Operations

Portillo's restaurant of the future: smaller box, lower costs but same 'ridiculously high' AUVs

At an Investor Day, company officials plot the 77-unit chain's path to 920 units across the U.S.
Portillo's in Allen, Texas, is one of the newer units with a smaller design. But restaurants will get smaller.|Photo: Shutterstock

Portillo’s restaurant of the future is coming, and it will have a smaller box, a more efficient kitchen and a design to support off-premise business—all while maintaining an $8 million-plus average unit volume.

Oh, and contrary to plans at McDonald’s, Portillo’s guests will soon get their own self-serve beverages.

These changes come as the Chicago-based chain expands its plan to grow across the U.S., company officials said during an Investor Day presentation in Dallas on Tuesday.

Portillo’s CEO Michael Osanloo said Portillo’s now believes the 77-unit fast-casual chain can grow to 800 units with its full-scale model—up from previous estimates of 600 locations.

In addition, the chain could also add another 120 alternative-format locations, such as drive-thru-only or airport units, he said.

“We are a growth concept, admittedly with ridiculously good box economics,” Osanloo told the audience of mostly Wall Street analysts at the event, according to a transcript posted by Sentieo/AlphaSense. “We are accelerating our growth, but we’re doing it in a very disciplined fashion. We’re not chasing growth for the sake of growth.”

Portillo’s is a 60-year-old brand with a devoted following in and around Chicago. But since going public in 2021, the chain has been expanding in earnest across the Sunbelt, including Florida, Arizona and Texas, where the concept has been embraced. Portillo's locations in Chicago enjoy an AUV of $10.8 million, but those in the Sunbelt are not far behind at $7.1 million.

Up next is a move into three new markets: Atlanta, Denver and Las Vegas.

Now Osanloo contends the new Restaurant of the Future design will cut costs as the brand grows, while keeping those AUVs over $7 million, and possibly over $10 million.

Using a more standardized design, future restaurants (starting in 2025) will shrink to about 5,500- to 6,000-square-feet from the current 7,700-square-foot restaurant, for example, which is expected to reduce buildout costs to $5.2 million-$5.5 million from the current $6.2 million-$6.5 million.

The new design will also include a 47-foot production line, down from the current 65 feet, and labor costs could be cut by about 15%.

Shrinkage has already begun. That 7,700-square-foot unit describes the newest restaurant in Allen, Texas, which is already smaller than legacy units that are 11,300-square-feet with a 105-foot production line.

At Restaurants of the Future, seating will be reduced by about 25% to 140-170 and parking trimmed by about 20% to 85-100 spaces.

Some elements of the new design are already being retrofitted into existing units, and about 40 restaurants will be updated this year, the company said.

Other changes include the relocation of the salad and beer pick-up lines, which has allowed room for a grab-and-go counter and self-service beverage options.

Future restaurants will also be more off-premise friendly, with more direct drive-thru access and easier entry for delivery drivers to pick up orders.

“We want the restaurant to reflect what the world wants in terms of off-premises versus in-restaurant dining,” said Osanloo “We think we have come very close to cracking the code on that.”

Alternative-format units could be even smaller and more efficient—as small as 3,000- to 3,500-square-feet— like the drive-thru-only unit that opened in Joliet, Ill., last year. These might include walk-up locations in more urban areas, or in airports and college campuses.

In terms of growth, Portillo’s is following population growth but also “shop-and-ship” data, watching where there is demand for the brand’s menu through nationwide shipping.

“People shop-and-ship Portillo’s all across the country. And so some of the states have the biggest shop-and-ship we’ve gone into,” said Osanloo. “One of the reasons we went into Texas, huge shop-and-ship numbers. One of the reasons we’re looking at Georgia and Colorado, huge shop-and-ship numbers.

“We’re going where the growth is,” he added. “We’re going where people are moving, we’re going where people are demanding our food.”

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