Welcome to Chopping it Up.
I'm your host, Mike Hanlon, Senior restaurant and food service analyst at Bloomberg Intelligence. I'm very excited to introduce my guest today. He's Michael osanlu CEO of Portillo's. Thanks for doing us.
Michael, Thank you, Mike.
I appreciate it.
All right, So just before we kick things off, you know, I did a little background work and I love the French fry bar chart in the quarterly earnings presentation.
It was very, very creative.
Thank you. I got. I got a really sort of a fun, cheeky marketing team. They relish that kind of stuff. I see where they get it infected me with their passion for punts.
That's awesome.
Yeah, for the listeners that aren't aware, it's a you know, typical bar chart, but with crinkle cut French fries as the bars.
It's pretty cool. So let's jump right in here.
Man.
There was a lot of noise in Seamstar sales traffic and guest check data since the start of twenty twenty three. Not just for you, I'm talking about industry wide. So for somebody like me, it's not easy to make sense of things. What are you seeing right now from the US consumer?
You know, here's what I would say. I'd say, the first quarter, let's everybody had some very very attractive same sort of sales numbers, traffic numbers, et cetera, et cetera. We all did, and let's not get ourselves right. We were lapping Omicron in January and February of last year, so it's a little bit of an easy lap. I would tell you I'm cautious about the consumer. I think the consumer is in a fragile state. I think that
there's a lot of economic uncertainty. I think this is a year where, for whatever reason, the government has been slow in issuing refunds tax refunds, and that actually, I mean, it sounds quirky, but that actually affects consumers, and it affects consumer spending. So I think we're seeing that right now. I think we're seeing a cautious consumer. I think they're pulling back in certain areas. I think restaurants are still
doing reasonably well. You know, I think we're all relatively busy, But I think there are some areas hard goods, etc. That the consumer is showing some belt tightening.
Yeah, i'd say our data is showing some similar things. You know, one thing we keep pointing to is rising credit card balances and stuff like that, love savings rate and things of that nature.
Are you seeing any check management from your customers.
A little bit? It's you know, we have a little bit of what we would call negative mix, which is a tiny bit of less attachment, and so it's about two percent right now. But I can't in good conscience tell you driving that, Mic. I've looked at this a dozen ways. There's a different mix and an attachment level based on what channel somebody buys from. So you know, if they're ordering third party delivery, if they're ordering for delivery through US, if they're catering, it tends to be
lots of stuff. If they're coming into the restaurant and ordering for themselves, it tends to be a smaller check. It's it's a couple of items, and so there's definitely some mix. There's some channel mix issues going on. Our dining is picking back up, our drive through staying pretty stable,
and so it could just as easily be that. But theoretically it could be that, you know, somebody's saying, hey, I'm gonna pass on the cheese sauce on my fries this time, and it's really hard to like distill that with all the noise and everything going on.
Yeah, there's a lot of variables and a lot of moving pieces, for sure. So what are the demographics of your customer base?
Yeah, it's it's a great question. I'm going to give you a totally, totally, half half baked answer, which is it. It's sort of an upper it's slightly above average wealth, it's slightly uh, you know, a hair older than average. But averages mean nothing right. On average, you and I have a nice set of you know, like we have wispy hair. On average, it means nothing right, And so
averages don't mean a whole lot to me. If you go into our restaurants and you look around and you see who's there at lunchtime, you're gonna see you're gonna see a lot of men in colored vests and work boots. You're going to see men in you know, zenya suits. You're gonna see moms and yoga pants. But you also see women in you know, in fancy work clothes. It's a really broad demographic. In the evenings, we have families coming in, we are you know, our restaurants are really attractive,
they're nice, they're vibrant. So you see people making a decision to sit down with their family and have a meal at our restaur taurants in the evenings and the weekend. So it's a broad demographic. We do well in urban settings. One of our most successful restaurants is in a town in Indiana that has thirty thousand people. It does twelve million bucks. So we appeal to a really broad demographic.
Very cool.
And I would say I'm definitely below average on the hair on the whiskey, and I'm.
Probably slightly above average, so between us we're average.
Yeah, you do have a nice head of hair. It's too bet our listeners can't see it, all right, cool? And so the unit economics really stood out to me at the IPO right when I was reading that S one.
