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El Pollo Loco Expands Further in California with New Outlet

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The leading fire-grilled chicken chain in the U.S., El Pollo Loco Holdings, Inc. (LOCO - Free Report) opened its latest outlet in Chula Vista, CA on Nov 21, 2016. The 2,400-square-foot restaurant, located at 1305 Third Avenue, can accommodate 74 guests.

The outlet features the brand’s hacienda design and has an open kitchen layout to display the preparation of its signature dish. Owned and operated by franchise partner, Chic Pollo, LLC, it marks the second outlet for El Pollo Loco in Chula Vista and the 30th for the franchisee.

El Pollo Loco currently has more than 450 company-owned and franchised restaurants in Arizona, California, Nevada, Texas and Utah. Also, it is looking to expand its presence in key markets like Houston and Dallas.

El Pollo Loco has opened over 23 restaurants year to date with the expectation of opening an additional 17–18 company-operated restaurants and 11–12 franchised restaurants in 2016.

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


Last month, the company reported weak third-quarter 2016 results, with both earnings and sales missing the Zacks Consensus Estimate. Consequently, management also slashed its 2016 earnings outlook.

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

Going forward, the company expects to boost traffic on the back of increased focus on catering to health-conscious customers by offering customized meals without compromising on flavors. Interestingly, menu innovation and limited time offers have also been contributing to traffic. In fact, the third quarter of 2016 marked the 21st consecutive quarter of positive comps for the company, and this trend is expected to continue due to various sales and digital initiatives being undertaken.

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.

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