Tech initiatives are at the forefront of Portillo’s plans for 2022, CEO Michael Osanloo said at the recent ICR Conference.
While Osanloo said Portillo’s would never be on the cutting edge of technology or go completely digital, the brand has no problem with becoming a fast follower of innovation that makes operations more efficient and provides more value to the customer.
“I’m going to [introduce new technology] if the guests value it and if [Portillo’s] team members value it,” he said.
New tech programs include rolling out an updated POS to replace the existing “antiquated system,” introducing digital menu boards, and improving Wi-Fi systemwide.
The current POS system is too complicated, Osanloo said. The inability to quickly take orders is something he thinks can be easily fixed by a more modern platform.
Referring to it as POS 2.0, the CEO said the new system will “dramatically increase the efficiency of our team members,” while simultaneously making guests and employees happier due to less friction.
In terms of digital menu boards, Osanloo said Portillo’s has seen how successful the technology can be at some of its outer-market restaurants, particularly new builds.
The ability to display videos and use the menu boards as a quick marketing tool makes the technology worthy of introducing systemwide, Osanloo said. The boards also improve interactions between customers and workers, which he emphasized as being of the utmost importance.
“We’re rolling those out all across the country,” he added.
When it comes to updating Wi-Fi, Osanloo said faster internet for dine-in customers will be a nice bonus, but that isn’t why Portillo’s wants to enhance its connection throughout the system. Instead, it’s to help long lines in the drive-thru.
Units have gotten so busy that employees who are on foot and trying to take orders from customers are having difficulty getting the order as they move farther away from the restaurant.
“The lines in our drive are so gosh darn long,” he said, adding that better Wi-Fi is necessary to meet the demand.
Arguably, Portillo’s biggest example of technological innovation is the “one-of-a-kind” drive-thru only location in Joliet, Illinois. The new 3,750-square-foot design features three drive-thru lanes and a pickup area for orders placed through the website or app. One of the three drive-thru lanes will be dedicated to customers who ordered ahead.
Even with the new contactless design, Osanloo said those who still want the traditional Portillo’s experience and crave human interaction will be able to get it.
“We’ll take great care of you in our dining rooms,” he said. “We’re a hospitality-first model as opposed to a low-cost-first model.”
In addition to technology, the CEO said Portillo’s will invest heavily in human capital. As he sees it, the chain’s workforce separates the brand from its competitors.
CFO Michelle Hook said during the brand's Q3 earnings call that average hourly rates were up nearly 20 percent, quarter-over-quarter. And still, the brand remained 10 percent understaffed. Q3 labor was 26.8 percent of Portillo’s revenue, up from 24.3 percent last year. The wages inflated costs, as did training and discretionary bonuses.
Osanloo believes Portillo’s pays general managers as well—if not better—than nearly everyone else in the industry, which is by design. Attracting talent that fits into the company’s stated values of greatness, fun, family, and energy is key, and he’s happy to shell out extra money to do it.
“We will pay for greatness,” he said.
He noted that taking care of frontline employees is “the secret sauce to Portillo’s success."
“That translates into superior guest experiences, which in turn translates into superior investor experiences,” he added. “Those people matter; they are the heart of Portillo’s.”
Investing in employees is also imperative to the company’s growth strategy of reaching 600 units domestically, Osanloo said. A general manager already familiar with the chain’s complexities and one that embodies the company’s stated values will help open new units in accordance with the brand’s mission of providing excellent food and hospitality.
Portillo’s expects to grow its overall unit count by around 10 percent each year, a pace that doesn’t place too much pressure on the company, the CEO noted. In the coming years, same-store sales are expected to be up in the low-single digits, while total revenue growth is expected to be in the high-single to low-double digits. The brand plans on opening seven new units in 2022 and is currently on track to meet that goal.
“There is a wealth of opportunity for Portillo’s,” he said. “We’re not in a foolhardy rush to expand everywhere because our concept is easy to copy. Our concept is hard to copy…so for us the lever to have all of our craziest aspirations of growth occur is developing people.”