Portillo's CEO on hiring challenges: 'It’s pretty tough to get great people'

Portillo's CEO & President Michael Osanloo joins Yahoo Finance Live to discuss the first few months since the restaurant chain's IPO and the state of fast casual dining.

Video Transcript

BRIAN SOZZI: Restaurant chain Portillo's is looking to serve up a sizzling 2022 a few months removed from its well-received IPO. On its menu for this year, its first foray into Texas and the opening of a new prototype restaurant that has three drive-thru lanes. Let's welcome back to the show Portillo's president and CEO, Michael Osanloo. Michael, nice to see you again. It feels like the IPO was yesterday, but it was not. Look, it's jobs day in America here. And the restaurant industry has not hidden the fact that it's had some problems keeping its restaurant staffed just to meet the influx of demand. What are you seeing out in your stores?

MICHAEL OSANLOO: Well, I think you nailed it, Brian. It's tough right now. We are probably 10% staffed below where we'd like to be. Our teams are working very, very hard to satisfy guests' demand. But it's tough right now. It's tough to hire. We're paying very competitive wages. And it's still-- it's pretty tough to get great people.

JULIE HYMAN: And Michael, it's Julie here. I'm curious, first of all, what you're doing to try to remedy that. Are you trying creative things? Is it just a matter of paying more? And what do you think is the biggest obstacle to getting those people in the door?

MICHAEL OSANLOO: Right, I think there's an old saying that people join great companies and they leave bad bosses. And so our number one thing is we're trying to create an amazing culture, right? We want people who join Portillo's to join for the reasons right behind me, you know, family, greatness, energy, fun. And that's-- and those are the values that we as an organization push. It's the values that we engage with our frontline team members. And so the people who are value oriented, who want a long-term opportunity, I think we do really well with them.

And that's the key for us. I want great culture. I want people who understand that Portillo's is-- can be a place where you can build a career for as long as you want. Our general managers do awfully well. They have great lives. They make up-- they make really good money for this industry. And that's the long-term play for us. We want to hire people who are value oriented, who love coming to work every single day, and who can build a career with us. I think, Julie, that's the differentiation.

BRIAN SOZZI: Michael, you're a veteran of the restaurant industry. Is this the tightest labor market you've ever seen in your career?

MICHAEL OSANLOO: I'll tell you, I've been in business of one sort or another for 35 years. This is the tightest labor market I've seen in any industry at any time. It's up. And I don't think anybody has the answers right now. You know, there was all these concerns about people opting out of the workforce, people being able to stay home because of government programs. I don't know what's going on. And I'm not sure anybody has a cogent explanation for it.

BRIAN SOZZI: You know, as I mentioned at the top, just switching gears a bit from jobs, you're getting ready to debut a new prototype restaurant that doesn't have dine-in experience. Maybe that does help on the jobs front, but three drive-thru lanes. You know, how does that position you for the future of your business?

MICHAEL OSANLOO: Yeah, Brian, we just turned over to our operators a location in Joliet, Illinois that's going to be our first prototype of this ilk. It's a three drive-thru lane. There's no dine-in. It's purely off-premise dining. I think it's going to be an interesting-- it's going to be very interesting, right? It opens a potential ton of new doors for us.

There's places where we physically can't fit in certain lots. You know, we need two acres when it's a sit-down restaurant. So with the drive-thru-only concept, I think we're going where the puck is going in terms of consumer demand, more off-premise. And I think it opens a lot of opportunities for Portillo's to expand in areas and locations that we might otherwise not have had good real estate opportunities.

JULIE HYMAN: Michael, I've been watching beef prices. And boy, have they been going up. And I'm just wondering, I mean, you guys have a lot of beef on the menu. And so what do you do about that? Are you raising prices this year? Or are there other ways that you're sort of managing through that?

MICHAEL OSANLOO: It's a great question. And I think it's something that every consumer business is dealing with, which is the commodity volatility right now. We look at it literally every single day. And what our team does is we're buying beef every single day when the price comes into a certain window. And now I'm knocking on wood here-- it might be laminate, but we think that the inflationary dynamics are going to taper off in the second half of the year. So we're-- and we're seeing some of that, and we're cautiously optimistic about that.

But the key for us is we're still going to provide amazing value for our guests. So we're trying to absorb as much of that commodity inflation as we can. At a certain point, you just have to pass some of it along as pricing. But, you know, our philosophy is, Portillo's is an amazing value. And we're going to keep that. We're going to be priced laggards, as opposed to being aggressive in terms of pricing. I want our guests-- we all want our guests to have an amazing experience and great value when they come to Portillo's.

BRIAN SOZZI: And Michael, Texas is hot right now in terms of the economy, hiring. Dallas is hot, Austin is hot. Where are you putting your first restaurant?

MICHAEL OSANLOO: Yeah, unfortunately, I can't tell you. But we are building a restaurant in Texas. We're opening it in the fourth quarter, is what our plans are. I'm going to tell you, it's going to be-- I think it's going to be just a showstopper restaurant. We've really taken our time, really thought it through. Texas is an amazing market.

But I don't want anybody to think that we're underestimating how Texas can be difficult to succeed in, right? The people in Texas have lots of opportunities. And so when you go into Texas, you want absolutely an A-plus location. And you need to execute flawlessly. And so we're making all the people investments first, and then the real estate investment to make sure that our first restaurant in Texas will be a home run.

BRIAN SOZZI: All you got to do, Michael, is--

MICHAEL OSANLOO: And look for that in the fourth quarter. Sorry. And look for that in the fourth quarter.

BRIAN SOZZI: All you gotta do is put some pulled pork. Just put some pulled pork on the menu and some barbecue ribs. You'll be good.

MICHAEL OSANLOO: Yeah, you know, I'm a big fan of both of those. We have ribs. But, you know, I think our beef sandwiches and our hot dogs and our burgers will translate awfully well to the Texas ballot.

BRIAN SOZZI: Fair enough. All right, Portillo's president and CEO Michael Osanloo, good to see you again. Have a great weekend. We'll talk to you soon.