Operations

El Pollo Loco stock soars nearly 30% as sales accelerate

September was the fast-casual chain’s best month of the year as it works to expand delivery capabilities and operational efficiencies.
Photograph: Shutterstock

El Pollo Loco’s stock surged nearly 30% early Friday as the fast-casual chain reported strong sales and the implementation of a number of operational efficiencies for future growth.

The Costa Mesa, Calif.-based chain saw a 1.1% same-store sales lift systemwide for the quarter ended Sept. 26. September was the strongest month of the year to date for the 480-unit chain, with comps up 4.2%.

El Pollo Loco CEO Bernard Acoca, during a call with analysts late Thursday, credited three chainwide initiatives for the recent success:

  • The Fire-Grilled Combos promotion performed well and, at $5, was “value-engineered to deliver good margins at a very attractive price point,” Acoca said.
  • Delivery was expanded during the quarter to include Postmates and Uber Eats, in addition to DoorDash. About 420 locations now offer delivery via the three providers. Grubhub is slated to be added as a delivery provider next month. The chain also rolled out a curated delivery menu, which emphasizes family meals and combos to create higher average tickets. El Pollo Loco has seen its delivery mix grow from about 1% of sales to 3%.
  • Streamlining of operations has boosted customer satisfaction scores. The chain recently rewrote its operations manual, editing it from 477 pages to 74 pages and streamlining all recipes so they could be made in six steps or less. “We are extremely excited to roll these initiatives out in the fourth quarter as they will free up more time for employees to spend focusing on delivering exceptional customer experiences,” Acoca said.

 

The chain hopes to build on this growth with holiday LTOs, including chicken tamales, tamale bowls, pozole verde and Mexican hot chocolate. The offerings will be served in red, holiday-themed packaging and cups, which Acoca said he hopes “become an annual iconic feature of the brand.”

In addition to adding delivery providers, El Pollo Loco is expanding its ordering channels. This month, it plans to roll out ordering via Facebook Messenger, Apple Business Chat and Amazon Alexa.

Early this week, El Pollo Loco sold its five remaining company-operated units in Dallas to an existing franchisee. The company is not engaging in a wholesale refranchising program, but will consider them on a case-by-case basis, Acoca said.

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