By Paul Ziobro
Portillo's and activist investor Engaged Capital have struck a deal to work together to identify a new board member for the restaurant chain.
As part of the cooperation agreement announced Monday, Engaged Capital will withdraw its two director candidates it recently nominated. The two sides will focus on finding a new nominee with recent and relevant experience as a restaurant operator.
Last month, Engaged Capital, which at the time reported owning about 8.6% of Portillo's shares, nominated Charlie Morrison, the former chief executive of the Wingstop chain, and Nicole Portwood, the former chief marketing officer of Tito's Handmade Vodka, to the board. Morrison, however, last week was named chief executive of Jersey Mike's Subs, which is being sold to private equity firm Blackstone for $8 billion.
"Although we wish him well in his new role, we were disappointed it resulted in one of our nominees having to withdraw from this process," Glenn Welling, founder and chief investment officer at Engaged Capital, said. "We are pleased to have been able to work constructively with the Board on an alternative solution for adding a highly qualified director with restaurant operating expertise."
Engaged Capital in August disclosed a nearly 10% stake in Portillo's and said it wanted to work with the Chicago-based company to drive a turnaround. In January, Engaged Capital introduced the company to Jack Hartung, the former longtime chief financial officer of Chipotle Mexican Grill who was appointed to Portillo's board.
Engaged Capital has said that despite certain strong attributes, Portillo's performance has been challenged due to outdated restaurant operations, ineffective marketing and disappointing restaurant-level cash-on-cash returns.
Portillo's, which specializes in Chicago-style foods including hot dogs and Italian beef sandwiches, said Monday that Engaged has also agreed to certain customary standstill and voting agreements as part of the agreement.
"The Board is committed to overseeing decisive action to drive traffic, improve margins and deliver industry-leading unit economics for shareholders," Portillo's Chair Michael Miles said.
Write to Paul Ziobro at paul.ziobro@wsj.com
(END) Dow Jones Newswires
April 28, 2025 17:29 ET (21:29 GMT)
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