So do you have any updates there?
We do remarkably well when it comes to box economics, right, So we average about eight point three million dollars per restaurant, which is sort of for people in this business, is ridiculously high. We're at that, Like if you just looked at our numbers, you'd say this must be a relatively nice steakhouse. It's not. It's a it's a fast casual place that lives on ten dollars per person, but still generates eight point three million on the top line and
very healthy bottom lines. We continue to do really well. I would tell investors that as we continue to build more and more new restaurants and we build faster, that number has to come down, right because the new restaurants are just not going to perform quite as well as restaurants that have been in our base for twenty thirty years in our hometown. So it's a very very lofty number. It will come down over time. It's not going to
come down to a low number. It's still going to be outstanding AUVs and outstanding margins for us.
Yeah, for sure.
You know, I look at the brand and I think that it has a unique opportunity being a sixty year old brand with so much white white space. You know, in my career, I've seen some older brands with a rich history become strong growth stories. You know, Popeyes is definitely more that comes to mind for me. So you're growing in Florida, Arizona.
And Texas. I noticed I saw that those are areas of importance for you.
I'd imagine the migration into these states was a factor in deciding to grow in these markets. What other factors contributed to that decision.
Yeah, First of all, you've said a couple of things that I want to emphasize because I because I appreciate you doing your homework. You're one hundred percent right. We just celebrated our sixtieth anniversary, which really in this business is extraordinary to be a restaurant company that's been around for sixty years. And you're right in that despite being a sixty year old brand, we're like rambunctious teenagers still, right,
We're still growing up, we're still figuring stuff out. We're getting really good and our Sun Belt strategies is exactly what. It's really simple. We're going where population is. You know, we're going to the three fastest growing states in America, Texas, Florida, Arizona. We're not fools. We're also following where there's a Chicago emigration. Right,
there's people from the Midwest going to those markets. It's really nice to go into these towns and see x Midwesterners who are warmly embracing us and are excited to have their favorite restaurant to join. Now that's not that's not going to sustain your business. You still have to, you know, you have to become very quickly a local restaurant company, and that's what sustains the business. But we feel really good about getting off to a good start
and then sustaining it. And I'll give you some examples. You know, we opened in Orlando, Florida a little about two years ago, and we had extraordinary performance. We had nearly ten million dollars of revenue in the very first year. You're not doing that on just Chicago expats, right that that volume, you really do have to appeal to locals. And then in this business, you know, your revenues go up first year, they down, then they build back up again.
That's very common. Our second year is almost as good as the first year in Orlando.
It's a very very little dip, and so I feel really good about that because again, that means we're sustaining a business built on local guests and local community.
Same thing as happening to us in Texas. I had a lot of people asking questions like why do you think you're going to sell Italian beef to people in Texas, and so you know, my response is, first, it's Italian, not Italian, and second it's beef and bread. And I'm pretty confident that the fine people of Texas has said yes to beef and bread and that Texas has come out of the gates extraordinarily well. Right we opened in January. Right now, it's one of our top three performing restaurants
in the country. It's performing as well as our very best restaurants in the city of Chicago. It has it opens every morning with lines outside the door, and it's being sustained by the local community. So so I love going where the growth is. I love finding pockets of latent demand, but then we very quickly have to build to that local community.
Awesome.
Yeah, I'd imagine that popularity of Italian beef in Texas would alleviate some investor concerns about how well your food travels. But have you had Are you still getting pushed back about it expanding away from your stronghold in Illinois?
For sure? And it's understandable, right, I Mean, there's there's a there's a probably an entire graveyard of regional restaurant companies that were never able to expand nationally. So on one hand, I totally understand the logic of the question, and I and I think it's a very fair, legitimate question. I of course have a perspective, right, It's why I've sort of bet my career coming to Portillo's and knowing that I think that this is an expandable concept and
that the food will travel. So I and a lot of my team members have made that career decision that we think Portillo's is a sleeping giant and will be a national concept. And you know, we're seventy We're seventy six restaurants on our way to being six hundred plus, so it's super exciting. And I'm willing to bet that we will succeed in Texas, and we already are and succeeding in Arizona and Florida, So I'm fine with that.
