Back to top

Analyst Blog

Zacks Equity Research

El Pollo Loco (LOCO) Opens Its Newest Outlet in California

YUM MCD PZZA LOCO

Trades from $3

The leading fire-grilled chicken chain of the U.S., El Pollo Loco Holdings, Inc. (LOCO - Free Report) , opened its newest outlet in Moreno Valley, CA on Sep 26, 2016. The 2,995 square feet restaurant is located at Perris Blvd and can accommodate 78 guests.

The restaurant will be offering the chain’s signature citrus-marinated chicken which is prepared on an open flame grill and served with Mexican entrees. Other offerings include a variety of salads, quesadilla, burritos and under 500-calorie options for health-conscious customers.

The outlet features the brand’s hacienda design and has an open kitchen layout to display the preparation of its signature dish. It joins another already existing outlet in Moreno Valley.

The company currently has more than 440 company-owned and franchised restaurants in Arizona, California, Nevada, Texas and Utah, and is looking to expand its presence in key markets like Houston and Dallas.

El Pollo Loco has opened over 20 restaurants year to date with the expectation of opening 17–20 company-operated restaurants and 10–15 franchised restaurants in 2016.

However, the company loses out in terms of international presence. Whereas other restaurateurs like Yum! Brands, Inc. (YUM - Free Report) , McDonalds Corporation (MCD - Free Report) and Papa John’s International, Inc. (PZZA - Free Report) are following aggressive global expansion policies, El Pollo Loco seems to be weak on this front.

However, the company has joined the S&P 600 Small Cap Index after the close of trading on Sep 12, 2016. We believe El Pollo Loco's addition to one of the most widely followed small-cap benchmarks is a key positive for the company.

Notably, the company reported strong second-quarter 2016 results on Aug 4, with both earnings and sales beating the Zacks Consensus Estimate. Also, the second quarter marked the 20th consecutive quarter of positive comps, courtesy of various sales and digital initiatives.

Interestingly, menu innovation and limited time offers have been contributing to traffic. Going forward, the company’s increased focus on catering to health-conscious customers by offering customized meals without compromising on flavors should continue to boost traffic.

El Pollo Loco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »