Portillo’s is a popular restaurant chain known for its Italian beef sandwiches and Chicago-style hot dogs. Over the past year, the restaurant has slowly increased its prices and consumers are not pushing back. In fact, Americans are still dining out and Portillo’s is seeing positive traffic and sales.
One of the main reasons for this is the slow-rolled price increases. Portillo’s CEO Michael Osanloo said the company prices behind the curve and this strategy has paid off. The restaurant raised menu prices 3.4% in the fourth quarter and saw same-store sales increase by 6.0%. In fiscal year 2022 overall, the restaurant raised menu prices by 7.5% but saw same-store sales up 5.4% and a 8.6% increase in revenue.
Portillo’s is also looking to further buffer its margins by increasing menu prices by 2% in January. This is due to high commodity inflation that is largely tied to chicken and beef supplies which make up over 40% of the restaurant’s commodity basket. There is also labor inflation and labor shortages that are driving the inflation pressure on the cost of sales.
Osanloo said that the consumers are voting with their feet and the great value proposition in a recessionary-like climate is working well. He added that Portillo’s expects to see “mid-single digit commodity inflation for ’23”. To get back to a more normal inflation number, Portillo’s is recruiting people with values and acting with urgency while having fun.
Overall, it seems that Portillo’s slow-rolled price increases strategy is working. Americans are still dining out and the restaurant is seeing positive traffic and sales. The company is also taking steps to buffer its margins and manage inflation and labor shortages. These factors are allowing Portillo’s to remain competitive in a tight market and still provide customers with a great value.
