Portillo's Inc.

NOTE 1. DESCRIPTION OF BUSINESS

Portillo’s Inc. ("Inc.") was incorporated as a Delaware corporation on June 8, 2021, for the purpose of completing an initial public offering ("IPO") and related reorganization transactions in order to carry on the business of PHD Group Holdings LLC and its subsidiaries ("Portillo's OpCo"). Portillo's Inc. is the sole managing member of Portillo’s OpCo, and as sole managing member, Inc. operates and controls all of the business and affairs 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.

The Company operates restaurants in 11 states that serve Chicago-style hot dogs and sausages, Italian beef sandwiches, char-broiled burgers, chopped salads, crinkle-cut fries, homemade chocolate cake and more, along withtwo food production commissaries in Illinois. As of September 27, 2026, the Company had 108 restaurants in operation. The Company also hadone non-traditional location in operation, a food truck.

The Company holds a 65% ownership interest in AP Dogs, LLC ("AP Dogs"), which operates a restaurant at Dallas-Fort Worth International Airport ("DFW Airport"). The Company has day-to-day operational and managerial control over the business and affairs of AP Dogs, and accordingly, consolidates the joint venture and reports a non-controlling interest representing the economic interest held by the other partner. This restaurant is included in the restaurant count above.

In addition, the Company has a 50% interest in C&O Chicago, L.L.C. ("C&O"), which operates a single restaurant. This restaurant is excluded from the restaurant count above.

The Company’s principal executive offices are located in Oak Brook, Illinois.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by GAAP for annual reports. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.

All intercompany balances and transactions have been eliminated in consolidation.

The Company does not have any components of other comprehensive income recorded within its condensed consolidated financial statements, and therefore, does not separately present a statement of comprehensive income.

Fiscal Year

The Company uses a 52- or 53-week fiscal year ending on the Sunday prior to or on December 31. In a 52-week fiscal year, each quarterly period is comprised of 13 weeks. An additional week in a 53-week fiscal year is added to the fourth quarter. Fiscal 2026 and 2025 consist of 52 weeks. The fiscal periods presented in this report are the quarters and three quarters ended September 27, 2026 and September 28, 2025.

Use of Estimates

The preparation of these condensed 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 period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. In January 2025, the FASB issued ASU 2025-01 "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures-Clarifying the Effective Date", which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), which clarifies existing interim reporting guidance under U.S. GAAP. The ASU clarifies the scope and application of interim reporting requirements, the form and content of interim financial statements and disclosures, and consolidates required interim disclosures within Topic 270. The ASU also introduces a principle requiring disclosure of material events occurring after the annual reporting period but before the issuance of interim financial statements. The amendments do not change underlying interim reporting requirements but improve clarity and consistency. ASU 2025-11 is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which makes technical corrections and clarifications for a broad range of topics within the FASB Accounting Standards Codification to improve clarity and consistency in the application of existing guidance. The improvements are not expected to have a significant effect on current accounting practice or result in significant costs to most entities. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU.

Recently Adopted Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires public entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold on an annual basis. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard during the fiscal year ended December 28, 2025.

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 condensed consolidated financial statements.

NOTE 3. 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 also offers delivery services to customers which are generally classified as either Dispatch Sales or Marketplace Sales.

The Company sells gift cards which do not have expiration dates. The Company recognized gift card breakage of $0.1 million and $0.7 million for the quarter andthree quarters ended September 27, 2026, respectively, and $0.2 million and $0.7 million for the quarter andthree quarters ended September 28, 2025, respectively.

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

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

Portillo's Perks® ("Perks") is a visit-based loyalty program under which guests earn rewards based on qualified visits. The liability associated with Perks was$0.2 million asof both September 27, 2026 and December 28, 2025 and is included in deferred revenue on the condensed consolidated balance sheets.

