adjustments To Additional Paid-In Capital, Reorganization	ptlo_AdjustmentsToAdditionalPaidInCapitalReorganization	71,150,000
Adjustments to Additional Paid in Capital, Allocation of Equity Reverse Recapitalization	ptlo_AdjustmentsToAdditionalPaidInCapitalAllocationOfEquityReverseRecapitalization	185,980,000
Common Class A [Member] \| Common Stock [Member]
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	$ 233,000
Stock Issued During Period, Shares, New Issues	us-gaap_StockIssuedDuringPeriodSharesNewIssues	23,310,810
Adjustments To Additional Paid-In Capital, Reorganization	ptlo_AdjustmentsToAdditionalPaidInCapitalReorganization	$ 125,000