1. Humble Beginnings
Long lines donât impress me; long lines that move fast impress me.
This particular long line wasnât moving fast, but I wanted to see what the fuss was about. TCBY, an American chain of frozen yogurt stores, had opened in 1981 in Arkansas. The company began franchising the following year and stores were being built around the country at a rapid pace, and one opened near our home in Oak Brook, Illinois.
My wife, Sharon, thought we needed to invest in TCBY. I had never been in one of their stores, but Sharon, myself, and my parentsâwho were in visiting from Floridaâhad been out for dinner and we usually stopped somewhere for dessert. We decided to get in line with other customers and try a frozen yogurt.
When we reached the counter to place our order, I knew immediately it was not a brand that weâd invest in. I told Sharon, âSee those machines?â She said, âYes.â I explained it was a simple concept, too simple in fact, and pretty much everyone is going to have a machine like that. Thereâs no science behind it. It was an easy approach that competitors can quickly copy.
I was right.
New frozen yogurt establishments were being built and TCBYâs sales cooled off after its strong start. In 2001, there were 1,777 TCBY locations across the country. By 2011, according to newspaper accounts, there were just 405, and TCBY was listed among Americaâs disappearing restaurant chains by USA Today.
Thatâs why I built what I called a âmoatâ around Portilloâs. That moat protects Portilloâs from the competition, the enemy. The moat is the complexity of the business. It is filled with ideas and our core principles and it makes it very, very difficult for the competition, the enemy, to cross the moat to get to Portilloâs and duplicate our business model.
History has shown that when somebody gets a good idea everyoneâs going to jump on it and think they can do it better and all that. So, I had to make mine so unique and complicated but at the same time it had to be trainable. In other words, it couldnât be so complicated that the average person thatâs in this business couldnât grasp what I was trying to do with the culture.
That moat has allowed Portilloâs to maintain a competitive advantage over its competitors and protect our long-term profits.
We have come a long way from the 6â x 12â trailer hot dog stand I opened in Villa Park in 1963 from which we sold hot dogs, fries, tamales, and soda. âThe Dog Houseâ had no running water and was launched with $1,100 in savings that Sharon had earmarked for âa house with a white picket fenceâ but grew to average more than $8 million in sales per restaurant annually, with our largest-volume locations doing more than $17 million in annual sales.
We are famous for our Chicago-style hot dogs, Italian beef sandwiches and the creative dĂ©cor of our dining rooms. No two Portilloâs restaurants have the same look. To some people, it would make sense to use the same set of plans, at least from a financial standpoint. But that is not what I wanted or envisioned for Portilloâs. If you walked into a McDonaldâs or a Wendyâs across the country, it would probably look the same as any of their restaurants in the state of Illinois.
What I had to do was create something that was more unique, more interesting than what they were doing at McDonaldâs, Burger King, Wendyâs, and others. I had to separate myself and get out of that way of thinking. People told me, âWell, you know, McDonaldâs does this and McDonaldâs does that.â But I responded, âI am not a McDonaldâs. I donât want to be a McDonaldâs because I donât want to think like they do.â It was a different ballgame. I had to establish something thatâs so different than McDonaldâs and Burger King and all those other guys who donât even know how to compete with me. The average Portilloâs has higher sales than the average McDonaldâsâand thatâs without us serving breakfast.
Remember, the restaurant business is not just about the food. The restaurant business should be an experience. I wanted every one of our restaurants to offer a unique customer experience. When you walk into a Portilloâs, youâre going to see something, youâre going to see colors, youâre going to see an energy, youâre going to see movement. The focus has to be on the customers, the people in your community who you serve. That will be a theme throughout my book. One of my favorite sayings is, âThe customer is the foundation of our business.â
In the 50 years I owned the company, we experienced significant growth, adding locations across Illinois, Indiana, California, and Arizona. We employed over 4,000 people and, in addition to our employees, we create work for carpenters, plumbers, bakers, drivers and equipment companies. A much broader sector of the community has benefited from the growth of Portilloâs.
Customers returned the love. In the years since we first opened, there have been three major economic downturns in America. But through each of them, Portilloâs sales grew! Other businesses were closing, but our customers so enjoyed the experience we gave them that our restaurant sales increased through those dark periods.
