What is in this article?:
- El Pollo Loco turnaround spurs IPO plans
- Staging a turnaround
Brand resets course for growth after several years of restaging efforts
After spending several years staging a turnaround, the private-equity owners of the El Pollo Loco grilled chicken chain are now eyeing an initial public offering.
The Wall Street Journal reported news of the planned IPO by El Pollo Loco Holdings Inc. on Thursday. Other sources close to the situation also confirmed that the Costa Mesa, Calif.-based chain is prepping for an IPO, though the timing and other details remain unclear.
Officials with private-equity firm Trimaran Capital Partners, which acquired a controlling stake in El Pollo Loco in 2005 for $415 million, did not respond to requests for comment.
Additionally, Mark Hardison, El Pollo Loco’s vice president of marketing, said Thursday that the company “has nothing to report at this time.”
In a recent interview with Nation’s Restaurant News, however, Ed Valle, El Pollo Loco’s chief marketing officer, outlined how a brand restaging over the past two years has moved the 401-unit quick-service chain into more of a “QSR plus” positioning that leans toward fast casual.
“It’s the food of fast casual with the speed and convenience of QSR,” said Valle. “We’re riding this macro theme of mainstream foodies that have become educated by the Food Network and the Chipotles of the world. They want better-quality restaurant food, but they want it on their terms.”
After years of struggle through the recession, the chain has emerged with renewed strength. Valle said same-store sales rose 9.9 percent in 2012, and momentum continued into 2013, though he declined to give sales numbers.
“We had continued strong growth through 2013, and that’s why we’re sticking with this strategy,” he said. “We’re feeling very good about this brand.”
El Pollo Loco began as a roadside chicken stand in Guasave, Mexico in 1975. In 1980, the concept arrived in Los Angeles. The concept grew in popularity as an alternative to fried chicken and was known for its citrus-marinated grilled chicken, which was the centerpiece of the family-focused combination dinners featuring bone-in chicken pieces with side dishes. The grilled chicken was also the primary protein in the chain’s lineup of burritos, tacos and salads.
After taking a controlling stake in the chain in 2005, Trimaran announced plans in 2006 for an IPO, looking to raise up to $135 million. But the plan was withdrawn later that year, blaming unfavorable market conditions.
In 2007, private-equity firm Freeman Spogli & Co. invested $45 million for an undisclosed stake in El Pollo Loco Inc. to help accelerate expansion.
But the recession took a toll on the quick-service brand, especially in its core market of Southern California, where unemployment rates were high, particularly for Latinos. The brand relied heavily on discounting, at one point offering a 12-piece chicken dinner for $12. El Pollo Loco’s same-store sales plummeted by double digits, and recovery was slow.