Chicago-based fast-casual hot dog and Italian beef chain, Portillo’s, reported strong sales momentum for the second quarter ended June 25 as same-store sales grew nearly 6%, boosted by increased menu prices of nearly 10% and a continuous pipeline of store openings for the growing brand.
“We delivered another quarter of strong results that highlight the durability of our brand,” Michael Osanloo, president and CEO of Portillo’s said in a statement. “We feel great about our recent new restaurant performance and are also delivering solid results in our core. To sustain this positive trajectory, we continue to focus on quality and execution.”
While Portillo’s is not the first or only brand to raise prices in this challenging inflationary environment — particularly when it comes to commodities pricing and wage inflation — bumping the price of certain menu items up by nearly 10% is a more aggressive pricing strategy than many of their industry colleagues have taken. Even though increased menu prices drove up average guest check by more than 7%, traffic dipped by 1.2%, which could reflect a more cautious consumer that’s sensitive to significant changes in price.
Aggressive pricing might not be a tactic Portillo’s uses for long, however, because Portillo’s said it expects overall commodity inflation to ease as we head into the second half of the year. However, Portillo’s continues to increase wages of team members to keep in line with competitive wages, which could require further menu pricing adjustments.
Besides their aggressive menu price strategy, Portillo’s has also been concentrating on robust physical growth, as the chain opened four new restaurants in the first half of 2023, adding more than $20.9 million in revenue over the last two quarters to Portillo’s total portfolio of 76 restaurants.
For the second quarter ended June 25, Portillo’s revenue increased 12.3% to $169.2 million. Net income swung to a loss of $0.9 million to $9.9 million total or $0.12 earnings per share, driven by a decrease in operating income.
Portillo’s opened net one new restaurant, ending the quarter with 76 total restaurants as of June 25.
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