Every so often, there comes a juggernaut like Chipotle, Shake Shack or even McDonald’s that sets a new benchmark in the restaurant industry. Chicago-based Portillo’s Inc. has all the right ingredients to…
become such a treat for investors.
The company, whose roots go back to a single take-out trailer called The Dog House in 1963, priced its IPO Wednesday night at $20 a share and beings trading Thursday on Nasdaq under the ticker “PTLO”. The deal comes at an unusual time because many restaurants suffered dearly during Covid-related shutdowns but Portillo’s is an example of a chain that powered through 2020 – even boasting a remarkable 10% rise in adjusted Ebitda last year when others saw catastrophic drops.
For those who haven’t had a chance to visit, Portillo’s Chicago-style hotdogs and Italian beef sandwiches have become as synonymous with the Illinois city as deep-dish pizza—the kind of delights Bill Swerski’s Superfans in Saturday Night Live might stack up before a Bears game. But the unique made-to-order menu that also features salads and chicken sandwiches along with a fun-filled ambience (each location is different with various Americana motifs from the 20th century) combine to attract loyal customers of all ages, all walks of life, and increasingly from across the county.
A look at the numbers backs up the impressive story. Take 2019, before Covid distortions impacted the industry. Portillo’s generated $8.7 million in average unit volume that year, with the best figures in the Chicago area but very high across the map.
That dwarfs virtually any restaurant in the quick serve or fast casual segment. Chick-Fil-A posted $4.7 million in average unit volume, Shake Shack $4.1 million and Chipotle $2.2 million.
Part of the Portillo’s magic is a highly-efficient drive-through strategy, which usually includes two lanes. That translated to twice as much average drive through traffic in 2019 as McDonalds – itself of course known for highly efficient service. Portillo’s even tops McDonald’s in overall traffic, with 2,563 average guests per day per restaurant versus 1,608. Shake Shack and Chipotle posted much lower numbers.
The company also adapted to Covid by taking decisive action to serve food by any means necessary – such as developing a robust delivery platform. Delivery volume is up 90% from 2019 and now accounts for 11% of sales. That channel will likely remain critical as many consumers grew fond of the convenience during the pandemic and will want it for years to come.
Portillo’s also embraced and supported its employees during the worst days of Covid. The company continued its streak of never closing a restaurant in 58 years, never furloughed or laid off any employees, and even launched an employee assistance fund, The Heart of Portillo’s Fund, to support team members facing hardships. Portillo’s continues provide 100% meal discounts to workers to ensure none go hungry.
Such thoughtful treatment of employees likely contributed to…
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