Portillo’s will make its highly anticipated public debut on Oct. 21. It’s expected to raise approximately $375 million. The money raised will help the fast food chain pay off its total debt of $479 million. Its shares are expected to be priced at about $18.50 each. Bank of America, Jefferies, Morgan Stanley, and Piper Sandler are some of the banks that will serve as the underwriters for the IPO. Portillos looks to become a global competitor in the fast food industry. Should you buy the stock?
Portillo’s has plans to expand across to all of the states in the U.S. Currently, it's the most common in the Midwest. The restaurant chain has unique characteristics that could make its stock stand out from other competitors.
Portillo’s versus other fast food chains
On a country-wide scale, it’s difficult to compare Portillo’s to other large fast food chains. Companies like McDonald’s, Burger King, and Chipotle are widely known around the world, while Portillo’s is mainly known in the Midwest.
Founded in Chicago, Portillo’s originally started off as a hot dog stand. Portillo's evolved over time into the fast food restaurant it is today. In September, QSR Magazine found that the Chicago-based franchise is 45th in average sales per unit among all of the fast food chains in the U.S. with an amount of $6,923.
Now owned by Berkshire Partners, Portillo’s has over 60 locations in the U.S. and it continues to grow. In March, the restaurant opened a franchise in Detroit, which is its first location in Michigan. The restaurant opened its first Orlando location in June—the third Portillo’s built in Florida.
A location in Indiana will have its grand opening in early November. The fast food chain is growing rapidly, and it hopes to expand to over 600 locations within the next 25 years.
Portillo’s implements some unique business strategies compared to other fast food chains. Its restaurants use a retro theme design and draw similarities to an old-fashioned diner with appealing colors. Various locations have drive-thrus where fast food runners will bring food to a customer’s vehicle. In May, the fast food chain invested in Cartwheel, which is a California-based delivery platform.
Cartwheel offers delivery solutions like dispatch software, internal text messaging, and driver apps. The delivery platform has worked with other major restaurant chains including P.F. Chang’s. Portillo’s investment into the company was part of a seed funding that reportedly raised $1 million. Cartwheel plays a key role in providing software for the fast food chain’s self-delivery service. It's a fairly new service that Portillo’s started to implement in July 2020 and is still developing.
Portillo’s will share the same IPO day as Vita Coco.
Coconut water brand Vita Coco is expected to have its IPO on Oct. 21 as well. The company plans to raise approximately $224 million. Vita Coco will have its shares priced around $18–$21. While there aren't any platforms currently available that allow retail investors to purchase IPO stocks of Portillo’s, Robinhood’s IPO Access allows users to purchase IPO shares of Vita Coco.
Is Portillo’s a good buy?
IPOs that are led by Jefferies as the underwriter have seen an average return of 14.4 percent in a 12-month span after going public, according to Seeking Alpha. With the fast food market continuously growing and Portillo’s becoming more widely known across the U.S., the stock might be a valuable purchase.