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El Pollo Loco looks outside the coop for sales growth

Multiple LTOs may be to blame for the slowing growth of El Pollo Loco’s comp sales in the first quarter of 2015.

Though the Costa Mesa, California-based Mexican chain saw comps increase in Q1—5.1 percent year-over-year— they took a dip from the nearly 8 percent growth the company saw in 2014’s last quarter.

The slowing trend will likely continue, with second-quarter comps expected at the “low end of the (3-to-5 percent) range,” El Pollo Loco CEO Stephen Sather said in a call with investors Thursday.

Though its menu hinges on poultry, the chain has been testing shrimp and steak offerings this year, marking the first time the chain has promoted three different proteins on its menu.

While the shrimp test ends in May, the chain is looking to include shrimp and steak as full-time offerings, Sather said on the earnings call.

The company notes it will assess the implications of shrimp and steak individually, admitting that running several protein LTOs simultaneously inflated food costs for the quarter and may have muddled marketing messages.

“The visibility of value on our menu is not as strong as it used to be,” particularly during the five weeks when the shrimp and steak LTOs overlapped, Chief Marketing Officer Edward Valle said, noting that the chain is moving toward more focused messaging and refining the pacing of its protein promotions.

Revenue for the chain increased 11.1 percent in the first quarter, to $90.4 million.
 

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