Portillo's Restaurant Group, Inc. History

Address:

2000 Spring Road, Suite 500
Oak Brook, Illinois 60523-3930
U.S.A.

Telephone: (630) 954-3373
Toll Free: (866) 986-2333
Fax: (630) 954-5851

Private Company
Founded: 1963
Employees: 3,500
Sales: $175 million (2005 est.)
NAIC: 722110 Full-Service Restaurants; 722210 Limited-Service Eating Places

Company Perspectives:

The Portillo Restaurant Group is the largest privately-owned restaurant company in the Midwest with more than 3,000 employees operating 41 units with 5 separate concepts, plus a catering division. This was all accomplished without franchising or investors. Over the years, Portillo's has remained a family owned business. Dick Portillo attributes much of his success to his hard-working employees and to you, the satisfied customer. He thanks you for your support.

Key Dates:

1963:: The Dog House opens in Villa Park, Illinois.
1967:: The Dog House is expanded and renamed Portillo's Hot Dogs.
1987:: The first Barney's restaurant, serving ribs and sandwiches, is opened.
1993:: The first Barnelli's Pasta Bowl is opened in Schaumburg.
1994:: Dick Portillo is crowned Inc. magazine's Entrepreneur of the Year.
1995:: The Key Wester Fish & Pasta House opens in Naples, Florida.
1996:: A second Key Wester opens in Naperville, Illinois.
2000:: Luigi's House, an authentic Italian eatery, opens in Illinois.
2004:: Portillo's first major advertising campaign is launched.
2005:: A Portillo's Hot Dogs opens in Buena Park, California.

Company History:

Mentioning "Portillo's" in the Midwest garners instant recognition and makes mouths water. Portillo's Restaurant Group, Inc. (also known as The Portillo Restaurant Group) consists of its namesake hot dog and sandwich chain, Barnelli's Pasta House, Barney's BBQ, Key Wester Fish & Pasta House, and Luigi's House. Many of Portillo's outlets have a Barnelli's or Barney's sharing space, providing customers with a wide array of delicious, made-to-order fare. Key Wester and Luigi's House are upscale full-service restaurants serving pasta and seafood dishes, the former in a Hemingwayesque atmosphere and the latter in the tradition of northern Italy. After conquering the Midwest, Dick Portillo moved west, opening a Portillo's in Buena Park, California, in 2005.

In the Beginning: 1963-71

Richard "Dick" Portillo was born and raised in the Midwest, specifically Chicago, Illinois. The Portillo family was poor and lived in the city's infamous projects until Dick's father earned enough for the family to move to the southern suburbs. Dick Portillo graduated from high school in 1957 and enlisted with the Marines. Upon his return, he took his savings, little more than $1,000, pooled it with an investment from his older brother Frank, and took on a great American pastime, the hot dog. Using an old trailer with no restroom or running water (a major health code violation by today's standards), Portillo opened "The Dog House" on North Avenue in Villa Park, Illinois.

In its earliest days the Dog House gained little attention and had only sporadic sales for its limited menu of hot dogs (wrapped with fries), tamales, and soda pop. Portillo slowly learned the ABCs of running a small fast-food establishment, including not buying his supplies from local grocers, since that made it nearly impossible to turn a profit. Portillo visited a competitor and reportedly sneaked into his back room to find out where the rival bought his hot dogs, buns, and condiments. Armed with this information, Portillo began getting what he needed wholesale and set out to make the Dog House the best hot dog vendor in the area. Five months into the business, Dick Portillo repaid his brother's investment and became the hot dog stand's sole owner (Frank bought into another fast-food enterprise, Brown's Chicken).

What the Dog House lacked in atmosphere it made up in the hard work of Dick Portillo and his wife Sharon. They toiled long hours at the stand and did dishes at night in their apartment. Although the next few years were touch-and-go, by 1967 the Dog House was a success. With his profits and help from a local businessman, Harold Reskin, who owned the shopping center where the Dog House was located, Portillo secured a larger trailer and changed the name of his enterprise to "Portillo's."

In 1969 Portillo's had attracted a steady clientele and Reskin helped Dick Portillo finance a freestanding outlet with a counter and kitchen, but no tables or chairs for customers. A second such location was built the following year, 1970. These two hot dog shops soon gained local acclaim and business was good. Portillo was able to finance his own expansion through profits and bank loans, requiring no partners, no investors, and no strings. This self-reliance would turn out to be one of Dick Portillo's most powerful business tools.

