Portillo’s investors must have liked what they heard during the company’s presentation Tuesday at the annual ICR conference in Orlando, as its share price jumped by double digits to close afternoon trading and has remained elevated. What that presentation entailed was a robust plan to bolster traffic, margins, and returns through investments in loyalty and drive-thru technology, as well as a sharpened focus on a smaller prototype (though not smaller volumes, which is notable given Portillo’s high numbers).
The presentation followed the company’s preliminary fourth quarter results release, including a 0.3% same-store sales increase and bump in revenue, both of which exceeded expectations. In an interview following the presentation, chief financial officer Michelle Hook outlined some of the company’s initiatives to maintain its current momentum, adding that the priority is to grow traffic this year. Those initiatives include the expansion of its new — and much smaller — prototype, dubbed the Restaurant of the Future. The 1.0 version of this prototype, which is about 6,250 square feet, has already made its debut in Texas and the company now aspires to open a 2.0 version in 2026 and continue to iterate from there, looking for even more opportunities to reduce square footage.
Hook said when Michael Osanloo came on board as chief executive officer in 2018, Portillo’s restaurants averaged about 10,000 square feet. As costs spiked during and after the pandemic, and as off-premises business grew and sustained, it became a bigger priority for the company to shrink those boxes. The 2.0 version is expected to be around 5,500 square feet.
“We’re going to keep working on it from there,” Hook said.
There is plenty of incentive to do so — the average building cost of traditional locations is about $6.6 million and the new prototype cuts “at least a million from that,” Hook said.
“As we go to 2.0, that will be another $300,000 to half million,” she said. “And it creates more opportunities to get into more developments.”
In addition to site selection benefits, Portillo’s new prototype has a more linear kitchen, which Hook said creates “adjacencies and efficiencies” for employees. The length of the kitchen line for legacy units is up to 105 feet, for instance, while the new restaurants’ lines are about 47 feet.
As Portillo’s continues to iterate and refine and study its new prototypes, Hook said there are also opportunities for new formats, such as its pick-up window-only location that recently opened in Chicago.
“Think about the strip in Las Vegas. We could do a pickup window location there and it would increase brand awareness,” she said. “We could go into a college campus and do a walk-up location. Those aren’t currently in the portfolio, but they’re a big opportunity. They’re on the table.”
As such, Portillo’s plans to accelerate its growth. The company built 10 restaurants in 2024 and plans for 12 more this year. Complementing this expansion will be a stronger focus on digital, including the imminent launch of Portillo’s Perks loyalty program, which will exist in mobile wallets versus as an app. During the company’s presentation, chief information officer Keith Correia said wallets have less friction than having consumers go to the app store, download the app, and find the app every time they want to use it. He said the company can send messages through the program and that messaging will become more personalized as it ramps up.
“We will use data over time to drive the timing and relevance of these offers so they become more material to our guests and incentivize them to visit. That’s where we get the incremental transactions and the value of the program,” Correia said.
Portillo’s Perks is expected to be deployed by the end of the first quarter and executives expect between 1.5 million to 1.7 million people enrolled in the program by the summer.
“We have 94 restaurants, and so the number of loyalty guests per restaurants, that’s an extraordinary number,” Osanloo said, adding that the program should help the company translate its “measurably obsessed fans” into traffic, transactions, and economic returns.
The drive-thru has also become a bigger priority, as the company looks to build on its $9.1 million average unit volumes (according to Technomic data). Doing so requires throughput and speed, but Portillo’s lost a full minute at the drive-thru in the past few years and is now working to claw back that time for customers. Last year, the company added a manager at the drive-thru, for example, and focused on training in this channel.
Portillo’s also just added computer vision technology in three locations — soon to be eight — that flashes whenever a customer has been idling in a lane for too long.
“Managers that want to know what drive-thru times are (now) have to go into an app and it’s reactionary. This technology will tell you if a car has been waiting too long and it starts flashing red,” Hook said. “We have a lot of volume and this allows them to deploy labor differently at that time. If you’re in the dining room, you see people in front of you. if you’re the drive-thru manager, you have cameras, but they’re not shouting at you. You don’t know how long those cars have been waiting. This is going to scream it at you. Our managers want to do a great job and we’re giving them the tools to do that.”
Early results on the test, Hook added, have been “amazing.”
Contact Alicia Kelso at [email protected]
