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El Pollo Loco: No rush to reopen dining rooms given drive-thru success

The drive-thru now makes up more than 70% of the chicken chain’s sales, though same-store sales remain down by double digits due to the coronavirus.
Pollo Loco
Photograph: Shutterstock

After seeing significant growth in its drive-thru business, El Pollo Loco executives this week said they are in no rush to reopen dining rooms—especially at a restricted capacity to adhere to social distancing guidelines.

Drive-thru business has grown from 45% of sales to more than 70%, offsetting some of the chain’s double-digit COVID-19-related losses, El Pollo Loco CEO Bernard Acoca told analysts during a conference call Thursday afternoon.

“It opened up our eyes,” Acoca said. “We knew this could be a growth channel, but how much more can we grow?”

The Costa Mesa, Calif.-based fast casual said same-store sales plummeted about 30% during the last two weeks of March due to the coronavirus. The chain has seen some lift in the past several weeks, with same-store sales down 10% last week.

For the quarter ended March 25, same-store sales fell 1.5%, with total revenue at $105.2 million, down from $109 million the previous year.

The brand has installed plexiglass shields for cashiers at company-owned restaurants and has purchased infrared thermometers to check the preshift temperatures of all employees.

With the drive-thru now accounting for such a large percentage of the chain’s sales, executives are focused on redeploying labor to maximize speed and accuracy there.

“Better drive-thru performance can be a big sales driver and competitive advantage for us in the future,” Acoca said.

When it comes to reopening dining rooms, the chain is going to follow its own schedule.

“We’re not necessarily going to always follow the timing of whatever state or city or municipality chooses to open up,” he said. “We always want to make sure our employees and customers, that their safety is always the driving decision. Given the amount of business we’ve been driving through the drive-thru, through delivery and through mobile, we’re not as hard-pressed to be … tethered to what a state decides.”

Currently, 192 out of 195 company stores are operating for off-premise orders, along with 279 of 283 franchised units. All but roughly 50 of those stores have a drive-thru.

The chain has also seen growing interest in its family chicken meals. The large-format meals now make up about half of all orders, helping with check averages as well as product turnover, Acoca said.

“We’re starting to see more of the growth at the dinner daypart,” he said. “So we’re encouraged by that. That coincides with the record-level growth we’ve seen in our family chicken meals.”

The company is testing curbside pickup and is focusing on expanding its delivery business.

Early on in the pandemic, it announced it would offer free delivery via Postmates until “however long is necessary.” Company executives expect that promotion to continue at least through early summer.

 

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