Yeah, I think social media has changed the game there. You know, when we did some analysis pre IPO on your company, we looked at the amount of followers you had on Facebook and Instagram per store, and it was extremely high. I'm sure part of that is the AUVs, but you're not going to have followings like that unless
you're a very popular restaurant. You've had chains like Shakesheck proove that, you know, through a big social media audience that they can grow stores across the country, and in fact, in their case, some of these stores across the world are open into huge Yeah, it's a huge fanfare. So I think social media's kind of changed the game a bit there.
I think there's a lot of truth to what you're saying. I actually you know, and I also think that I mean, I think Shakeshak's a wonderful example because they're a fantastic company have bucked that trend. One of the intellectual debates I like to get into with some investors in one on ones is, look, if your concern is will my food travel well, an Italian beef sandwich travel will an iconic Chicago style hot dog with all of our fixings traveled?
I say, that's a very legitimate question, and you're obviously asking that because the food is so unique and iconic. But here's the logical sort of flip of that. The logical corollarya is, if my food does travel, then you must think we're worth the fattest multiple in the restaurant industry because our food is so iconic. And unique. So
you know, you can't have it both ways, right. If our food travels and we can prove it to you, then we're really really interesting unicorn in the restaurant industry.
Yeah, no, it's good. It's good to be differentiated. There's no doubt about that.
You know.
I I one of the CFOs I used to work with. You know, he used to criticize his competitors and casual dining. He was a fan worked out a family dining chain, but you know he used to call them TGI chilibes, right because they were all the same alfer and the same food.
So that there's there's definitely.
It's definitely important, and I think a nice differentiating factor that if you can sell other types of food that your competitors aren't. How are the building bottlenecks right now, like permitting and equipment.
Gosh, I want to say something positive, but I'd be stretching the truth too much. It's still really hard. It's still really really hard. You know, if you look at building costs. Over the last three years, just material costs have grown like it's just an insane amount. The costs have gone up. The availability of material and supply has been very challenged. The labor costs associated with building has gone up. The processes permitting approvals, anything touching the government
and municipalities has gotten incredibly slow and bugged down. If there's any good news is that it's not getting any worse, that it's now stabilized. The other little bit of good news, I mean it's not good news, but in a healthy dose of pragmatism, when it comes to the timelines, we have gone and budgeted significantly more time to get our
restaurants done. Right. So what we were doing, you know historically, if you know, if I in the real estate team and my reset real estate committee looked at a site, liked it and said, go, I felt really confident that we could get that restaurant built from that moment twelve months later. So that's no longer viable. So now it's the minute we say, go that restaurant we think can get built eighteen months later. So we've budgeted that extra
six months for supply availability, for permitting, et cetera. We are getting So that deals with the timing, and then we are actively looking at what we call the restaurant of the future. Right, everybody knows the way people interact with restaurants is changing, and I think some of these changes with off premises are not going to come back.
So I think that people are more and more saying that, hey, look, I want my food delivered it is I can deal with the excess costs, and I know that it's not going to be quite as hot and fresh, and I'm okay with that. There are people who say, I don't want to deal with human beings. I just want to order it via my app and I want to pick it up. And so I think it's important to pivot to a restaurant of the future, which is going to
have smaller dining rooms. We still need to produce as much food and do as much sales, but it's more of it's going to go through third party delivery, our own delivery, catering, and even our drive throughs. So we're right sizing and redeveloping the restaurant and shrinking the footprint. And so we think that that is a very viable thing for us to do on a go forward basis.
It will take excess costs out of the restaurant. I still want a beautiful, dynamic, engaging restaurant for the people who want to dine in, but I think we can save a bunch of money and square footage and get on a smaller pad et cetera, et cetera, et cetera. So that's the other way we have to deal with the new normal of cost and supply chain.
Yeah.
Cool, So I noticed that you had small smaller square footage.
Test going on. I guess that's what you're kind of referring to.
Well, there's one that's actually so, we do have one. We have one that's a smaller square footage. We're designing it actively. My goal is to roll it out in twenty four at one of our restaurants in twenty four. Right now, we do have a what we call a Portillo's pickup, which is drive through pickup delivery catering. It just doesn't have a dine in and that's gone exceedingly well.
