Dive Brief:

• Portillo’s laid out a four-pillar strategy focused on improving operations; innovation and amplification of the Portillo’s experience; building restaurants with high AUVs; and bolstering employee experience on its earnings call Tuesday. 
• The chain is particularly focused on improving accelerating drive-thru speed, which is slower than 2019 levels, CEO Michael Osanloo said on the call. 
• Portillo’s reported a same-store sales decline of 1.2%, which it attributed to inclement weather in the Midwest. Improving drive-thru speeds by 30 seconds can add one point to comparable sales, Osanloo said.

Dive Insight:

Improving drive-thru times largely comes down to training and ensuring that employees are properly deployed along the lane. Osanloo said that the company “got a little complacent in how well we are performing,” and restaurants were often slow to assign a second person as an outside order taker.

Portillo’s is working to improve throughput. Osanloo said solving these problems begins with staffing appropriately, adding that restaurant leaders now have tools and coaching to provide real-time feedback.

“When the lower [income] consumer is pressured, it tends to impact us a little bit more in the drive-thru where they are going to QSR. Most QSR is largely drive-thru business,” Osanloo said. “That's why for us, being incredibly quick, efficient, fast and generating throughput is so important in the drive-thru.”

The chain is focused on menu innovation, marketing and digital engagement, as well. 

“Each of these avenues raises brand awareness and reaches guests through the consumer landscape,” Osanloo said. 

At the end of the quarter, Portillo’s tested a Spicy Chicken Chopped Salad and a Chicken Pecan Salad that did so well that the chain accelerated the launch by a month, he said. Sales were the highest of any new menu item launched within the past five years. The company is increasing marketing across digital channels, and made a small investment in advertising to boost awareness in Arizona, which is the only market outside of Chicago where the chain has scale. 

On the digital side, the chain’s newly appointed chief information officer, Keith Correia, will work on improving digital ordering through its app and oversee initial tests of digital ordering kiosks in California. 

Portillo’s third strategy pillar is maintaining its high average-unit volumes, which approach $10 million, by optimizing its footprint and lowering buildout costs. The company is also focused on entering new markets quickly, which will help it reach its target of 920 future units. Its first Restaurant of the Future will open in Texas during the fourth quarter. This model is 1,500 square feet smaller than a traditional store and is expected to reduce new build costs by $1 million, Osanloo said. 

The restaurant’s fourth pillar focuses on employees and training. Portillo’s Ignite Development Program has helped drive employee engagement and build out the chain’s leadership. The company has already identified experienced general managers for its 2024 development pipeline and most of its 2025 stores. Nearly all of these GMs are graduates of the Ignite program. During the first quarter, the chain promoted 64 team members who went through the Ignite program.  

“We’re committed to running world-class operations, to innovating and amplifying the Portillo's experience, building great restaurants with industry-leading returns and taking great care of our teams,” Osanloo said. “This is the strategy that we'll execute against. It’s how we'll grow our transactions. It's how we'll grow our comp and it's how we'll deliver industry-leading returns for our investors.”