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
Staging a turnaround
(Continued from page 1)
For the 12 months that ended March 30, 2011, the end of the company’s first quarter that year, El Pollo Loco reported a net loss of $38.6 million, according to prior financial disclosures because of once-public debt. Later that year, however, the parent company EPL Intermediate Inc. refinanced its publicly traded bonds with private debt and an unspecified investment of capital from existing equity sponsors.
The refinancing paved the way for El Pollo Loco to work on revitalizing the brand, and 2012 was dubbed a “year of transformation.” Part of that effort included the development of a new “Hacienda” prototype design, with an open kitchen and grills front and center, so guests could see the handcrafted nature of the grilling process.
Valle said about 136 locations now have the new look and, though he declined to specify the sales lift, those units are averaging higher sales than traditional locations.
The more contemporary look also matched a vastly upgraded menu, with items like a chicken, bacon and guacamole-stuffed quesadilla, and lower-calorie grilled tostadas with house-made mango salsa.
“But we wouldn’t have been able to get into the Mexican entrée business unless we restored the value of our chicken,” Valle said.
The bone-in chicken combo meals are still top sellers, but the chain has entirely eliminated discounting, he said. Instead, El Pollo Loco appeals to value-focused customers with offers like a three-course family meal with eight pieces of chicken, sides, a Mexican Cobb salad and churros for $20.
The average check at El Pollo Loco is $10.25, combining lunch and dinner.
Roughly 56 percent of El Pollo Loco’s 400 units are franchised, and most of them are in Western states. For 2014, the company expects 17 new restaurants to open, including 11 company-owned locations and six franchised units. By comparison, the chain opened seven new restaurants in 2013, including five franchised units and two company-owned locations.
Valle said the concept is ready to push further east, though the plan is to continue to grow in existing markets. Generally, El Pollo Loco looks for freestanding suburban locations with drive thrus, but, Valle said, “As we look to the future, we will look at different formats.”
Valle declined to share systemwide sales results. According to the Wall Street Journal, the chain has debt of about $305 million and generated annual revenue of about $307 million for the year ended June 26, 2013.
El Pollo Loco will be the third restaurant chain to make a move toward an IPO this year.
Earlier this month, Papa Murphy’s Holdings Inc., parent to the Papa Murphy’s Take ‘n’ Bake Pizza chain, filed for an IPO with the goal of raising $70 million.
That filing came just days after an IPO filing by Zoe’s Kitchen Inc., parent to the fast-casual Zoës Kitchen chain, which is seeking to raise $80.5 million.
Contact Lisa Jennings at email@example.com.
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