Photo courtesy of Portillo
While other chains are raising prices to keep up with inflation on all fronts, Portillo’s said Thursday it intends to be a “price laggard.”
The Italian fast-casual beef chain, which went public late last year, said it wanted to be a consistent choice for value-conscious diners.
“We intentionally price below inflation and we haven’t priced as aggressively as many other restaurant brands,” CEO Michael Osanloo told investors Thursday. “And that’s because we believe in providing added value to our customers.”
Osanloo said he wanted Portillo’s to be a “respite” from the rising prices consumers are seeing all around them. The chain’s average check is under $10.
“A comforting place where people don’t have to think about it,” he said. “We want them to come, have a beef sandwich and a great experience, and leave that stress at the door.”
Portillo’s, which went public in October, raised prices 4.4% in 2021. Out-of-home food prices rose 6.8%, the highest rate since 1981, over the past year .
But the company’s stance doesn’t mean Portillo’s isn’t taking any prices: the chain raised prices by 3% in the fourth quarter and plans to raise them by about 1.5% in the first quarter.
“Our belief is that others could reduce their portions, taking prices above inflation,” Osanloo said. “Our philosophy is that we’re going to take traffic…Our goal is to make sure we’re working hard to increase margin dollars, and we’re just not as excited about percentages.”
For the quarter ended Dec. 26, Portillo’s total revenue increased 17.2% to $138.9 million.
Portillo’s opened two locations during the fourth quarter, increasing its number of units to 69 as of December 26. For 2022, Portillo’s said it plans to open seven new restaurants.
The chain’s same-store sales increased by 10.3%. Portillo’s estimates comparable store sales for the first quarter to be 7.5% to 8.5%.
The chain is working to increase the efficiency of its restaurants, as an alternative to further price hikes.
But there are pressures from all sides.
Portillo’s predicts commodity inflation of 13-15% for 2022, due to its reliance on beef and chicken. And labor as a percentage of revenue rose to 26.2% in the fourth quarter from 24.3% in the same period a year ago.
“We didn’t plan for a war in Ukraine,” Osanloo said. “We hadn’t anticipated fuel costs where they are. And so we’re just being as transparent and honest as possible. What will happen in three to six months? I do not know.”
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