Fast-growing, cult-favorite chain cuts expansion, ends breakfast

What began as a humble hot dog stand in 1963 in Chicago has since grown into a cult-followed restaurant chain with nearly 100 locations across nine states. For decades, its Chicago-style hot dogs, Italian beef sandwiches, and signature chocolate cake have drawn devoted fans and fueled an ambitious expansion. 

However, that rapid growth is now being cut back. Facing economic uncertainty, a slowdown in consumer spending, and underperformance in certain markets, Portillo's has announced a major strategic reset to sharpen its focus on core strengths and ensure long-term sustainability.

This new plan centers on four key priorities:

• Drive transactions by reinforcing value and service.
• Simplify operations by ending its Chicago breakfast pilot.
• Sharpen focus by slowing the pace of new restaurant openings.
• Optimize capital deployment to achieve positive free cash flow by 2026.

"As we advance Portillo’s growth strategy, two priorities stand out. First, driving sustainable traffic through consistent service and value. And second, disciplined development with restaurants designed for strong unit economics, attractive four-wall returns, and efficient capital deployment that will fuel long-term growth," said Portillo's CEO Michael Osanloo in the announcement.

Portillo's halts restaurant expansion and ends breakfast pilot

As part of this reset, Portillo's  (PTLO)  is lowering its growth projections. For fiscal year 2026, it cut its restaurant expansion from 12 units to 8, reducing it by 33%.

During its latest earnings call, the company cited delays in Texas openings due to permit issues. It also noted underperformance at new Texas locations where brand awareness is lacking, but it plans to increase marketing investments in the state to improve recognition.  

Related: Portillo's gives crucial update for major menu change

Additionally, same-restaurant sales expectations were lowered from a 1%-3% increase to a 1%-1.5% decline. Revenue and EBITDA forecasts were also decreased. 

This reset marks the end of Portillo's first-ever breakfast menu, which launched in April at five Chicago restaurants and later expanded to five more. 

Initially, the pilot was described as positive, but the company now believes simplifying operations and improving service take priority over pursuing breakfast. 

Portillo's remains optimistic for the future of its business

This move may be in response to its only 0.7% increase in same-restaurant sales in the second quarter earnings for fiscal 2025.

Despite navigating a tough economic environment and industry traffic pressures, Portillo's is learning from these challenges and remains committed to long-term growth. 

"We’re testing and learning, refining our new market playbook, and focused on continuous improvement to drive consistent sales, expand our restaurant footprint, and deliver top-tier shareholder returns," said Osanloo in an earnings report statement.

Related: Popular breakfast chain struggles to stay on the menu amid closures