Last week, Dean Kehler resigned as a director with El Pollo Loco. The reason was relatively simple: Kehler’s private equity firm, Trimaran Capital, was wrapping up its investment in the California-based chicken chain.
In the process, Trimaran ended a surprisingly long-term investment in the company. The investment firm first invested in El Pollo Loco in 2005. At the time, El Pollo Loco was valued at $400 million and the chain operated 359 locations.
Trimaran tried taking Loco public the next year, only to withdraw, long enough for the world to plunge into and then emerge from a brutal recession. In 2014, Loco did go public. Shares took off, as some analysts likened the chain to Chipotle Mexican Grill, giving the brand a halo among investors that were pumping millions into fast-casual concepts at the time.
At one point, the brand was trading at more than $30 a share, giving it a valuation of more than $1 billion—well over the $400 million at which Loco was valued when Trimaran first invested.
But El Pollo Loco never matched that early valuation, and a year later the company’s stock price was below $10. It has largely drifted between $10 and $15 in the years since then. The company has also had some unique issues, such as $36 million in lawsuit settlements it paid in 2018.
Trimaran, which initially acquired El Pollo Loco along with Freeman Spogli, owned about 45% of the company's stock after the IPO, and 43% before unwinding.
The brand itself has done OK. System sales have grown 74% since 2006 to about $1 billion, according to data from Restaurant Business sister company Technomic. They’ve grown by an average of 4.1% per year since 2016, more than Bojangles (3.8%) or KFC (2.5%) but less than Popeyes (10.6%) or Chick-fil-A (17.1%). The chain has 480 locations, 291 of which are owned by franchisees.
The company’s stock price, which started the year off strongly, hitting a 52-week high of $13 per share in early February, has since lost 28% of its value as Trimaran liquidated its position.
Loco’s enterprise value, according to data from Sentieo/AlphaSense, is just over $400 million, not much different than in 2005.
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