A few months after Liz Williams was named CEO of El Pollo Loco in March 2024, she put a three-year turnaround in place that included improving brand awareness and increasing unit-level economics, among other points. Following the company’s second quarter earnings call Thursday after market, it’s clear the company is well ahead of pace heading into year three.
The company once again exceeded Wall Street’s expectations, posting a 3.9% increase in same-store sales, as well as total revenue, income from operations, net income, and adjusted EBITDA (earnings before income, tax, depreciation, amortization) increases.
Perhaps the most impressive metric, however, came from El Pollo Loco’s restaurant contribution margin, which was 19.5%, ticking up from 19.2% in Q1. During the same period in 2024, that number was 18.6%. Williams’ long-term target range per her initial turnaround plan was between 18% and 20%.
“We are pleased with this result, especially in light of the significant cost pressure in produce during the quarter. Even with this headwind, our underlying cost discipline continues, which speaks to the margin focus we’ve built over the past several years,” she told analysts on Thursday. “We will also balance the goals of driving year-over-year margin expansion with the need for value offers and investment in innovation, technology, and unit growth. We believe we can do all of these and be in the healthy margin range.”
As has been the case for the past couple of quarters now, El Pollo Loco has also caught some momentum from an accelerated menu pipeline. In the second quarter, that included the new Loco Tenders, which broadened the chain’s customer base and drove trial, especially among younger consumers. The tenders were additive to check and popular in both snacking and late-night dayparts, Williams said. In June, El Pollo Loco introduced Loaded Quesadillas, created for portability and value, priced at less than $10 on their own or $10.99 for a combo meal, which includes chips, salsa, and a drink.
The chain is currently testing holding equipment to learn if the tenders could eventually become a permanent menu item.
“Tenders drove a lot of incrementality,” Williams said. “We saw a higher incidence and attach rate through delivery, coupled by late night. It was evident that this fit a need in snacking in the afternoon. We were really pleased with how it helped with check across the board, all times of the day.”
The chain also introduced a new coffee platform in the quarter, featuring its signature horchata, iced coffee, and cold foam.
“We designed our new beverages to capture an afternoon pick-me-up occasion, which we believe is a meaningful and underserved daypart for our brand,” Williams said. “Alongside items like our tenders and quesadillas, we see this as part of a broader snacking occasion that brings guests into our restaurant outside of traditional mealtimes and also helps in building check.”
On deck are two Double Chicken Burrito Bowls, a new Pumpkin Spice Churro, and Caramel Apple Horchata coffee. The brand also continues to test new salads, wraps, and sandwiches.
Another initiative is building brand awareness. Williams said its “Let’s Get Loco” campaign launched last year continues to resonate with new and existing guests. Meanwhile, digital sales have increased 13% year-over-year and now represent nearly 30% of systemwide sales. Within those channels, Loco Rewards membership has also grown, and those members visit approximately three times more per year than non-loyal members, so the company has focused on more targeted offers and more frequent communication with them.
“(This has driven) not only frequency growth, but also check growth among our loyalty members, outpacing non-loyalty guests by more than double,” Williams said.
The other major headline in the quarter was El Pollo Loco’s continued growth with aspirations of becoming a national brand. The company expects 18 to 20 new restaurants this year, which would nearly double its 2025 pace. In June, the company debuted in Idaho, marking its 10th state.
“Our newer markets are opening really well. We’re very pleased with the strength of the sales. Most are opening above system average, particularly when it’s the first restaurant in the first state or first market. They’re opening to just blockbuster lines and, quite frankly, exceeding our expectations, which is giving us a belief that the fire-grilled chicken is resonating and our brand is resonating,” Williams said. “There is nationwide interest.”
Contact Alicia Kelso at [email protected]
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