Portillo’s Relies on Four-Part Strategy to Claw Back Sales and Traffic

During a time when price-pointed value is ruling the quick-service segment, Portillo’s refuses to get involved with aggressive promotions and discounting. Instead, the legacy chain wants to bring value by improving the overall dining experience.

The fast casual divides the strategy into four key pillars. The first is “running world-class operations,” which CEO Michael Osanloo believes is the single most important tool to fuel sales and transactions (two metrics that were negative in Q2; same-store sales fell 0.6 percent and transactions dropped 2.3 percent).

This particular pillar mainly focuses on drive-thru throughput. Since the departure of COO Derrick Pratt, Osanloo has closely observed and participated in operations across the system, and he concluded that the brand’s processes for measuring success relied on too many metrics and prevented GMs from paying attention to the guest experience. Since this observation, Portillo’s has realigned its GMs to focus on factors that matter when driving transactions and sales, including training employees “for the speed and sense of urgency that we’re known for, especially in our drive-thrus,” Osanloo said.

With this shift, drive-thru speed has improved 15 seconds year-to-date versus the same period last year. Portillo’s is trying to climb back to 2019 levels, which were almost a minute faster than the past trailing 12-month period.

“It’s really just making sure that there’s managerial presence outside, and we’re coaching up and training our team members on what it means at Portillo’s to be fast and efficient,” Osanloo said. “We just lost our way a little bit. And a manager outside giving real-time feedback, real-time coaching, making sure that our team members are working as adeptly as our expectations is the key to that success. So we’ve carved a little bit of that time back, but there’s still a bunch to go. I’m very enthusiastic about it because the teams have embraced this. And of course, we’re doing contests and competitions and rewarding all the great people at Portillo’s and encouraging the not-so-great to be a little bit better. But I’m very optimistic about this. We are an execution machine. We just need to know what to execute against. And now the teams know.”

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The chain is actively searching for a new COO to lead these strategies, but for now, Osanloo is enjoying his time being close to operations.

“I work very closely with them. I kind of started my job here at Portillo’s working closely with them, and it gets me a lot of insight into what we’re focusing on and what we shouldn’t be focusing on,” the CEO said. “And so it gives me a chance to reinvigorate the team, to be the great execution machine that we are, and just to focus on a few basic things that make us fantastic. We are actively in a search for a COO, but we’re not going to rush into anything. We want a world-class leader who fits our culture and appreciates Portillo’s for the sleeping giant that it is.”

The second pillar is based on amplifying digital engagement, marketing efforts, and menu innovation. To accomplish the first point listed, Portillo’s launched its first kiosk prototype last week in a suburban Chicago location. In Q3, the chain plans to install kiosks in its flagship downtown Chicago locations, followed by two more stores in California.

In terms of marketing, Portillo’s has been running TV commercials and posting billboards in Chicagoland. The brand is ramping up to a full relaunch of its advertising efforts in the market. The campaign kicks off in September to coincide with the start of the NFL season. The commercials will focus on Portillo’s food quality, which helped drive traffic during the previous campaign in Q4 2023. The CEO said the company is spending more on advertising than it did last year.

“The messaging is very consistent,” Osanloo said. “We see that our business is super responsive when we remind people of how much they love Portillo’s. So it’s not to be glib, but it’s essentially food porn. We show beautiful images of our food. I think we get people excited about it and we just remind them how much they love the taste, the smell, the sites of Portillo’s. So that’s what it is. It’s very consistent with the ad campaign last year.

” … This is going to sound a little cocky, but we’re just a brand that punches above its weight in Chicagoland,” he added. “So in a lot of other markets, it’s a different dynamic for us. But in Chicagoland, when Portillo’s is on TV or actively marketing, it catches the consumer’s attention. We are a 60-year-old beloved brand in Chicagoland and we don’t advertise regularly, so when we do, it has a very strong positive impact for us.”

The next pillar is about building more efficient restaurants. It took fewer than two years for Portillo’s to create, test, and construct its 6,300-square-foot prototype, which is 1,500 square feet less than the current model and reduces costs. That’s a 20 percent decrease in space without changing the restaurant’s ability to deliver the same AUV. Three Texas-based restaurants (Willowbrook, Stafford, and Grapevine) will open with this prototype later in 2024.

The final pillar is taking care of employees. In Q2, Portillo’s launched the Strive for Greatness Scholarship program to increase access to higher education. It also implemented an employee assistance program to help with benefits, including mental health, financial planning, resources and legal services.

After achieving comps of negative 1.2 percent and 0.6 percent in Q1 and Q2, respectively, Portillo’s changed its 2024 outlook to flat to slightly positive same-store sales from low-single-digit same-store sales. Even with this lowered expectation, it still means the brand expects improved sales for the rest of the calendar year.

Portillo’s has 88 restaurants nationwide. It has opened four stores this year in Denton and Mansfield, Texas; Surprise, Arizona; and Livonia, Michigan. Six more are expected in Q4, five of which will be in Texas. The other will be in Florida. The 10th restaurant will boost Portillo’s unit growth percentage close to 12 percent for 2024, ahead of the 10 percent plus it communicated at Development Day in September 2023.