Portillo's selling out?

Looks like the local chain will soon have new outsider corporate overlords:

http://www.reuters.com/article/2014/07/ ... 7I20140701

Dick Portillo, who's in his mid-70s, founded the chain in 1963. That's means he's been working at building and improving it, investing his time, his life, and his money for over fifty years. Don't you think he's entitled to sell it if he wants to? To whoever he wants to? Sure, it's a local institution. Yes, it's disappointing that he's selling to an outside firm. But it's his, not a publicly owned company. He started with a tiny shop and built it into a highly successful major restaurant group. Good for him. I think to accuse him of "selling out" belittles his lifetime of work and isn't fair or accurate.

Gypsy Boy wrote:Dick Portillo, who's in his mid-70s, founded the chain in 1963. That's means he's been working at building and improving it, investing his time, his life, and his money for over fifty years. Don't you think he's entitled to sell it if he wants to? To whoever he wants to? Sure, it's a local institution. Yes, it's disappointing that he's selling to an outside firm. But it's his, not a publicly owned company. He started with a tiny shop and built it into a highly successful major restaurant group. Good for him. I think to accuse him of "selling out" belittles his lifetime of work and isn't fair or accurate.

Jeez, lighten up a bit. I was referring to the business selling out. I'm not maligning the man's career or achievements. One would assume that there are children there to take over the business, so his aging doesn't really enter into it (nor does a billion dollars if he's in his mid-70's). It would have been nice to keep it local; can't help but be concerned that there are going to be changes (Uno's left a bad taste in everyone's mouths).

Apologies if I offended, but your topic sentence said "selling out" not "selling." I'm accustomed to the phrase "selling out" having a rather particular and negative meaning, distinct from just "selling." I think we're in undoubted agreement that it's sad that the kids (if they were an option) had no desire/interest/ability and that he couldn't find a local investor(s). It's frankly kind of hard to imagine that no one (or no group) locally could be interested. But that may well be the case. In any event, it's part of the increasing concentration in the industry and that's a trend--in general--to be sorry about.

Gypsy Boy wrote:It's frankly kind of hard to imagine that no one (or no group) locally could be interested.

Interested is one thing. Being willing to pay a billion dollars for a chain of hot dog stands is another.

stevez wrote:

Gypsy Boy wrote:It's frankly kind of hard to imagine that no one (or no group) locally could be interested.

Interested is one thing. Being willing to pay a billion dollars for a chain of hot dog stands is another.

$300MM in annual revenue (and $70MM in pretax profits) for hot dog stands ain't hay.

That averages out to more than $8MM in annual revenues per "stand." While those aren't Gibson's revenue dollars their price points are waaaaay below Gibson's, so those figures are pretty impressive.

It isn't just hot dog stands, either. Portillo's Restaurant Group (which also has locations in southern California and Arizona, oh, and Indiana--and even in Japan, once upon a time) also sells by mail order to the whole country and includes some Honey-Jam Cafe, Barnelli's, and Luigi's House. It also appears from its website that it owns a couple retail properties, plazas in Elgin and Bolingbrook.

I'd have to guess that they wanted top dollar for the primary purpose of obtaining capital for further expansion--what most successful businesses do. Takes money to build an empire these days. Silly to say "selling out" when this is a perfectly normal business move.

I totally applaud the Portillo family selling (out). They worked their behinds off and made excellent business decisions to get to where they are today. The American dream! Time for them to relax and enjoy their well-deserved fortune. Grandpa is having a Jack Daniels toast in heaven right now!
The recipes will stay the same everyone, so all can chillax. Who knows-delivery???

This is a sale, not a sell-out.

=R=

Just trying to even the responses my friend. I'm quite aware of what it is. Is the heat getting to people lately?

kitty wrote:Just trying to even the responses my friend. I'm quite aware of what it is. Is the heat getting to people lately?

Heat? What heat? It's a beautiful day in the neighborhood!

spinynorman99 wrote:

stevez wrote:

Gypsy Boy wrote:It's frankly kind of hard to imagine that no one (or no group) locally could be interested.

Interested is one thing. Being willing to pay a billion dollars for a chain of hot dog stands is another.

$300MM in annual revenue (and $70MM in pretax profits) for hot dog stands ain't hay.

That averages out to more than $8MM in annual revenues per "stand." While those aren't Gibson's revenue dollars their price points are waaaaay below Gibson's, so those figures are pretty impressive.

Well, it's a business decision that the buyer has to make. I wish Dick Portillo (a very nice man) the best. Not sure I'd be pulling the trigger on that particular deal, but I don't have an extra $Billion, either.

kitty wrote:Just trying to even the responses my friend. I'm quite aware of what it is. Is the heat getting to people lately?

Not that he needs me to defend him but pretty sure Ronnie was voicing agreement with you kitty

spinynorman99 wrote: One would assume that there are children there to take over the business, so his aging doesn't really enter into it

I thought I'd read somewhere that he did not foresee his children being interested in taking over the business, which is why he's been thinking lately of selling it.

I'm cautiously optimistic that Portillo's will continue its winning ways, especially if, as the latest reports say, he plans to stay involved with it.

HI,

Children are not born to continue their parent's efforts in life. It is terrific if they take an interest, though sperm meeting egg is not a mandate. Many farmers wished their kids wanted the farm.

In a parallel set of circumstances, I heard someone criticize a person who closed their business and sold their property. This non-interested third party did not like who bought it. They felt the owner should have sold it to someone else who was a small business and not a corporation. I responded, "if you feel this way, then you should have bought it and paid top dollar."

