Rising wages and higher costs for ingredients like beef caused Portillo’s shares to plummet early Thursday as the Chicago-based Italian hot dog and beef chain first reported revenues. since it became public.
The company’s operating profit fell 8.8% in the quarter ended Sept. 26 compared to the same period last year, Portillo’s said in a press release. Meanwhile, revenue rose 15.3% as the company opened a handful of new restaurants and saw customers spend more with each visit.
President and CEO Michael Osanloo said he was pleased with the performance of the company, “which reflected continuous improvement in customer traffic as our business evolves to a new standard,” a- he declared.
Shares fell nearly 22% after the company reported earnings on Thursday before falling to 6.9% below the previous day’s close at noon. The company’s share price has more than doubled since its debut on the Nasdaq Global Select Market last month.
Portillo’s hiked prices around 3% at the start of the fourth quarter to help cover rising raw material and labor costs, fueled by an “extremely tight” labor market, the manager said. financial Michelle Hook on a call discussing company profits.
Average hourly wages were almost 20% higher in the third quarter than in the previous quarter, she said. The company’s more than 500 restaurant managers also received restricted stock unit grants when the company went public, Osanloo said.
Hiring issues mean Portillo’s is about 10% understaffed, but the company hasn’t had to limit hours or shut down dining halls, executives said.
Even with the hiring challenges, the company is moving forward with plans to increase its number of restaurants by about 10% per year. Two restaurants in Wisconsin and Indiana are scheduled to open later this year. Seven more are slated to open next year, in Florida, Arizona, Indiana, Michigan and a first restaurant in Texas, Osanloo said.
New restaurants are also being designed with more emphasis on take-out orders, as customers go from restaurant to drive-thru during the pandemic, Osanloo said. The new prototypes have smaller dining rooms, outdoor patios, dedicated entrances for delivery drivers, and convenient curbside pickup locations. A restaurant in Madison, Wisconsin, which will open in two weeks, will have a third drive-thru lane for people picking up pre-placed orders.
Consumers want restaurants to be flexible and provide them with options for eating, Osanloo said.
“If you are a mom with three kids screaming behind your back, you don’t want to stand in line, you ordered in advance in the app and you paid, you just want to collect your food,” he said. -he declares. noted. “We’ve made it super easy, and we’ll see how it works.”