I'm a little nervous about rolling that out too broadly, right because we're very, very protective of our brand and I really want a consumer's a guests first experience with Portillo's. I want them to come into the restaurant. Because we do what I call balance sheet marketing. We build beautiful restaurants with lots of engaging, inviting components. People take selfies in our restaurants, and so I'm really happy to build these pickup only locations in Chicago Land where everybody knows us.
And then that's a you know, that's sort of a penetration strategy. But outside Chicago Land, we need to be cautious because I really want a guest first experience to be in a full line restaurant.
Okay, so this is more of like an infill strategy. Yeah at the moment, Yeah, that makes a lot of sense, and I'd imagine this would impact your total market opportunity.
Gosh, I think. So we're going to refresh that in September. We're going to give a do an analyst day and do an entire development update on where we are, what we're seeing, all the great questions you're asking everyone wants to know more about, and so we'll talk about prototypes, total addressable market, et cetera, et cetera.
Okay, cool, And you know, do you are you worried at all that that a focus on some of that stores could maybe take some of your attention from building the core business.
No, because I'm a I'm a you know, I'm a simpleton at heart, and so I'm just going to go after the lowest hanging fruit right now, which is mainline restaurants in A plus markets and A plus locations. And I try to do my best, and I get distracted by all the chat chatcha.
Fair enough, you know, I don't buy that simpleton at heart for a second.
But that's good stuff.
So how long does it take for one of your new units to nail the operations and get to that steady run rate restaurant margin.
Well, look, we're blessed in some ways, which is and I think this is a surprise to some people. Our restaurants cash flow positive almost immediately. So from go, our restaurants are making money. And there's there's a you know, there's a little curve. I think we don't put restaurants into the comp base until after two years because we think that that's a really stable period of time. But you know, they come out of the gate performing well,
they come out of the gate making money. I think our operations I cut the team a lot of slack in terms of investments in labor and food costs for the first six months because what I don't want to do is we don't want to do anything to hurt the guests experience. So we're very consciously over investing in labor for six months because I don't want guests to
have a bad experience. We overinvest in food costs because if something's not perfect, toss it, do it again, make it perfect for the guests, because what you really want is, you know, you're welcoming new people, you're teaching them what Portillo's is all about, and so you want them to have as great of an experience as humanly possible. And I'm okay investing in that in the first six months.
Only have one chance to make a first impression, that's for sure.
Amen.
Yeah, I love that all your twenty twenty three openings are going to have an experienced GM running it. So outside of what is your biggest hurdle to rapid expansion, you know, is it finding quality sites or the cost of building or what is it?
No, it's so Look, We're I'm not trying to build fifty restaurants a year, right, We're we're building you know, we built seven, we're building nine. There are plenty of A plus locations for us, so that's not an issue. We're you know, it's funny in this day and age, we're incredibly fortunate that we don't have to rely on banks for financing, right I don't. We don't have to worry about what the interest rates are, We don't have to worry about is this bank going under?
What have you?
We self finance because we generate enough cash flow that we can build all of our restaurants with our own cash flow. So that's actually a sneaky good thing for a growth company right now, to be able to self finance the the limitation. And you know, my executive team and I have held hands. My HR has done unbelievable work over the last several years to develop a pipeline
of talent for us to populate these new restaurants. And it's not It sounds really simple and easy to say, yeah, I've got a pipeline of people, but here's what it takes.
It means you've got to know for every management person and even every senior hourly person in your company, and for us that's somewhere the neighborhood of eight nine hundred people, what their development needs are when you think they can be a GM, What are their personal desires, what is their geographical mobility, where do they want to go, And then you have to put in development programs against all that.
So if I know, hey, Mike's a rock star, but Mike needs to work on this, this and this, and we think Mike can be ready to be a general manager for us in two years. And Mike, by the way, really desperately wants to relocate to Arizona. So what that means is, I want Mike to work in an experience setting for a year and we're going to target him for a restaurant opening in twenty six in Arizona. We're
penciling his name in. So that's what it's taken to get to the point where I can look you through the lens in the eye and tell you that every restaurant in twenty three, I can identify the general manager as well as the assistant general manager, and they're all
experienced people. All the restaurants in twenty four, we're doing the same thing, every restaurant manager, every AGM, and even in that situation, we're trying to get fifty plus percent of the rest of the managers to be experienced Portillo's people. That just de risks these investments, right, and so that's the single biggest hurdle for us, and that's the single biggest gating factor on how fast we can grow.