NOTE 4. INVENTORIES

Inventories consisted of the following (in thousands):

NOTE 5. PROPERTY & EQUIPMENT, NET

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

Depreciation expense was $7.6 million and $22.5 million for the quarter and three quarters ended September 27, 2026, respectively, and $6.6 million and $19.5 million for the quarter and three quarters ended September 28, 2025, respectively, and is included in depreciation and amortization in the condensed consolidated statements of operations.

NOTE 6. GOODWILL & INTANGIBLE ASSETS

The Company hasone reporting unit for goodwill which is evaluated for impairment annually in the fourth quarter of each fiscal year, along with indefinite-lived intangibles, or more frequently when impairment indicators are present. There were no impairment indicators and no impairment charges were recognized during the quarter and three quarters ended September 27, 2026. During the quarter and three quarters ended September 28, 2025, the Company completed an interim quantitative impairment test of both goodwill and trade names. As a result, the Company recognized trade name impairment charges of $2.2 million related to its legacy Barnelli's trade name, a pasta concept available at nine co-branded restaurants. This impairment charge is included within other (income) loss, net in the condensed consolidated statements of operations.

Intangible assets, net consisted of the following (in thousands):

Amortization expense was $0.7 million for both the quarters ended September 27, 2026 and September 28, 2025 and $2.0 million for both the three quarters ended September 27, 2026 and September 28, 2025, and is included in depreciation and amortization in the condensed consolidated statements of operations.

The estimated aggregate amortization expense related to intangible assets held at September 27, 2026 for the remainder of this year and the succeeding five years and thereafter is as follows (in thousands):

NOTE 7. 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 and tenant improvement receivables, 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 long-term prepaid expenses and a deferred compensation plan with related assets held in a rabbi trust. Other long-term liabilities consist of a deferred gain on a supplier arrangement. Long-term prepaid expenses and other long-term liabilities approximate fair values due to the nature of these financial instruments.

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 September 27, 2026 and December 28, 2025, the fair value of the mutual fund investments and deferred compensation obligations were as follows (in thousands):

As of September 27, 2026 and December 28, 2025, we had no Level 2 or Level 3 assets.

The deferred compensation investments and obligations are included in other assets, accrued expenses and other long-term liabilities in the condensed 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 condensed consolidated statements of operations and offsetting increases or decreases in the deferred compensation obligation are recorded in accrued expenses and other long-term liabilities in the condensed consolidated balance sheets.

Refer to Note 8. 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, operating lease assets, 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 wereno impairment charges recognized during the quarter and three quarters ended September 27, 2026. During the quarter and three quarters ended September 28, 2025, the Company recognized trade name impairment charges of $2.2 million, included within other (income) loss, net in the condensed consolidated statements of operations.

NOTE 8. DEBT

Debt consisted of the following (in thousands):

2025 Credit Agreement

On January 27, 2025 (the “2025 Credit Agreement Closing Date”), PHD Intermediate LLC ("Holdings"), Portillo’s Holdings LLC (the "Borrower"), the other Guarantors party thereto, the Lenders from time to time party thereto and Fifth Third Bank, National Association, as Administrative Agent (in such capacities, the "Administrative Agent"), the L/C Issuer and the Swing Line Lender entered into an amendment (the “Amendment”) to the credit agreement, dated as of February 2, 2023 (the "Existing Credit Agreement" and the Existing Credit Agreement as amended by the Amendment and as may be amended, restated, supplemented or otherwise modified from time to time thereafter, the "2025 Credit Agreement"), by and among Holdings, the Borrower, the other Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent. The arrangement was accounted for as a debt modification.

The Existing Credit Agreement provided for a term A loan (the "2023 Term Loan Facility") in an initial aggregate principal amount of $300.0 million and revolving credit commitments in an initial aggregate principal amount of $100.0 million (the "2023 Revolver Facility"). The Amendment provides for, among other things, (i) a $250 million term loan A facility (the "2025 Term Loan Facility") and (ii) revolving credit commitments in an initial aggregate principal amount of $150 million (the "2025 Revolver Facility" and, together with the 2025 Term Loan Facility, the "2025 Facilities"). The loans under each of the 2025 Facilities mature on January 27, 2030. The proceeds of the 2025 Term Loan Facility were used to pay off in full amounts outstanding under the 2023 Term Loan Facility outstanding on the 2025 Credit Agreement Closing Date.

