Should Portillos Change? (Cleveland: 2013, bankrupt, closing)

[Army_Guy]

Now I don't have knowledge to their books or numbers but I assume with the way they've expanded not just in IL but also CA and AZ, they must be making money and they're successful.

If someone were to come along, buy it and change it, that person would be a fool. Why would you mess with a winning formula? I mean, other than the govt.

[chet everett]

The thing of it is there are probably more "troubled" quick service restaurants that either currently or formerly "publicly traded" than those that are privately held -- the numbers on places like Arbys, Wendys, BurgerKing and similar household names are dismal while the privately held places like Chik-Fil-A, In&Out Burger, Del Taco, Whataburger and White Castle are doing quite well...

If Mr. Portillo can entice the right kind of "venture capital" firms to help his restaurants grow and compete against restaurants that very likely will try to horn in on this market it should be a win. Thinking broadly, one has to wonder if the right kind of "resturant investment group" could help expand the production of the specialty sausages that Hot Doug's has popularized and marry this to the Portillo's core concept -- that seems like has the potential to blend the familiar and adventurous aspects of "meat in a bun" into something that might be a real category dominating idea...

[MPowering1]

Among the top global chains you find Burger King ranked third, Wendy's ranked 8th and Arby's ranked 17. The numbers are hardly dismal. But I'm not sure I would compare global chains with chains that are national or just regional chains - or chains where all the units are corporate-owned versus franchised.

Portillo's has done an amazing business as a Fast Casual regional chain. As long as they're not bought by a major player they should be fine. A good comparison might be Chipotle, a publicly traded operation that started as a regional Fast Casual chain, and expanded when McDonald's became an investor. Since McDonald's fully divested, a move that was better for Chipotle and stupid on the part of McD's, Chipotle has improved a number of things internally and sales keep going up.

I think Marcus Lemonis would be a great investor. He's local and while he may tweak some things, he's not going to make major changes to an already successful business.

[MPowering1]

Originally Posted by Army_Guy

Now I don't have knowledge to their books or numbers but I assume with the way they've expanded not just in IL but also CA and AZ, they must be making money and they're successful.

Army_Guy, Portillo's sales are more than $8 million per unit, with combined sales exceeding $300 million last year. It would be insane to tamper with that beyond tweaking some things.

[BleedCubbieBlue]

The problem is that if an investment group gets Portillo's then they'll have to inevitably change the formula that works. Mr Portillo is currently very successful, and a big part of that is that he sticks to what works. An investment group will have to report increases every quarter/year and therefore will have to look at cutting costs or increasing sales every year. Mr Portillo currently doesnt have that need. He's ok wih making a steady 10M a year lets say. Any investment group will want to make 10M year 1, 12M year 2, 15M year 3, etc. This will lead to the eventual decline in quality and service. Sad that a great place such as portillos will be ruined by capitalism.

[eureka1]

Originally Posted by Irishtom29

You think their lousy Ora-Ida freezer section type fries are perfection?

Never had their fries. No room for both fries and sandwich.

[MPowering1]

Originally Posted by BleedCubbieBlue

The problem is that if an investment group gets Portillo's then they'll have to inevitably change the formula that works. Mr Portillo is currently very successful, and a big part of that is that he sticks to what works. An investment group will have to report increases every quarter/year and therefore will have to look at cutting costs or increasing sales every year. Mr Portillo currently doesnt have that need. He's ok wih making a steady 10M a year lets say. Any investment group will want to make 10M year 1, 12M year 2, 15M year 3, etc. This will lead to the eventual decline in quality and service. Sad that a great place such as portillos will be ruined by capitalism.

I understand your pessimism, because I, too, am a Cubs fan.

Did you see in my post above yours what their annual sales are? For a regional chain such as this, even though they're a Fast Casual versus Quick Service Restaurant, the sales figures are staggering. The only way they can improve in sales is to expand. Investors will increase sales by opening more units, not by pushing each unit to do more.

On another note - who cares about the fries? Have any of us ever heard anyone say they were going to Portillo's because they had a taste for fries?

[emathias]

Originally Posted by BleedCubbieBlue

The problem is that if an investment group gets Portillo's then they'll have to inevitably change the formula that works. Mr Portillo is currently very successful, and a big part of that is that he sticks to what works. An investment group will have to report increases every quarter/year and therefore will have to look at cutting costs or increasing sales every year. Mr Portillo currently doesnt have that need. He's ok wih making a steady 10M a year lets say. Any investment group will want to make 10M year 1, 12M year 2, 15M year 3, etc. This will lead to the eventual decline in quality and service. Sad that a great place such as portillos will be ruined by capitalism.

That's not always true. There are investment funds that are fine with slow and steady growth, especially if they get it at a price that's not an excessive multiple of earnings. The rate of return they want has a lot to do with the level of risk, and while restaurants are relatively risky, Portillo's has a great track record and, with its industry, is probably relatively low risk. They'll bank the dividend payouts and maybe grow it some and then they can sell it at a profit at a time of their choosing when demand for such investments is higher. The current owner wants to sell to retire - an investment group doesn't have such pressure and can buy now and sell only when the overall market is supporting higher multiples and in the meantime bank the dividend payouts. Yes, some investment groups will squeeze companies to death, but there are plenty of others that are more responsible. If you get bought by Warren Buffet, for example, you're probably going to be doing better for it.

[chet everett]

Originally Posted by MPowering1

Among the top global chains you find Burger King ranked third, Wendy's ranked 8th and Arby's ranked 17. ...

Read much?

What's wrong with Burger King?

Report: Denny's, Wendy's and Domino's among restaurants in danger of bankruptcy - newsnet5.com Cleveland

Quiznos Follows Sbarro Into Bankruptcy Court - Bloomberg


Chains that are ubiquitous but unprofitable are not interesting to investors. Turning around a chain of dumpy stores that are out of favor with the food trends are waste or time and money. Celebritiy type "business men" don't really add value for investors either, though they do make for TV shows that the idiot hordes seem to flock to...

[Justabystander]

Originally Posted by Irishtom29

You think their lousy Ora-Ida freezer section type fries are perfection?

I think their fries are great. And their cheeseburgers. And their pastas. And their ribs. And their beef sandwich, and the strawberry shortcake, and the chocolate cake ........ When I visited Orange County, where did I go to eat? Portillos in Buena Park. I do like the fries, just me maybe, but I doubt it.