El Pollo Loco’s rebrand and new menu items helped improve sales through the second quarter. But, as CEO Liz Williams put it: “Progress take time, especially in this consumer environment.”
The fast-food chicken chain’s results were a bit mixed, though systemwide traffic was up 0.8% for the quarter.
Company units reported a same-store sales increase of 1.5%, but traffic was down 0.3%. Meanwhile, traffic increased 1.5% at franchised locations, but same-store sales were down 1.1% for the quarter.
The difference was blamed in part on price increases resulting from the California fast food wage increasing to $20 last year, which impacted company units, mostly in California, more than franchised locations.
Williams said El Pollo Loco continues to face headwinds as consumers look for value and convenient meal options. The challenges are being seen across all income groups, she said.
In fact, customers are so price sensitive, sales are higher at the beginning of the month, when consumers are feeling more flush, but then slow toward the end of the month as consumers wait for payday, she said. The message: “Consumers want to spend, or want to enjoy our products, but they’re limited on what they can spend.”
The chain’s Fresca Wraps and salads were a hit as limited-time offers during the quarter, though the company didn’t parse out the benefit from wraps versus salads. The promotion was followed by new quesadillas in two flavors (creamy chipotle and salsa verde) with chicken and guacamole for $9.99.
There’s more menu news coming, including new Street Corn and Queso Crunch Burrito bowls and new beverages, Williams said.
And, though El Pollo Loco’s menu is built around citrus-marinated, grilled chicken, the chain is bringing back a line of seasoned chicken tenders and dipping sauces, as well as chicken sandwiches that Williams said will be unlike any others in the market, though she didn’t offer details.
El Pollo Loco has had both tenders and sandwiches on the menu in the past, and officials earlier this year said sandwiches are among the most requested menu items.
The move, however, comes amid a crowded market for chicken tenders, with McDonald’s and Taco Bell brought back chicken tenders this year, and specialists like Raising Cane’s focusing on chicken fingers alone.
Looking to drive growth outside of California, Williams said El Pollo Loco expects to double unit growth next year.
For 2025, the company expects to add 10 to 11 new restaurants, only one of which will be company-owned. Williams said the company expects to see that number double in 2026 to 20-plus.
Despite the headwinds, Williams said she is confident that growth will come to fruition.
With average unit volumes at $2.2 million and restaurant margins over 19%, Williams said, “We have a healthy business that’s getting healthier.”
Couple that with lower building costs and franchise incentives, she said, “You put that all together, and our returns are back in place where it’s a healthy return, and they’re inspired to grow again,” she said.
The chain, meanwhile, is in talks about a possible sale. Last month, filings with the U.S. Securities and Exchange Commission indicated the chain is in talks with private-equity group CapitalSpring on a potential transaction.
That filing followed news that El Pollo Loco was also talking with Biglari Holdings about the possibility of a potential acquisition.
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