Activist investor Engaged Capital has built a big stake in struggling Chicago food chain Portillo’s and is pushing for change, sources said.
Activist investor Engaged Capital has built a big stake in struggling Chicago food chain Portillo's and is pushing management to make changes to how the business grows and runs, said people familiar with the matter.
The firm has told Portillo's it believes there would be significant private-equity interest if a public-market turnaround fails, the people said., the struggling Chicago-based hot-dog chain, and is engaging with management on improving operations, margins and branding as the company pushes to expand nationally, according to people familiar with the matter..
Shake Shack shares are up 67% since the company settled with the activist in May 2023, giving Engaged two board seats and staving off a proxy battle.It believes the company should no longer own and develop real estate, and should shrink the size of its current locations, according to a presentation to the board viewed by CNBC. Engaged believes the fixes could improve Portillo's restaurant cash-on-cash returns from 25% to 50%.
Engaged is pushing management to accelerate national growth, the people said. Shake Shack has managed to do that successfully through standardized store layouts and targeted, regional advertising. Engaged believes both those tactics could help Portillo's grow beyond its present 85 locations.
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