Regards,

I don't know the deal, but PE funds/financial buyers are usually also buying the current management's expertise as well as the business. Unlike a so-called strategic buyer (eg, Bud buying Goose Island). I assume this is a way for the Portillos to monetize the value of their hard work and get some dough for the grandkids (a lot of dough). I'd be surprised if the current team isn't staying around in some material way. They did sell the family biz, though. Good for them, I assume.

Cathy2 wrote:Children are not born to continue their parent's efforts in life.

Sometimes they are - thank goodness for Marc Malnati!

Portillo's does a solid Vienna Beef hot dog and a great Italian Beef - definitely worthy of representing what a great Italian Beef sandwich is to the country in the future. Just hope nothing changes for the worse. For instance, they do the fries in beef tallow. Even though they are frozen, they are fine by me. Don't want to see that change. I am wary of what happened to Uno's chain.

Ram4 wrote:

Cathy2 wrote:Children are not born to continue their parent's efforts in life.

Sometimes they are - thank goodness for Marc Malnati!

Portillo's does a solid Vienna Beef hot dog and a great Italian Beef - definitely worthy of representing what a great Italian Beef sandwich is to the country in the future. Just hope nothing changes for the worse. For instance, they do the fries in beef tallow. Even though they are frozen, they are fine by me. Don't want to see that change. I am wary of what happened to Uno's chain.

If you quoted the first half of my second sentence, I covered this, "It is terrific if they take an interest ..."

The real hazard zone in family businesses is when it goes from second to third generation. You hope and prey they have their heads screwed on straight and don't treat the business as a piggy bank.

Regards,

I absolutely love Portillo's for their Chicago style hot dogs, Italian beefs, burgers, chicken sandwiches, polish sausage, chopped salad, and their famous chocolate cake. I don't think I've ever had a bad meal there at any point in my life. Portillo's runs like a well oiled machine- they are consistently great at every location. Their Italian beef in particular has always been spectacular. Are Portillo's Italian beef and hot dogs as good as Johnnie's Beef or Gene and Jude's? No, but Portillo's makes great examples of both Italian beef and hot dogs in their own right.

Hopefully, the quality and consistency stay the same at every location.

deepdish wrote:I absolutely love Portillo's for their Chicago style hot dogs, Italian beefs, burgers, chicken sandwiches, polish sausage, chopped salad, and their famous chocolate cake. I don't think I've ever had a bad meal there at any point in my life. Portillo's runs like a well oiled machine- they are consistently great at every location. Their Italian beef in particular has always be spectacular. Are Portillo's Italian beef and hot dogs as good as Johnnie's Beef or Gene and Jude's? No, but Portillo's makes great examples of both Italian beef and hot dogs in their own right..

I'm not from Chicago, so the River North Portillo's was the first place I had a truly great Italian beef sandwich. I made the mistake of getting it to go, and trying to drive home with it on the seat next to me. The smells coming from the bag were so enticing I kept trying to sneak bites at red lights, so to prevent a fatal accident I pulled over on Ontario to devour it. That sandwich was so good I started involuntarily cursing and pounding on my steering wheel like a caveman. Since then I've tried beef sandwiches at dozens of other places but only a bare handful have been better than that first Portillo's sandwich, the one that started it all.

If their new owners can maintain the quality I'd love for them to expand to Indianapolis where my family is from. I bet there are enough Chicago transplants there to provide a good initial market, then word of mouth would get around and the local Hoosiers would make it self-supporting.

Why doesn't somebody change the title of this discussion?

Tim wrote:Why doesn't somebody change the title of this discussion?

That's completely up to the OP.

=R=
for the Moderators

While I've never loved their hot dogs (due mainly to a lack of radioactive-green relish), and their McD's-style fries give me little joy, their Italian Beef is quite good.

If Portillo's national expansion does nothing other than educate the rest of the country (the WORLD!!) about the glories of Italian Beef with hot giardinera, then it's a good thing.

JoelF wrote:While I've never loved their hot dogs (due mainly to a lack of radioactive-green relish), and their McD's-style fries give me little joy, their Italian Beef is quite good.

If Portillo's national expansion does nothing other than educate the rest of the country (the WORLD!!) about the glories of Italian Beef with hot giardinera, then it's a good thing.

Or they pull a Uno and ruin the Italian Beef reputation across the country.

midas wrote:
Or they pull a Uno and ruin the Italian Beef reputation across the country.

I think the Al's Beef franchises have a good head start on that project.

As a second generation small business owner getting on in years, I can sympathize with the decision to sell your business. There should be some reward for working hard all your life and when you decide it is time to enjoy the fruits of your labor, no one should criticize you for your decision. Terming it selling out is a little unfair for a private decision that was probably agonizing. In my business we have no next generation, even if we did would not guaranty a third generation business. We have wonderful nieces and nephews, but they are all in their twenties and anxious to make their own mark in the world. So how does it finish for us? My Mom says she does not want her tombstone to read "sure wishes she would have spent less time in the shop and more time enjoying life"!

stevez wrote:

midas wrote:
Or they pull a Uno and ruin the Italian Beef reputation across the country.

I think the Al's Beef franchises have a good head start on that project.

Is Al's outside the Chicago area yet?

The truth is, I would say 90% of the IB available, even in Chicago, is bad. I take that back, about 40% is bad, about 50% is awful.

midas wrote:
Is Al's outside the Chicago area yet?

Saw one in Vegas on my most recent trip.

There are also two Cali locations of Al's - one in Chino (east of LA, vaguely in the Ontario area), and one in San Jose.