To Portillo’s CEO Michael Osanloo, traffic is perhaps the most important health metric for an organization.

The philosophy seems obvious, but the difficult part is there isn’t a “magic lever you pull all the time,” to make it work in reality, the chief executive noted. Portillo’s used several tools to help transactions grow 1.3 percent in Q4 as the 84-unit brand closed out its biggest development year on record with 12 openings. Of those, four were carryovers from 2022. This year, 61-year-old Portillo’s plans to debut at least nine stores.

One traffic trigger in 2023 was making noise on TV. Leading up to the holiday season, the 84-unit Portillo’s ran an advertising campaign in Chicago that “brought the sights, smells, and sounds” of restaurants to the forefront, Osanloo said. The commercials were about reminding customers why they love the brand instead of luring them with discounts.

In terms of how marketing may look for the rest of 2024, Osanloo chose not to share much, telling investors, “We’re just not comfortable telling everyone exactly what we’re going to do and when to be totally honest with you.” He assured when Portillo’s advertises, it will do so selectively and only when it knows it will get the best return on those dollars. For instance, the fast casual likely won’t advertise in the back half of the year because it wouldn’t want commercials to be drowned out by the election cycle. Osanloo doesn’t want to be formulaic, either, and hold the restaurant to a certain amount of spend in a particular timeframe. The strategy is to be more opportunistic.

“It’s marketing, but it’s really traffic driving,” Osanloo said during Portillo’s Q4 earnings call. “So undeniably, we have a muscle that we use, but we like to use selectively when it comes to TV and ad campaigns to drive traffic. It works really well in Chicago. I think we’re approaching a scale where it could work for us in markets like Arizona and Indiana. And so we certainly have that arrow in our quiver, and we won’t hesitate to use it if we need to.”

READ MORE:

Portillo’s Future Lies in the Sun Belt

Portillo’s Finds That Smarter Development Equals Better Traffic

Portillo’s Bolsters Growth Projections to 920 Restaurants

Another traffic-driving measure is adding two salads to the permanent menu. Portillo’s created a spicy chicken version of its Chopped Salad and tested a Chicken Pecan Salad with a new Honey Peppercorn dressing. Similar to all of the brand’s salads, the latest options are made to order and customizable. Thus far, both salads are testing well and will soon be launched systemwide.

The company currently generates more than $650,000 in salad sales per restaurant per year, with the Chopped Salad being the No. 1 seller.

“We take menu innovation very seriously at Portillo’s,” Osanloo said. “We don’t just add items to add. They have to fill a gap in the menu, make sense operationally and most importantly, be utterly craveable … We know we’ve got space to add more variety to this already craveable menu category.”

Portillo’s third lever to fuel traffic—and the best way to do it, in Osanloo’s opinion—is operational excellence. That can be broken down into multiple areas, like channel flexibility through drive-thru, delivery, catering, or inside restaurants. It also means digital menuboards at the front counter, which is another way to advertise to customers.

Considering the rise in off-premises, speed of service at the drive-thru continues to be an integral part of operations. A 30-second improvement in service time equals a 1 percent lift in comp sales. Osanloo acknowledged Portillo’s has recently pushed accuracy and friendliness to the detriment of speed, but he also noted there’s something to be said about customers’ perception of speed and whether their experience was happy or not. But the end goal is to create a balance between all those metrics.

“Our operators right now are maniacally focused on speed of service, number one in the drive-thru. It’s less relevant frankly on dine-in, still important, but just it doesn’t have the same impact as in the drive-thru,” Osanloo said. “And so, absolutely speed of service matters, how fast you get guests in and out matters. Not just their perception of the time and how happy they are with it, but literally the math of getting them in and out and moving the next person. Drive-thru can be almost infinite capacity if you’re fast enough.”

Portillo’s same-store sales grew 4.4 percent in the fourth quarter. Restaurant-level adjusted EBITDA increased 42.7 percent to $46 million and restaurant-level adjusted EBITDA margins expanded by 310 basis points to 24.3 percent.

For fiscal year 2023, total sales increased 15.8 percent to roughly $680 million. Same-restaurant sales lifted 5.7 percent, and AUVs reached $9.1 million per store. Restaurant-level adjusted EBITDA rose 24.7 percent to $165 million and margins increased 170 basis points to 24.3 percent. Operating cash flow grew 24.4 percent to a record level.