Dogs Taking Flight: 1972-89

The success of Portillo's allowed the Portillo family to live well. In the early 1970s, the family took the first of many trips to Key West, Florida, a favorite haunt of writer Ernest Hemingway. Dick Portillo was enchanted by the community's quaint shops and the ambience of its restaurants. Upon his return to Illinois, Portillo began envisioning a new restaurant reflecting the charm of Key West's best seafood eateries. Although it would take Portillo two decades to realize his dream, the inspiration for the Key Wester Fish & Pasta House was born.

While the Key Wester idea was at the back of Dick Portillo's mind, he did, however, try his hand at barbecue. In 1987 Portillo built and opened an eatery called Barney's, serving slow-cooked barbecue ribs, chicken, and sandwiches. He also continued to scout locations for more Portillo's hot dog shops, which he always bought outright, in or near small shopping centers. By this time the "Chicago-style" hot dog had gained fame not only with area residents, but visitors as well. Portillo's served its own version of the Chicago dog--often called the "garden on a bun"--with a variety of vegetables and condiments. Moreover, Portillo's hot dogs were steamed, never grilled, boiled, deep fried, or rolled around a countertop rotisserie.

According to Jeff Smith, of Frugal Gourmet fame, there were more than 4,000 hot dog stands in Chicago in the late 1980s. Smith had researched the nation's obsession with hot dogs for his book, The Frugal Gourmet Cooks American (William Morrow, 1987), and found that Chicagoans considered their city the "Hot Dog Capital" of the world (New Yorkers, of course, begged to differ). Dick Portillo's success certainly supported the notion, as did other Windy City vendors such as Byron's, Gold Coast Dogs, Murphy's Red Hots, and hundreds of pushcart owners. By 1988, however, Portillo's was the largest hot dog chain in the Chicago area, with 11 outlets, and the company's segue into barbecue, Barney's, was gathering momentum as well.

Portillo's had not established itself by taste alone, but by the unusual old-time décor of its dining rooms and the speed of order fulfillment. While the dining rooms were attractive and scrupulously clean, the drive-in windows were high-tech. Once lines had started curving around buildings and into streets, Portillo pioneered the use of placing order-takers outside with headsets. This allowed orders to go into the kitchen more quickly and kept the lines moving at a faster clip. As Portillo had commented to Restaurants & Institutions (May 29, 1989) magazine, "There are 256 ways to dress a hot dog, so operationally, it can be a nightmare."

Portillo's offered hot dogs any way a customer wanted them. For years the Naperville outlet led the thriving group's sales, bringing in an estimated $2 million-plus annually by the end of the decade. Dick Portillo, however, had no plans to slow down and savor his success. He intended to add a number of new Portillo's in the suburban Chicago area and was in negotiations to franchise a similar chain in Asia with a Japanese firm called, oddly enough, Chicago Foods. Although the venture was later discontinued, due to quality concerns and translating Portillo's appeal, it would be the restaurant group's only failure.

Variety Is the Spice of Life: 1990s

In the new decade, Portillo experimented by putting two of his restaurant concepts together in one unit. Pairing a Barney's barbecue with a Portillo's Hot Dogs proved ideal, providing customers with a wide range of menu items. Another concept was introduced in 1993 with Barnelli's Pasta Bowl, which offered a selection of pasta dishes, homemade breads, salads, and desserts. Soon a dual unit featuring Barnelli's and Portillo's opened, and this combination, too, was a hit with suburban fans. As his eateries thrived in Illinois, Portillo finally realized his dream of opening a full-service seafood restaurant in Florida. The Key Wester Fish & Pasta House opened in Naples, Florida (where Portillo vacationed), in 1995 and offered a nautical décor and seafood selection Papa Hemingway would have admired.

Back home in Illinois, the Portillo's empire had brought in more than $50 million by mid-decade. There were 25 locations sprinkled in and around the Chicago area, almost all Portillo's Hot Dogs, with the exception of the three locations that combined Portillo's and Barnelli's pasta specialties or the barbecue and chicken items of Barney's. The chain's 25th location, a two-story Portillo's/Barnelli's in downtown Chicago, wowed locals with a wide variety of edibles and more than a million dollars' worth of Dick Portillo's sports-themed memorabilia. By this time in its evolution, Portillo's had become equally renowned for its food and the atmosphere of its restaurants. Each location was characterized by a particular Americana theme (sports, music, Prohibition), housing a wide array of early 20th-century objets d'art.