The 2023 Term Loan Facility and 2023 Revolver Facility accrued, and the 2025 Term Loan and 2025 Revolver Facility accrue interest at the forward-looking secured overnight financing rate ("SOFR") plus an applicable rate determined upon the consolidated total net rent adjusted leverage ratio, in each case subject to a 0.00% floor.

As of September 27, 2026, the interest rate on the 2025 Term Loan Facility and 2025 Revolver Facility was 6.48% and 6.44%, respectively. Pursuant to the 2025 Credit Agreement, as of September 27, 2026, the commitment fees to maintain the 2025 Revolver Facility were 0.25%, and letter of credit fees were 2.75%. Commitment fees and letter of credit fees are recorded as interest expense in the condensed consolidated statements of operations. As of September 27, 2026, the effective interest rate was 6.53%.

As of September 28, 2025, the interest rate on the 2025 Term Loan and 2025 Revolver Facility was 6.55% and 6.57%, respectively. Pursuant to the 2025 Credit Agreement as of September 28, 2025, the commitment fees to maintain the 2025 Revolver Facility were 0.20% and letter of credit fees were 2.25%. As of September 28, 2025, the effective interest rate was 6.90%.

The 2025 Term Loan Facility amortizes in quarterly installments, which commenced on the last day of the first full fiscal quarter ended after the 2025 Credit Agreement Closing Date, equaling an aggregate amount of (i) $6.3 million for the first 2 years following the 2025 Credit Agreement Closing Date, (ii) $12.5 million for the third and fourth years following the 2025 Credit Agreement Closing Date and (iii) $25.0 million for the fifth year following the 2025 Credit Agreement Closing Date, with the balance payable on the final maturity date.

As of September 27, 2026, outstanding borrowings under the 2025 Credit Agreement totaled $327.2 million, comprised of $242.2 million under the 2025 Term Loan Facility, and $85.0 million under the 2025 Revolver Facility. Letters of credit issued under the 2025 Revolver Facility totaled $4.2 million. As a result, as of September 27, 2026, the Company had $60.8 million available under the 2025 Revolver Facility.

As of December 28, 2025, outstanding borrowings under the 2025 Credit Agreement totaled $336.9 million, comprised of $246.9 million under the 2025 Term Loan Facility, and $90.0 million under the 2025 Revolver Facility. Letters of credit issued under the 2025 Revolver Facility totaled $4.4 million. As a result, as of December 28, 2025, the Company had $55.6 million available under the 2025 Revolver Facility.

Discount, Debt Issuance Costs and Interest Expense

Pursuant to the 2025 Credit Agreement, the Company capitalized deferred financing costs and issuance discounts of $1.3 million. The remaining unamortized costs under the 2023 Credit Agreement were $2.0 million. The total deferred financing costs and issuance discounts of $3.3 million are amortized over the term of the 2025 Credit Agreement.

The Company amortized animmaterial amount of deferred financing costs during both the quarters ended September 27, 2026 and September 28, 2025, and $0.1 million for both the three quarters ended September 27, 2026 and September 28, 2025, which is included in interest expense in the condensed consolidated statements of operations. In addition, the Company amortized $0.1 million and $0.2 million in original issue discount related to the long-term debt during the quarters ended September 27, 2026 and September 28, 2025, respectively, and $0.4 million during both the three quarters ended September 27, 2026 and September 28, 2025, which is included in interest expense in the condensed consolidated statements of operations.

Total interest expense was $5.5 million and $16.8 million for the quarter and three quarters ended September 27, 2026, respectively, and $5.7 million and $17.1 million for the quarter and three quarters ended September 28, 2025, respectively.

Fair Value of Debt

As of September 27, 2026 and December 28, 2025, 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.

