The coronavirus pandemic may have choked its traffic and shut its dining rooms, but it also taught El Pollo Loco a thing or two. And the fast-casual chicken chain is quickly applying those lessons to current and future locations as it looks to return to growth.
“We consider what we've been encountering with COVID to be actually a blessing for us,” said Bernard Acoca, the chain’s president and CEO, on a call with shareholders Thursday afternoon. “We've learned a lot about what adjustments we need to make on a go-forward basis in these remodels and in this new restaurant design of the future.”
Rebuilds will have a double drive-thru lane—a reflection of the importance of that channel during the pandemic, when it has accounted for nearly 70% of sales, from 45%. The chain has been “maniacally focused” on the lane, Acoca said, with the aim of cutting drive-thru times in half via staff training and new technology such as order-taking tablets.
New restaurants will also feature GPS-enabled curbside pickup, a pandemic addition that’s now at 90% of the chain. Dining rooms will be downsized or gone altogether as more business shifts to off-premise channels, with digital orders getting a dedicated pickup space in the restaurant.
El Pollo Loco is planning three to five company-owned openings in 2021, up from two this year, said CFO Laurence Roberts on the call. It’s also aggressively pursuing new franchisees, hiring a consultant and prepping a recruitment push in new markets.
The Costa Mesa, Calif.-based chain begins that effort coming off a third quarter in which sales returned to positive, up 1.8% year over year. That number was diminished by high unemployment and closed dining rooms in its key California market, Acoca said. Same-store sales outside of Los Angeles, home to 192 of the chain’s 482 units, were up 6%, he said.
Restaurant contribution was 22.4% of company-operated revenue, up from 18.6% during the same period last year. Net income was $9.9 million, up from $6.4 million in 2019.
Acoca credited operational and labor efficiencies and higher average checks for the improvement.