Yeah, I think that's fantastic.
And there's been a lot of research done that shows, you know, probably the biggest correlation with strong same star sales growth is having a great GM. So yeah, I think I think that's smart, and I think it was smart to do the work, have your HR team do the work on your employees and anything you'd like to share about turnover because I remember, you know, at the IPO, your turnover numbers were pretty significantly better than a lot of your peers.
Yeah. I think we all collectively take great pride in that, and it's I would tell you that I'm a I'm a culture evangelist, you know. I think that whatever whatever you do for a living, whether whatever company you work with, whatever sports team you follow, whether it's my beloved Michigan Wolverines, culture wins over everything else. Right, Great talent is good, great ops are great, but culture is triumphant. And so
we have worked very very hard on culture. We believe in you know, our values are family, greatness, energy, and fun. We evangelize those. We espouse those we recruit against those. When we recruit people to come to the company, the first thing we do is this person a cultural fit. Are they going to treat each other and our teams like family? Do they aspired to greatness? Right? Like, there's a phrase that I love, which is, you know, good enough sucks, and so I want people who want to
be great, high energy, fun. And so we've done a really I think a really good job of being cultural culture first people. And what that means from our frontline team members is we went candidly from paying below average wages across the country to now we're at sixtieth seventieth percentile, and I'd like to get the seventy fifth percentile. We have a benefits package that I'm exceptionally proud of, and
it's crazy. It's like, you know, guys like my age, we want healthcare and four one ks the benefits that we're providing our team members that they love is you know, they get access to pet insurance and gym pass memberships and you know, mental health coaches and so it's just a different vibe. But we're doing, I think a really good job of being responsive to the needs of our teams, and then you know, I'm an enlightened capitalist, right, I
take great care of your frontline team members. Don't think of them as a cost, think of them as your brand ambassador, because that's really what they are. And it creates a beautiful virtual cycle. So we've done that, and it means that we have twenty to thirty percentage points better turnover at the hourly level, and I think we have sort of industry leading turnover at the management level. And that's that's just a gift that keeps on giving.
There's hard costs, but there's a lot of soft costs that's associated with that.
Yeah, that's awesome.
I think you know, I'd have to imagine that contributes significantly to your multi year highs and speed of service, accuracy, guest satisfaction. Are there are there any other initiatives that have kind of fed into that.
You're going to think this is totally hokey, But I honestly believe that happy people make happy food and it translates to a happy guest. I mean, it's just it's just that simple, right. Yes, it's feed of service as that, but it's like when a happy person makes your food and serves it to you, it just tastes better, it creates a it's it's a it's a virtuous cycle. It's very very hard to like point to every single economic advantage to it. And that's why there's so much soft
benefit that is. That's you know, to to an accountant would be like, I don't see where this is, But to you know, people who experience it, who have a gut sense for what's going on, it's real.
Yeah. I couldn't agree more.
My last episode with Fred la Frunk, we we dove into this entire topic. It was about empowering your employees to help turn around struggling brands and yeah, grow emerging ones. So I think, I think, I think it's great.
How much pricing did you run last year and how much do you expect to run this year?
Yeah, so we were just around a little bit over eight percent last year. So we trailed inflation by a hair and trailed the rest of our peers by a little bit more than a hair. I think a lot of our peers took pricing above inflation, and honestly, I
love that position for us. I want I think that I genuinely believe that the consumer, whether or not the country goes into recession, the consumer is in a recessionary mindset, and I think it's very important to have a sharp value proposition in that situation, and so that that's where we are. I want to have fantastic value. I also do not believe in discounting, So we're not a brand that's ever on sale, right because I think that causes
long term harm to your brand. You're telling people I'm not worth this price, you should only buy me when I'm on sale. So we don't discount.
We don't.
We don't do value meals, value menu, we don't do any of that stuff. And so it's it's we can't cut prices like everybody, you know, the big QSRs do, so we're slow and steady when it comes to pricing. I expect that we will. You know, we've taken two pricing actions our year over year increases and prices have actually slowed down, and I'm not sure what's going to happen the rest of the year, So I don't I don't know if we need the price anymore this year.