Guarantees and Covenants

The 2025 Credit Agreement contains customary representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, negative pledges, dividends, junior financings and other fundamental changes. The 2025 Facilities are guaranteed, subject to customary exceptions, by all of the Borrower’s wholly-owned domestic restricted subsidiaries and Holdings, and are secured by a lien on substantially all of the Borrower’s assets, including fixed assets and intangibles, and the assets of the Guarantors, in each case, subject to customary exceptions. Failure to comply with these covenants and restrictions could result in an event of default under the 2025 Credit Agreement. In such an event, all amounts outstanding under the 2025 Credit Agreement, together with any accrued interest, could then be declared immediately due and payable.

As of September 27, 2026, the Company was in compliance with the financial covenants in the 2025 Credit Agreement.

NOTE 9. NON-CONTROLLING INTERESTS

We are the sole managing member of Portillo's OpCo, and as a result, consolidate the financial results of Portillo's OpCo. We report a non-controlling interest to reflect the entitlement of the pre-IPO LLC Members who retained their equity ownership in Portillo's OpCo (the "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 Units 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.

The following table summarizes the LLC interest ownership by Portillo's Inc. and pre-IPO LLC members:

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to Portillo's Inc. and the pre-IPO LLC Members. The pre-IPO LLC Members' weighted average ownership percentage for both the quarter and three quarters ended September 27, 2026 was 4.5%. The pre-IPO LLC Members' weighted average ownership percentage for the quarter and three quarters ended September 28, 2025 was 4.6% and 9.6%, respectively.

The following table summarizes the effects of changes in ownership in Portillo's OpCo on the Company’s equity (in thousands):

Additionally, the Company holds a 65% ownership interest in AP Dogs, which operates a restaurant in DFW Airport. During the quarter and three quarters ended September 27, 2026, $0.3 million and $1.0 million of contributions from non-controlling interests were received. During both the quarter and three quarters ended September 28, 2025, $0.1 million of contributions from non-controlling interests were received.

NOTE 10. EQUITY-BASED COMPENSATION

Equity-based compensation expense is calculated based on equity 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 condensed consolidated statements of operations is as follows (in thousands):

(1) Equity-based compensation for the quarter and three quarters ended September 28, 2025 included a net credit of $2.6 million related to the departure of the Company’s former Chief Executive Officer, effective September 21, 2025. The net credit reflects a $5.0 million reversal of previously recognized equity-based compensation expense, partially offset by a $2.4 million charge related to the modification of vested stock options.

Restricted Stock Units

During the three quarters ended September 27, 2026, the Company granted 2,148,207 RSUs, under the Portillo's Inc. 2021 Equity Incentive Plan (the "2021 Plan") to certain employees, including the Company's Chief Financial Officer and Treasurer, Kevin Kalicak, in connection with his appointment to that role. During the three quarters ended September 27, 2026, we also granted 303,688 RSUs to non-employee directors. The weighted average fair value of these awards was determined using the Company's closing stock price on the applicable grant dates, which was $5.29. The RSUs granted to employees will generally vest equally over periods ranging fromone tothree years on each of the anniversaries of the date of grant subject to continued service on such date. The RSUs granted to non-employee directors will vest at the end of this year.

During the three quarters ended September 27, 2026, the Company recognized accelerated and incremental equity-based compensation expense related to the modification of outstanding equity awards in connection with the announced retirement of our former Interim Chief Executive Officer and Director.

Performance Stock Units

During the three quarters ended September 27, 2026, the Company granted 611,407 performance stock units ("PSUs") to its executive officers under the 2021 Plan. The PSUs are subject to continued service and are earned based on the achievement of predetermined performance goals related to Adjusted EBITDA growth and total revenue growth over athree-year performance period beginning on December 29, 2025 and ending on December 31, 2028. Performance is measured based on a combination of annual and cumulative performance results, with final achievement determined at the end of the performance period. The number of shares ultimately earned may range from 0% to 200% of the target award based on performance achieved. The grant date fair value of the PSUs was $5.52, based on the Company's closing stock price on April 15, 2026, the date of grant. The Company reassesses its estimate of performance achievement each reporting period, and the cumulative effect of any change in estimated attainment is recognized in general and administrative expenses in the condensed consolidated statements of operations in the period of change.

