Over 62 years, Portillo’s has cultivated a strong following in the Midwest and its home base of Chicago. The coming years will be focused on recreating that passion in other regions of the country, particularly Texas.
Most new stores in 2025 will come in the Lone Star State. Since the start of 2023, the fast casual has opened 10 restaurants in Texas—seven in the Dallas-Fort Worth market and three in Houston.
“I love getting to some efficient scale because then it allows us to very efficiently market and start increasing awareness,” CEO Michael Osanloo said during Portillo’s Q4 earnings call. “It took us the better part of 10 years to get to an awareness level in Arizona that is sort of reasonable. Our goal is to achieve that in Texas in two years. So we’re just dramatically increasing the speed with which people get to know us so that we can stabilize the business and become a steady, durable transaction and comp driver out of these markets.”
Portillo’s is using advertising to build awareness in Texas to “capitalize on the untapped potential of large audiences who don’t know us yet,” Osanloo said. In late January, the fast casual rolled out its first market-wide ad campaign in Dallas-Fort Worth. The commercials focus on introducing the brand to new customers; they explain who Portillo’s is, what it’s known for, and where to find restaurants.
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The brand knows from experience that a TV presence in markets outside of Chicago works well. It used the same strategy in the past when it was penetrating Minneapolis, Indianapolis, and Arizona. This newest campaign is being shown to Texan viewers via traditional media, but the commercial features a lot of crowdsourced material from social media.
“We’re bringing the buzz and energy of a Portillo’s experience to encourage people to visit,” the CEO said. “Our past experience marketing outside Chicago gives us great optimism that this campaign will drive a meaningful lift.”
In 2024, Portillo’s opened 10 new stores, two of which were new, more compact restaurants of the future. Both opened in Texas in December (one in Grapevine and the other in Houston). The latest prototype reduces the footprint from 7,700 square feet to 6,250 square feet and lowers build costs by more than $1 million to $5.2 million to $5.5 million.
This year, all 12 scheduled locations will follow the same prototype, including the chain’s first outlet in Georgia.
“In terms of revenue, traffic, the feel, the ability to operate and execute, we’re thrilled,” Osanloo said. “There’s no difference, really, between that and a more traditional prototype. It feels like a really good restaurant. It provides a Portillo’s experience. So we’re really excited by that.”
Portillo’s is planning an even smaller restaurant of the future 2.0 that will debut halfway through next year. The process to get a new restaurant in place takes 18 to 30 months, so the chain is actively working through permits for its 2026 class. Osanloo noted that these stores may be smaller, but sales volume won’t meaningfully decline. In 2024, AUV was $8.7 million, which is one of the highest in the quick-service space.
These restaurants of the future may come with condensed menus. Portillo’s conducted a test in Houston where it removed between 15 percent and 20 percent of SKUs. The only negative feedback was around the removal of Italian Sausage and Polish sausage, so the brand quickly added those back.
“As I’m sure you can imagine, it reduces complexity in the kitchen, it’s an aid to throughput, it’s an aid to accuracy, and it streamlines supply chain and supply chain costs, so we think that we have unlocked something important there,” Osanloo said. It, frankly, is also an enabler to achieving restaurant of the future 2.0 when you just don’t have to store that much stuff in your coolers and your freezers, and it does help you reduce some kitchen equipment. So we’ve been watching that very carefully. We’re very excited by it, and I think there’s an unlock there for us going forward.”
In January, the brand opened its third drive-thru-only restaurant in Orland Park, a southeast suburb of Chicago. It operates with a smaller restaurant of the future kitchen. Portillo’s is still fine-tuning this particular prototype and being selective of how many it opens.
“They make a lot of sense in places where we have density and saturation for an incremental occasion,” Osanloo said. “So we’re going to keep building them in Chicagoland for sure. And we’re actively looking at a couple of other markets where we feel we have brand awareness and scale to justify the pickup-only location.”
The chain is also working on airport locations and inline restaurants in denser, urban trade areas.
Portillo’s announced in September 2023 that it had room for 920 U.S. restaurants, a 50 percent increase above its previous prediction of 600. This larger whitespace projection calls for 120 drive-thru-only units and urban-based inline locations.
The chain ended 2024 with 94 restaurants, meaning it will likely surpass the 100-unit mark sometime this year.
Same-store sales lifted 0.4 percent in Q4, boosted by a 4.1 percent rise in average check, offset by a 3.7 percent decline in transactions. The higher average check was driven by a 4.7 percent increase in menu prices, partially offset by product mix. Comp on a two-year stack basis was 4.8 percent. The chain implemented a 1.5 percent menu price increase in January.
Portillo’s felt traction in January, but industry headwinds in February, including weather, stunted momentum. The chain expects softness in the first half of 2025 and hopes for improved sales in the back half with the help of kiosk adoption, the launch of its Portillo’s Perks loyalty program, increased awareness in markets outside of Chicago, and improved drive-thru speed.
Same-restaurant sales decreased 0.6 percent in 2024. The decline was attributable to a 3.2 percent decrease in transactions, partially offset by an increase in average check of 2.6 percent. The higher average check was primarily driven by an approximate 4.6 percent increase in menu prices partially offset by product mix.
The chain expects 0 to 2 percent same-store sales growth in 2025.
“You’re not going to flip the switch overnight,” Osanloo said. “So it’s not like you’re going to go from negative 3.7 percent [traffic] to positive in the first quarter, especially with some of the weather in February. What we’re saying is expect us to steadily improve on traffic over the course of the year. That algorithm is what gets you to 0 percent to 2 percent same-store sales with some modest pricing. No one wants to be aggressive on pricing. We’re excited about the mix improvements, but it’s modest pricing, some mix improvement, and positive momentum over the course of the year on traffic to get to that 0 percent to 2 percent.”