While people have lost millions trying to compete with me, I made millionsâand much more.
I sold Portilloâs to Berkshire Partners, a private equity firm in Boston, in 2014. The amount of money I was paid for 38 Portilloâs and Barnelliâs units made it the largest sale in restaurant history in the United States for its size.
Twenty-four private equity groups wanted to purchase Portilloâs. There were days I had two meetings a day to listen to presentations. One would start at eight in the morning, the other at four in the afternoon. This sounds strange. I knew we were good. I knew we were successful. But once the word got out that we were for sale, it just went crazy.
But Portilloâs is complex. It took years for me to get where Iâm at. I purposely, by design, created something very, very complex. Specifically, my time in the Marines gave me mental toughness, discipline, taught me the value of training, teamwork, and organization, and gave me confidence. All these qualities have proven essential in my journey through life. Some people may not believe this, but we spent very little money on marketing at Portilloâs. I invested that money into people.
I am humbled to be able to celebrate our achievements and my story. It truly has been an incredible journey. One might say I have lived the American dream, but it did not start that way.
* * *
The son of immigrants from Mexico and Greece, I came from a poor family and at one time thought I didnât have anything to offer the world. We lived in public housing until my father made enough money to move us to a better neighborhood on the west side of Chicago. Ultimately, he was able to purchase a home in Bridgeview, 13 miles southwest of Chicago.
As a child I was spanked and got the belt from my father when I did something wrong. I learned at an early ageâwhen my dad said, âThe world doesnât owe you a damn thing, youâll have to earn itââthat I was accountable for my actions and that I had to accept responsibility for poor decisions that I made. This is a lesson that carried over to business as well. Still, everything came hard for me in high school and I was unsure of myself. To this day I still think I had an attention-deficit disorder. My friends would study for a half hour and retain everything. I studied for two hours and learned half of what they did.
I played football and even crowned and kissed the homecoming queen in the gymnasium in front of the whole class. Many years later a classmate of mine said I probably would have been voted âMost Likely Not to Succeed.â
I thought I was destined to a career of odd jobs and unskilled labor.
I enlisted in the Marine Corps seven days after my high school graduation from Argo Community High School, Class of 1957. My two years at Camp Pendleton, California, in the 1st Marine Division, represented some of the most important years of my life.
The lessons I learned under a young officer named Barney Brause, whom I remain friends with today, helped mold me into the person I am today.
We were just a bunch of lonely kids in the Marine Corps. When Thanksgiving arrived, it was the first time I had been away from home on a holiday. I was the only Marine in our Company not asked to Thanksgiving dinner by an officer, or NCO. I was thinking, âMan, I must really be a screw-up.â
As I laid on my bunk in my skivvies, the door flew open and Brause walked in. He said, âPortillo, get dressed. You are coming to my house for Thanksgiving dinner.â Brause had only been married five months and lived in an apartment off base. It was his first Thanksgiving dinner with his wife, Jorgine, but he treated me like a rock star, like I was somebody special.
That one moment of kindness had a profound impact on me and I have never forgotten it. I learned a lot from Brause about what makes an effective leader. He had the respect of his men and retired a full bird Colonel and served two tours of duty in Vietnam.
When I returned from my tour of duty with the Marines, I married my high school sweetheart, Sharon. And I worked the same day I got married (until noon!). I saw no reason to take the whole day off. I held 14 jobs in the first 18 months I was married. I worked day and night.
I unloaded box cars, worked for the railroad, the post office, a junkyard. I probably worked in almost every factory in the Clearing Industrial District on Chicagoâs southwest side. All of those jobs were back-breaking, and I knew I couldnât do that for the rest of my life. Sharon also was working during the day as a waitress.
Our dream, Sharon thought, was to purchase a house. But I knew I couldnât go back to school. I realized I had made a mistake in not preparing myself for the future. Young people think they are physically indestructible, and I realized at age 23 there wasnât any truth to it. Sharon was pregnant with our second child and I thought, âThis is it. I better act now.â
There seemed to be a hot dog stand on every corner in the city of Chicago, but that wasnât the case in the suburbs. I did not know anything about hot dogs or owning a business but that was the cast line I threw into the water in my search to build our future. Sha...