Is Portillo's Really Off the Mark?

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I always enjoy reading Steve Bocska's take on loyalty programs, and learn a lot from his perspective.  His recent analysis of Portillo's strategy in The Wise Marketer (https://thewisemarketer.com/wheres-the-beef-in-portillos-loyalty-strategy/) is no different.  In the past, Steve and I have had spirited back-and-forths about different programs and how they align with brand goals and here is another opportunity.  In his latest assessment, Steve makes a lot of good points about loyalty and engagement while providing his take on the merit of Portillo’s new program.  Having spent many years in Chicago and having ample experience visiting Portillo’s, I might add some thoughts about why that brand in particular might be taking a slightly different approach.  Hopefully this will add some additional color to his analysis.

The basic premise is that Portillo’s is about to launch an “app-less” loyalty program, a “… system designed to eliminate friction by linking customer rewards directly to credit cards and delivering promotions via text message.”  These are Steve’s words, but interestingly, no one at Portillo’s seems to have focused on promotions or mentioned the word “rewards” in talking publicly about the program, and that is telling.  More on that below.  (Further details are here, from QSR : https://www.qsrmagazine.com/story/portillos-like-usual-charts-a-fresh-path-with-guest-loyalty/)

Steve’s take on the program: this approach could be a mis-step and “…risks undermining the very essence of what makes loyalty programs successful."

"Loyalty is not just about convenience; it’s about engagement, emotional connection, and a sense of progression that makes customers feel valued. “

Time will tell if Portillo’s is making a mis-step, but this quote is on point.  I just wonder if it might be more fully applicable to some different brands in the category.

As mentioned above, what’s missing from the description of the program is talk of rewards and the use of promotional pricing.  The Portillo’s execs quoted in the QSR Magazine article discuss badging and other aspects of gamification, and use of personalization to drive offers, which is aligned with Steve’s overall argument – but they don’t mention discounts. Chief Information and Digital Transformation Officer Keith Correia said, “We will use data over time to drive the timing and the relevance of these offers so they become more and more material to our guests and incentivize them to visit and that’s where we get the incremental transactions and the value of the program for us.”

To provide further background about Portillo’s… it has never been a discounter.  Portillo’s has relied on product quality and variety, a passionate fan base and efficiency in ordering and service to drive growth, not coupons or promotional pricing.  CEO Michael Osanloo is quoted as saying, “Portillo’s does not play the discount game… We compete on great everyday pricing for our craveable food and abundant portions, and we know this approach will benefit us in the medium and long term.”

That makes Portillo’s very different from other QSRs that do heavily rely on promotional pricing – compare that to another Chicago-based company, for example, McDonald’s, which continually offers a rotating list of discounted items through their app, and they’re not alone.  Think Domino’s, or Taco Bell, or Dairy Queen, or any number of apps on my phone that offer discounts and rewards.

Steve further makes relevant points around gamification and engagement as critical aspects of loyalty.  When he says, “Customers love earning points, unlocking tiers, and achieving status levels that make them feel special.”, I might add a qualifier: “Some customers love…”. To what degree that is true for your brand has to factor into program design.

He then goes on to provide additional critiques of Portillo’s approach:

• “Bypassing an app entirely in favor of an invisible, background loyalty tracking system, the company is betting that convenience alone will drive customer retention.”
• “By removing the interactive and experiential elements of a digital loyalty program, Portillo’s risks cheapening the customer interaction. Instead of actively engaging with a well-crafted app filled with visual and sensory elements that reinforce the brand, customers will be left with an impersonal, passive system that functions more like an afterthought than a compelling reason to return.”

Where I probably differ somewhat is in thinking that the same approach does not apply equally to every brand, or that delivering rewards and discounts is a primary purpose for every loyalty program and app.  Although many programs will contain common elements, the right approach for each brand is always dependent on it’s unique circumstances.

Portillo’s has never been the convenient choice, always more of a destination, and may not think they need "...an app filled with visual and sensory elements that reinforce the brand" when the product itself has historically been their loyalty mechanism – that’s what keeps people coming back.  Portillo’s recent performance suggests they don’t need to chase discount-driven consumers: they experienced torrid same-store YoY sales growth throughout 2023, with only slight declines in 2024, in what was considered a very challenging environment for QSR performance overall.

The way Portillo’s has positioned itself demands a slightly different approach than some of their competitors, and that is what they are pursuing with this app-less program, that suggests they believe a less intrusive and less promotional approach to engaging with their passionate base is key to increasing long-term customer value.  As Steve says, time will tell if they are successful.

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