Onion rings and fries will be tight this year, according to Portillo’s Inc. Chief Executive Officer Michael Osanloo — another challenge for restaurant operators that are grappling with high food and labor costs.
(Bloomberg) — Onion rings and fries will be tight this year, according to Portillo’s Inc. Chief Executive Officer Michael Osanloo — another challenge for restaurant operators that are grappling with high food and labor costs.
The limited supply is largely due to a bad crop year for the onions that are used for the fried appetizers. The cost and availability of French fries are also a concern, Osanloo said in an interview in Chicago, adding that prices for the two items have gone up dramatically.
“It’s French fries and onion rings that have been the biggest nightmare in terms of both supply and cost increases, and that’s industry-wide,” he said.
While inflation-rate increases are slowing compared with 2022, food expenses are still a top area of concern for restaurants this year. The industry has been steadily raising prices in spite of tighter family budgets, economic uncertainty and a decline in consumer sentiment.
Data from the National Onion Association shows that 2022-2023 production levels for the US are almost 5% lower than the prior year. Restaurant distributor US Foods Holding Corp. has reported that onion harvests are lower than last year, while sellers are expecting tight supply this summer, according to its Jan. 13 Farmer’s Report.
“I’m nervous about onion rings,” Osanloo said. “There’s a certain type of onion that makes onion rings really good and apparently 2022 was a really bad year for these crops.” He added that frying oil has also gotten more expensive.
Onion rings and fries are important menu items for the chain that was founded in 1963 as a hot-dog stand in Villa Park, Illinois. Since then, Portillo’s has grown to about 71 locations in the US, with a focus on Italian beef sandwiches and burgers.
Osanloo predicted that commodity costs would be up in the mid-to-high-single digits in 2023 and further price increases are coming for diners, after the Oak Brook, Illinois-based company raised prices by about 8% last year. Portillo’s favors using multiple smaller increases instead of brusque jumps, Osanloo said. Chief Financial Officer Michelle Hook said earlier this month the company would raise prices by about 2% in mid-January.
Sunbelt Expansion
Meanwhile, Portillo’s is looking to the US Sunbelt region to add more locations, while it also continues to grow in the Chicago area and in Michigan. The chain is looking to cluster between 6 to 8 stores in cities in Arizona, Texas and Florida to achieve scale, Osanloo said. That helps to increase revenue and improve profitability, in part because the chain’s long-haul distributors can send an entire truck of supplies just for Portillo’s.
Portillo’s last year introduced a plant-based hot dog and will offer a new Rodeo Burger in May following a test in Florida. It’s a bacon cheeseburger topped with onion rings and barbecue sauce, and will be a permanent item, Osanloo said. The burger will include an upgraded cut of bacon from what the chain previously offered.
“Bacon isn’t bacon. There’s great bacon, and then there’s OK bacon,” he said. “We’re not proud of our bacon right now. We’re going to the highest-end commercially-available bacon — a dramatic improvement.”
On Monday, Portillo’s began accepting only non-cash payments in its drive-thru lanes across the US in response to robberies, Osanloo said. Some customers have complained about the new policy, but Osanloo said the priority is keeping employees safe.
“I’m sick and tired of hearing that we got robbed at so-and-so drive thru — somebody held up one of our kids with a gun, or somebody held up our kids with a knife,” he said. “I don’t want to put our team members in jeopardy.”
–With assistance from Kim Chipman and Michael Hirtzer.
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