Sardar Biglari must want to bring beef tallow to more restaurants.
The investment firm operated by the chairman of the company that owns Steak n Shake is making a play for the fast-food chain El Pollo Loco, according to a pair of federal securities filings on Monday.
Biglari Capital Corp., which handles investments for Steak n Shake owner Biglari Holdings, has made an “unsolicited, non-binding indication” in buying up the shares of El Pollo Loco that it does not own. Biglari Holdings, through various entities, owns 4.5 million shares of El Pollo Loco, or about 15.1% of the company.
Biglari Holdings has entered into a confidentiality agreement with El Pollo Loco to discuss a potential transaction. The agreement includes a standstill provision preventing Biglari from buying up any more shares.
El Pollo Loco is “carefully evaluating the proposal” along with its financial and legal advisors. The company’s board “has not set a timetable” and said it would not provide any further comment “unless and until it determines that additional disclosure is appropriate or necessary.”
Biglari has been sending signals of at least some interest in the restaurant space beyond the companies he owns or is invested in.
Biglari Holdings owns Steak n Shake—which recently started using beef tallow to cook its fries—as well as the buffet brand Western Sizzlin. It also owns 2 million shares in the family-dining chain Cracker Barrel, plus more than 1 million shares in Jack in the Box, according to regulatory filings.
In this case, Biglari is gunning for a brand that has long struggled to gain favor with investors. Its shares are down nearly 20% year to date, to about the same level it’s been over the past two years.
El Pollo Loco operates just under 500 locations. System sales at the Costa Mesa, California-based company increased 4.3% last year, according to data from Restaurant Business sister company Technomic.
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