Portillo is a restaurant concept with great unit economics and a promising future for growth in the United States. While Chipotle has seen impressive returns over the past 20 years, with a total return of 7,000%, its stock is now expensive and less appealing for growth compared to before. Investors seeking the next big restaurant stock should consider looking at smaller companies like Portillo.
Portillo, a Chicago-centric restaurant chain known for its fast-casual Chicago street food, currently operates 84 restaurants mainly in the Chicago area. Despite not being as well-known as other top restaurant concepts, Portillo boasts impressive restaurant-level economics, with average unit volumes comparable to Chick-fil-A. The company plans to expand to new states like Arizona, Texas, and Florida with a goal of growing its unit count by at least 10% annually.
Portillo has proven to be highly profitable, with a consolidated operating margin of 7.6% and positive margins every year since going public. As the company scales up its operations, investors can expect margins to improve further. With plans to reach 100 locations and potentially generate $1 billion in revenue, Portillo’s stock appears cheap given its growth potential.
Even with debt and tax liabilities, Portillo’s stock presents a good investment opportunity, especially if the company can continue expanding its unit count and improving margins. With a long runway for growth, Portillo has the potential to become a significant player in the restaurant industry. Investors should consider buying Portillo’s stock and holding onto it for the long term.