NOTE 11. INCOME TAXES

We are the sole managing member of Portillo's OpCo, and as a result, consolidate 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 generally not subject to U.S. federal and 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, based upon the respective member's ownership percentage in Portillo's OpCo. 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, as well as any stand-alone income or loss generated by Portillo's Inc.

Income Tax Expense

The effective income tax rate for the quarter and three quarters ended September 27, 2026 was 27.4% and 23.0%, respectively, and 268.2% and 20.4%, respectively, for the quarter and three quarters ended September 28, 2025. The decrease in our effective income tax rate for the quarter ended September 27, 2026 compared to the quarter ended September 28, 2025 was primarily driven by prior year valuation allowance movement related to the separation of the Company's former Chief Executive Officer. This decrease is partially offset by an increase in the Company's ownership interest in Portillo's OpCo, which increases its share of taxable income (loss) of Portillo's OpCo. The increase in our effective income tax rate for the three quarters ended September 27, 2026 compared to the three quarters ended September 28, 2025 was primarily driven by an increase in the Company's ownership interest in Portillo's OpCo, which increases its share of taxable income (loss) of Portillo's OpCo.

The Company’s annual effective tax rate differs from the statutory rate of 21% primarily because of state and local taxes, deferred tax adjustments and impacts from equity-based award activity partially offset by the portion of Portillo's OpCo earnings that are attributable to non-controlling interest that the Company is not liable for federal or state income taxes.

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. As of September 27, 2026, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets (except for those deferred tax assets relating to the basis difference in its investment in Portillo's OpCo that will never be realizable or only reverse upon the eventual sale of its interest in Portillo's OpCo, which we expect would result in a capital loss which we do not expect to be able to utilize) are more likely than not to be realized.

As of September 27, 2026, we estimated that our obligation for future payments under the TRA liability totaled $343.2 million. During the three quarters ended September 27, 2026 and September 28, 2025, the Company made TRA payments of $7.9 million relating to tax year 2024 and $7.7 million relating to tax year 2023, respectively. We expect a payment of $2.3 million relating to tax year 2025 to be paid within the next 12 months.

NOTE 12. EARNINGS PER SHARE

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

Diluted net earnings per share is computed by dividing net income 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 per share for the quarter and three quarters ended September 27, 2026 and September 28, 2025 are as follows (in thousands):

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 shares were excluded from the calculation of diluted earnings per share because they would be antidilutive or subject to performance conditions which have not been satisfied by the end of the reporting period (in thousands):

NOTE 13. 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, including as a result of the matters described below, if any, will not have a material effect on the Company’s condensed consolidated financial statements.

During 2024, a former team member fromone of the Company'stwo California restaurants filed a class action lawsuit alleging wage and hour violations and unfair competition, as well as claims under the California Private Attorneys General Act (“PAGA”). In November 2025, the parties agreed to settlement terms, subject to court approval. During the second quarter of 2026, the Company paid $0.05 million toward the settlement. As of September 27, 2026, the related litigation reserve was $0.75 million and was included in accounts payable in the Company's condensed consolidated balance sheet.

During 2025, plaintiffs filed a wrongful death and survival action in Cook County, Illinois, arising out of a vehicle accident at the Company's Oswego, Illinois location. The Company filed a motion to transfer the matter to Kendall County, which the court granted. The appellate court subsequently denied plaintiff's petition for leave to appeal that ruling. Discovery is expected to continue in the coming months. At this time a loss is reasonably possible but not reasonably estimable; accordingly, no litigation reserve has been recorded in the Company's condensed consolidated balance sheets as of September 27, 2026.