But I but again I didn't. I didn't expect the inflation last year that we experience fifteen percent in commodities, eight nine percent in labor. So based on what I see now, I feel really good. But if if the world continue, if the world goes bonkers again, then you know, we can always price. We have plenty of pricing power, but I'd rather not use it. I'd rather I'd rather drive our business via great execution and transactions and traffic count.
And I think it's a it's a little bit of a dangerous path to use price, seeing as your vehicle for cop sales growth.
Yeah, well, I I have a friend in the business. He says, you know when your your saints or sales are going up, but your traffic's declining.
He likes to call that the jaws of death.
Right, So I think the smart long term view is trying to grow your traffic. So I think that's a smart move on your part. What percentage of the commodity portfolio does beef makeup? How much inflation do you expect this year? And how much of your supply is locked in if any?
All right, those are all excellent questions that I wish my CFO was here to give you one hundred percent answers. I can tell you it's like, look, beef is a big deal to us because our beef touches, our beef sandwiches, which was a beef flat, it's a roast. Beef touches, are burgers, which is a mix of different types of beef, and beef is in our hot dogs, which are one hundred percent beef. And so the beef complex is very important to us. It's close, it's probably it's close to
fifty percent of our total buy. We are very thoughtful about locking in prices when it's at or better than budget, and so we have about thirty percent of our total beef complex locked in for this year going to go forward basis, and we you know, we need to be open a little bit to the market because you know, if you if you read everything and you see what people say, there's some thought that beef prices are actually going to come down in the back half of the year.
So I don't want to be totally locked and miss out on an opportunity to get that. But you know, we we we think that we're in a good spot. We're budgeting mid single digits on commodity inflation, which keep in mind last year was like fifteen slightly above fifteen percent for US, so mid single digits is a big slowdown, but it's the slowdown is really back half of the year, right. You don't go from fifteen percent in the fourth quarter to six percent in the first quarter, So it's a
it's a taper. So we expect it to continue to slow down, and we're allowing ourselves to benefit if the market improves better than what we expect.
Okay, good.
When when can we expect the company to make significant progress in leveraging GNA.
It's a great question. Like I think we try to be very disciplined on GNA, so we're definitely you know, we want to grow GNA slower than we grow revenues, and we have some I think we've publicly said, think about GNA in the seventy two to seventy five million range this year. I think it's reasonable for us to leverage GNA every year, and I'd like to get down to the point where GNA is a you know, it's
a fraction of revenue growth, right. You know, I lived in CpG for a while and there's some really good hygiene on. Hey, your GNA should not should not grow more than you know, sixty seventy percent of what your revenue is and so I think we can get there. At the same time, we're still a you know, we're
a growth company. I don't want to get penny wise and pound foolish, right, I don't want to not invest in the business and in growth because we're trying to watch a line in the P and L that is more relevant to a mature company.
That makes a lot of sense. Can you speak to.
The remodels and the kitchen twenty three upgrades? I guess what you're looking to do, especially in the back of the house, and what the expected impact is going to be on those initiatives.
The great question so for if for people who haven't experienced of Portillos, the original Portillos had sort of this wonky design element which you go to a front counter in order and there's this wing along your right side where there's people making salads. It's called the salad bowl area. And then directly in front of you and to the left is a a is a line where they're producing all of the sandwiches and the hot food and so. And then over here on the far left is what
we call the bar area where they serve beer. So if you go and order at the front counter and you order a salad and a sandwich and a beer. You literally have to go to three different places to pick up your food. And it's it's just it's there's a bunch of sort of tribal mythology on why that was a good idea, and it's it's not. It's a bad idea. So what we're doing is we're consolidating it to you order in one place. You can get your beverage right here, you can get your beer right here.
You walk down the line and you pick up all your food, salad, et cetera. The salad bowl areas are becoming slow, they don't look good, their eye sores. So we're repurposing that, making it beautiful into a more of a retail merchant kind of visual.
Right.
