Before Portillo’s was acquired by private equity firm Berkshire Partners, every company development was like an “Amish barn raising,” CEO Michael Osanloo said. 

The Chicago-based restaurant chain would fly out hundreds of hourly team members from The Windy City to Arizona for preopening, some of whom would pack meats for the restaurant in their carryon bags because the company didn’t have a formal supply chain. This undertaking was extremely expensive, especially since it does not franchise. Within the last four to five years, however, the company has focused on creating a “high quality, scalable company” by leaning into Berkshire’s expertise, Osanloo said. 

From 2014 to 2020, Portillo’s increased units at a compound annual growth rate of 7.7%, growing from 38 to 64 restaurants. Last year, the CAGR went up to 10.1%, with seven units opened within 15 months. By the end of this year, the company is expected to have 84 total locations. 

Instead of using gut intuition to pick sites outside of Chicago, the chain is working with several firms to help predict where its concept will do well. Using macroeconomic and consumer data, alongside mass mobile data to see where people drive and spend money, Portillo’s now has 920 total future units. 

Of these locations, 800 are full-scale restaurants while the rest are pickup, walk-up stores for urban areas and other alternative formats, such as locations on college campuses. At its initial public offering, it originally thought its total addressable markets would be 600. 

“[There are] eight hundred full-service Portillo’s restaurants we’re very excited about because our AUVs are $8.8 million, [our restaurants have] phenomenal margins,” Osanloo said. “That’s a lot of very big full-service restaurants.” 

The company also created new restaurant designs to remove dead space in the kitchen.

“The basic formula at Portillo’s isn’t any different than when Dick Portillo’s founded it 60 years ago, which is to serve incredibly delicious craveable food at a really great price point in a wonderful environment that is consumer-centric,” Osanloo said. “That is so deeply embedded in the DNA of the company. Even real estate locations that aren’t A-plus will do well under a Portillo’s.”

Better real estate analytics, improved opening strategy

Tighter guardrails and better data helped the company better determine which markets to target across the country. The analytics considered where Portillo’s has done well historically and where it could succeed in the future while meeting the company’s minimum average unit volume of $7 million by the third year, Osanloo said. Additionally, the restaurants could only have a 3% overlap in geographic territory. Compared to other companies that may put a pin in a map and draw a circle around it to create territory maps, Osanloo said, Portillo’s created amorphous shapes using its data. 

These analytics also allowed the company to find real estate in dense urban markets where it could build a smaller pickup location where a larger restaurant wouldn’t work. 

“Think for example the amazing Chick-fil-A or Raising Canes’ in Times Square, something like that is probably not far off in our future,” Osanloo said. 

To ensure new restaurants do well out the gate, Portillo’s also changed its opening strategy. 

“When we open up, people will travel for hours from local areas to visit,” Osanloo said. “Our learning is that that's not always a good thing the first month or so. If you have what historically was referenced as a Big Bang opening, you actually cause harm to the business because you don't give the best experience. People aren’t always happy and you burn out your teams.” 

Now the company does what Osanloo calls a “series of small bangs.” The stores initially open for friends and family of employees, then people who signed up on its VIP list. Then it opens for first responders and local government officials. After two weeks of fulfilling some of that initial demand, the restaurant is prepared for its grand opening. 

“We’re seeing results,” Osanloo said. “There’s always a curve in the restaurant industry. You open strong, you dip and you build back up. Our curve has flattened out. It’s factually demonstrable.”

New restaurant designs to boost efficiency

Just before Osanloo became CEO of Portillo’s in October 2018, the company built a 11,300-square-foot restaurant with two stories that had a kitchen line of 107 feet. 

“It was insane,” Osanloo said. “It was inoperable. It’s not a restaurant that makes any sense.” 

Osanloo and his CFO and head of marketing came together to create a more efficient kitchen. They performed time and motion studies in restaurants to eliminate the amount of time employees walk back and forth between work stations. 

“When you make [employees] walk 100 feet from one end of the kitchen to the other end of the kitchen, that’s inefficient. It’s not productive for them. They don’t actually like it,” Osanloo said. 

Because this was a huge undertaking and a multi-year process, Portillo’s is rolling out the new design in phases, initially with its Kitchen 23 designs this year. The company’s Restaurant of the Future prototype will debut in 2025. New buildings often take years to get permitting and entitlements, so the company started with smaller lifts to create efficiencies in its restaurants sooner. 

Portillo’s Kitchen 23 design has a more efficient kitchen layout, with a 65-foot makeline and a 7,700-square-foot restaurant. The first of these designs opened in Allen, Texas, earlier this year. Its Restaurant of the Future units, by comparison, will average 5,500 to 6,000 square feet and have a 47-foot production line. 

One element that was considered inefficient was a separate area, dubbed the salad bowl, where employees completed salad orders separately from where sandwich orders were made. It was not productive, created a slower speed of service and made customers who ordered a sandwich and salad go to two locations to pick them up, Osanloo said. Moving salads to the main makeline reduced how much walking team members have to do to complete orders. 

The new design also moved the beverage station from back-of-house to the front-of-house to create a self-serve beverage station. 

“All of that was part of the Kitchen 23 design, and we weaved that into the Restaurant of the Future, which has design improvements in the kitchen, but also in the dining room,” Osanloo said. “That’s multiple bites at the apple. You’re not trying to make a massive change and bet the farm on a new restaurant right away.”