On January 19, 2024, Maverick BJK, LLC ("Maverick"), which owns a 50% interest in C&O, initiated arbitration against the Company. Maverick asserted claims for breach of contract, alleging that sales by the Company's “Ghost Kitchen” location should have been included in C&O’s financials under the terms of the operating agreement. The Company recorded a litigation reserve of $1.7 million in accounts payable in its condensed consolidated balance sheets as of September 27, 2026 and the corresponding expense was recorded in other (income) loss, net in the Company's condensed consolidated statements of operations. Subsequent to September 27, 2026, the parties entered into a settlement agreement and an agreed order of dismissal with respect to the arbitration proceeding. The Company paid the $1.7 million settlement amount, fully satisfying the recorded liability.

NOTE 14. SEGMENT INFORMATION

The Company's chief operating decision maker (the "CODM") is its Chief Executive Officer. As the CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis, the Company hasone operating segment andone reportable segment.

The CODM allocates resources and assesses performance of the Company based on net income, as reported on the condensed consolidated statements of operations, which, as the segment measure of profit and loss that is closest to GAAP, is the required segment measure. Net income was $4.8 million and $11.4 million for the quarter and three quarters ended September 27, 2026, respectively, and $0.8 million and $14.8 million for the quarter and three quarters ended September 28, 2025, respectively. In addition to net income, the CODM also reviews revenue, operating income, restaurant-level adjusted EBITDA, and adjusted EBITDA.

The CODM reviews these measures (i) to evaluate the Company's operating results and the effectiveness of business strategies, (ii) internally as benchmarks to compare the Company's performance to its competitors and (iii) as factors in evaluating management's performance when determining incentive compensation. Additionally, the Company believes these measures are important to evaluate the performance and profitability of our restaurants, individually and in the aggregate.

The CODM does not review segment assets and segment expenses at a level different than what is reported in the Company's condensed consolidated balance sheets and condensed consolidated statements of operations. Additionally, the CODM regularly receives information about the Company's capital expenditures which are reported in the Company's condensed consolidated statements of cash flows as purchase of property and equipment under investing activities.

No guest accounts for 10% or more of our revenues.

NOTE 15. RELATED PARTY TRANSACTIONS

As of September 27, 2026 and December 28, 2025 the related parties’ receivables balance consisted of $0.4 million and $0.3 million, respectively, due from C&O, which is included in accounts and tenant improvement receivables in the condensed consolidated balance sheets.

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 quarter andthree quarters ended September 27, 2026 and September 28, 2025 (in thousands):

As of September 27, 2026 and December 28, 2025, $0.3 million is payable to Olo and is included in accounts payable in the condensed consolidated balance sheets.

We are party to 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. During the three quarters ended September 27, 2026 and September 28, 2025, the Company made TRA payments of $7.9 million relating to tax year 2024 and $7.7 million relating to tax year 2023, respectively. We expect a payment of $2.3 million relating to tax year 2025 to be paid within the next 12 months.

Transactions with Non-Controlling Interest Holders

NOTE 16. SUBSEQUENT EVENTS

On November 4, 2026, the Board of Directors of Portillo's Inc. approved a plan to close a mid-to-high single digit number of underperforming restaurants outside of Chicagoland, with the majority occurring in the fiscal fourth quarter of 2026. In making this determination, the Company evaluated each restaurant’s sales performance, restaurant-level margins, and projected operating performance. These actions are part of the Company's ongoing efforts to improve restaurant-level profitability, strengthen returns on invested capital and optimize its restaurant portfolio.

The Company is currently evaluating the recoverability, remaining useful lives, and potential impairment of property and equipment related to these underperforming restaurants. As of the date of this Quarterly Report on Form 10-Q, the Company is unable to reasonably estimate the amount of any resulting impairment charge or other related accounting impact, such as lease-related costs, employee separation costs and other exit-related costs. However, the Company expects the analysis to result in material cash and non-cash charges, the majority of which are expected to be recognized in the fiscal fourth quarter of 2026. Any such charges will be reflected in the Company’s Annual Report on Form 10-K for the fiscal year ending December 27, 2026.