Portillo’s Aims to Go Public This Year

Portillo’s Hot Dogs LLC is planning to debut on the public markets this year, the latest in a string of initial public offerings by restaurant companies looking to capitalize on this year’s Wall Street rally.

The fast-casual chain based in the Chicago suburbs confidentially submitted a draft registration statement with federal regulators on Friday, the company said.

The chain, held by private-equity firm

Berkshire Partners

LLC, is targeting a valuation of $2.5 billion to $3 billion, according to people close to the company. Shares are expected to begin trading by the end of this year.

Portillo’s is set to become the fourth U.S. restaurant chain to move toward the public markets in recent months. Salad chain Sweetgreen Inc. said last month that it plans to launch an IPO, as did Oregon-based Dutch Bros Coffee Inc.

Krispy Kreme Inc.

returned to the public markets this month but struggled to attract investor interest at the valuation it initially targeted. The doughnut company priced its IPO below expectations, and its shares have hovered around their IPO price of $17 since. European consumer conglomerate JAB Holdings Co. took Krispy Kreme private in 2016, and remains a major shareholder.

Public stock offerings are hot this summer as companies seek to take advantage of a rebounding U.S. economy and high stock-market valuations. In the summer months of June, July and August, bankers expect traditional IPOs to raise at least $40 billion, which would be a record during that period. Investor interest in special-purpose acquisition companies, or SPACs, has slowed, while traditional IPOs have regained momentum after a brief chill during the spring.

Few restaurants had floated IPOs in the years running up to the pandemic. Just two companies, Japanese cuisine company

Kura Sushi USA Inc.

and health-focused chain

Muscle Maker Inc.,

entered the public markets in the past five years, according to Dealogic. The Covid-19 pandemic last year put new issuance on hold as lockdowns and in-person dining restrictions upended restaurants’ business.

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Now, many chains are emerging from the pandemic with plans to grow. Companies that had a robust to-go business entering the pandemic gained business when many sit-down restaurants shut. Chains typically had bigger financial cushions than independent restaurants to sustain the downturn.

Restaurants that survived last year’s wave of closures are now seeing a surge in sales—as well as rising food and labor costs. Operators are passing along cost increases to consumers, and in some cases are trying to mask those hikes to avoid scaring away diners.

Portillo’s, founded in 1963 by Illinois entrepreneur Dick Portillo, has drive-throughs across its locations, and struck delivery deals before the pandemic for customers seeking its hot dogs and chocolate cake. It continued to open restaurants last year, now owning 68 across nine states. The company generated $455 million in sales last year, and its restaurants averaged an annual $7.5 million in sales each, according to Technomic Inc. data, ranking high among competitors.

Portillo’s recently hired executives from

Starbucks Corp.

and

Domino’s Pizza Inc.

The chain has boosted hourly wages in competitive markets to try to staff its new restaurants.

—Corrie Driebusch contributed to this article.

Write to Heather Haddon at heather.haddon@wsj.com

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Appeared in the July 17, 2021, print edition as ‘Hot-Dog Eatery Portillo’s Preps Listing.’


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