Beloved Chicago-based restaurant chain Portillo's went public last month, and at first, it seemed like a highly successful debut. But a mere few weeks after the company opened for trading, Portillo's is experiencing its first stumble, thanks to the latest earnings report that outlines its struggles with labor and ingredient costs.
While the company reported a rise in revenue of 15.3%, its operating income fell by 8.8%. The chain spent more money on wages (hourly wages were nearly 20% higher in this quarter) in order to retain employees, and was paying more for ingredients like beef. Additionally, the chain revealed it was still understaffed.
These factors ended up causing its stock to plummet nearly 22% after the quarterly results were made public. Although by day's end the stock price had somewhat recovered was only down by about 10%, the decline still represented the wiping out of millions of dollars in value.
This is in stark contrast to the chain's initial public offering on October 21, when some 20.3 million shares were made available at a planned sale price of $20 per share. When trading opened that day, shares were already at $26, and by the end of the trading day, they had nearly reached $40, doubling in value. For several weeks, Portillo's stock prices climbed, hitting a high point of over $55 on November 17.
Given the success of the public offering, the chain's goal of reaching 600 locations in the next 25 years isn't surprising. Still, the plan is ambitious considering its current footprint consists of 67 restaurants—it would represent a 900% growth.
Opened by Dick Portillo as a hot dog stand called The Dg House in 1963, Portillo's would become a staple of the greater Chicago area. It remained an entirely Illinois-based phenomenon until the early 2000s, when it finally expanded into California. Locations in Arizona, Wisconsin, Florida, and several other states followed over the next decade and a half.
The restaurant is beloved for its sandwiches, pasta, and burgers, but most of all for the hot dogs and sausages, of which there are half a dozen varieties.
For more, check out:
Don't forget to sign up for our newsletter to get the latest restaurant news delivered straight to your inbox.