It's like think of those, you know, the beautiful counters at Starbucks with all that stuff. You can grab and go food, et cetera, and even chotschki. Right, So that's what we're doing. You can do grabb and go beverages, grab and go desserts, you can get packs of beef and gravy to take home and make it home, and then t shirts, hats, all this other stuff. By moving the salad bowl over to the main line, I've made the guests life easier. I've made the box economics better,
and it actually it reduces conveyance. This is like my operator who's brilliant, has taught me that conveyance is like a four letter word in the restaurant industry. It means carrying stuff around for no reason. And so you just remove sixty feet of walking people walking back and forth and moving stuff. And so we think that there is a significant labor savings because our folks are just going
to be more productive, etc. It's all great. If we do it for no other reason than just to clean up the eyesore and make the consumers experience better, it's a home run. But if there's incremental sales, because we are seeing where we've tested this an uptick in beverage sales and dessert sales, and if we actually get the labor savings that we're seeing, then this is a home run. And so we've tested this and we're rolling it out
across Chicago Haan. Right now, it's largely a back half, but we we're going to get seventeen restaurants done this year. And of course that design element is going into our new kitchens that we're building going forward.
All right, exciting stuff.
So do you think there's an overhang from your pe Backer Berkshire Partners ownership? And what are their plans for the for their shares moving forward?
I mean, look, this is that's a very savvy question. So a ton of credit to you for understanding that nuance. Right for those who aren't as savvy, Look, we were. This company was bought by private equity in twenty fourteen, right, and so private equity has limited partners who expect returns on their investment, et cetera. And the private equity firm has had a fantastic outcome. They've made over five times
their money. And so and it's almost ten years, right, this is nine years that those LPs have owned this investment. And it's you know, if you make an investment somewhere after nine years, it's like, hey, where's my money? You made me five times? Can I have my money please? And that's a little bit of what's going on. And it's totally normal. It's reasonable. Our private equity partners are
wonderful people. I enjoy them very much, but it is appropriate for them to be selling off, and that does create an overhang, because what it does is, you know, every smart short seller out there knows that there's a technical short for us, because when you know, my PE firm, my PE partners still own thirty percent of the company, and when they sell stock, it's going to have, you know, supply and demand issues and it's going to have a
negative impact on the stock. So you've got a bunch of people sitting on a technical short, not a fundamental short, but this technical short. And so that will resolve itself relatively quickly. Right when we went public, I think we had what twenty million shares twenty five million shares in a public flow. We've doubled the float. We're still trading
above our IPO price, which is fantastic. So the market has absorbed twice as much Portillo shares more than double now and so so I think there is an overhang. I think that that overhang will resolve itself and then all of those lovely shorts will become longs because they have to get out of their positions.
Yeah for sure. All right, So what keeps you up at night?
You know? Uh, I am blessed with an amazing team. I've it's I love the team I work with. I love I have a fantastic supportive board. Uh. You know, I'd like to slay I sleep well, but I'm a middle aged man, so you know I don't sleep well. But nothing keeps me up at night. I mean, I have a great team. They're doing a great job. This. This industry is a game of whack a mole. There's always something going wrong. But if that keeps you up at night, then you're probably in the wrong business, right you.
I actually I love this. I love my job. I love this industry. I think it's it's such a dynamic, fun place. Right the the time between action and reaction is so quick you can you can try stuff, okay that didn't work, go on to the next thing, and uh, it's a ton of fun. It's a real fun industry.
That's great.
Uh.
And I love that answer, and I love covering it. I'm blessed just just to be associated with it.
So that was great. Man.
Is there anything that we didn't cover that maybe you think investors should know?
Uh, here's a fun fact for you. We keep testing this and my investor, even my investors and my analysts are always incredulous about this, But every time we test a net promoter score, are you familiar with those, Mike, Yes, right, we typically have the highest net promoter score when we test it. I mean that's comparing to some titans in this industry, Like you know, to say that not only are we in the same league as Chipotle and Chick fil A and McDonald's and these, but that we're actually
we have better net promoter scores is outstanding. And this isn't, by the way, just in Chicago. This is across the country. So any market where people experience us, our net promoter scores are exceedingly high. That that is man, that is that is that is gold. I don't know, I don't know too many companies that that have that kind of uh, that kind of brand strength. And so I'm a brand guy. I love great brands. I've never experienced a brand that punches above its weight like this brand.
Very exciting, man, and I look forward to continuing to follow your progress and Patillo's progress. It's it's a great exciting emerging grill story. So thanks again for doing this. I'm want to thank the listeners for listening in and have a good day.
Everybody.