Foodwise, though, Portillo's fame came from its hot dogs (which represented 35 percent of the chain's sales) and an ever-expanding menu of chicken and Italian beef sandwiches, hamburgers, soups, and the chain's famously delicious french fries. In the summer of 1996 Portillo brought his Key Wester concept to Illinois, opening an upscale full-service restaurant a mere block from one of the company's top-performing Portillo's locations in Naperville. Key Wester proved an immediate smash, always filled to capacity, and helped ring up overall group sales of more than $75 million for 1996.

By the late 1990s Portillo's had captured the hearts of Illinoisans and countless visitors to the area. As sales continued to rise, industry analysts wondered if Portillo would eventually franchise or go public. While Portillo had steadfastly rejected the idea of franchising due to quality issues, it seemed taking the firm public was within the realm of possibility.

Multiple Concepts, Same Quality: The 2000s

The dawn of the 21st century ushered in a new era for Portillo's, with sales topping the $100 million mark by 2001. The Illinois fiefdom included two dozen Portillo's Hot Dogs locations, nine Barnelli's Pasta Bowls (all sharing space with a Portillo's Hot Dogs unit), two Luigi's House full-service restaurants, the Key Wester Fish & Pasta House, and burgeoning catering services as well.

According to Restaurant Business magazine (October 15, 2003), more than 20 billion hot dogs were sold in the United States in 2002, which certainly helped Portillo's leap to sales of a reported $150 million. Dick Portillo continued to expand his chain, moving from the well-represented western and northern suburbs into the neighborhoods south of Chicago. This led to a monumental discovery: not only had many residents of the southern suburbs never been to a Portillo's, but most had never even heard of the brand. To remedy the situation, Portillo did something he had never done in the restaurant group's four-decade history--he initiated a major advertising campaign.

The campaign, produced by the Chicago-based Reilly Group, hit the airwaves in 2004. A series of humorous ads for both radio and television featured Portillo himself describing the history of the local chain and its high-quality food. The ploy apparently worked, as the company's sales continued to climb and Portillo scouted new locations not only in the Chicago area, but outside Illinois as well. In 2004 Portillo announced his intention to take his show on the road, to open a Portillo's in Southern California. The new Portillo's was slated to open in Buena Park, south of Los Angeles, in late 2005. Amazingly, Los Angeles was a major hot dog market despite most people's perception of it as a haven for vegetarians, vegans, and the Hollywood "raw" craze. If the Buena Park restaurant fared well, Portillo planned on opening several more California locations, and perhaps expanding into such southern states as Georgia and Florida. Whereas Portillo's, Barney's, and Barnelli's all seemed to thrive, Portillo did concede to Wade Daniels of Nation's Restaurant News (January 31, 2005) that although his Key Wester concept was still doing exceptionally well, he saw no "future in the fish business" due to escalating prices in fresh seafood.

Dick Portillo, by all accounts, was living the American Dream. The former Marine, who never attended college, had built an empire from one 6- by 12-foot trailer selling hot dogs. The entrepreneur had even prompted a new phrase in restaurant lexicon: "fast-casual dining." Whereas Portillo's may have begun its existence as a tiny fast-food joint, it evolved into a food industry phenomenon. As Dick Portillo had commented to Carolyn Walkup of Nation's Restaurant News (January 28, 2002), "I love this business. When you love something, it's not just money; it's a passion." Portillo's passion had become a staple in the diets of many Midwesterners and was on its way to capturing the appetites of Californians and, potentially, many other Americans as well.

Principal Operating Units: Portillo's Hot Dogs; Barnelli's Pasta; Barney's BBQ; Key Wester Fish & Pasta House; Luigi's House.

Principal Competitors: Al's Italian Beef; Byron's Hot Dogs; Gold Coast Dogs; Murphy's Red Hots; JR's Hot Dogs; Pot Belly Sandwich Works.

Portillo's Restaurant Group, Inc. History

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Key Dates:

Company History:

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