El Pollo Loco Holdings, Inc. (LOCO - Free Report) has been trying to expand its footprint in order to proliferate its brand awareness among customers. To this end, it recently launched a restaurant in Arlington, TX. The restaurant marks the company’s entry into Arlington and is owned by Henry Investment Group along with El Pollo Loco’s franchise partner, Chicken Time Holdings and.
The move underscores El Pollo Loco’s efforts to further foray into the markets of Texas. The company is also expanding its portfolio by opening restaurants in Arizona. Giving expansion strategies an utmost priority, it also announced that it will open 7-8 company-owned and 8-10 franchised restaurants in the current year.
The recent restaurant in Texas will seat roughly 66 guests and feature the company’s ‘Vision Design’ initiative. A unique brand positioning and other sales-building strategies have led El Pollo Loco’s shares to gain 16.9% in the past year, outperforming the industry’s rally of 9.1%.
‘Vision Design’ to Aid Sales & Profits
El Pollo Loco is opening all of its restaurants under the ‘Vision Design’ initiative. Restaurants under this program offer authentic atmosphere inspired by Mexico that includes El Pollo Loco’s menu and brand identity. Those restaurants also have an open kitchen layout to display the preparation of the signature dish.
The company believes that its vision model is going to position it better in the quick-service restaurant space. According to El Polo Loco, it is witnessing encouraging results from the implementation of this model in various company-owned and franchised restaurants. It also aims to reduce costs and drive sales through this initiative.
Limited Expansion Concerns
Although the latest move emphasizes El Pollo Loco’s rigorous expansion strategy, it shows that the company is only expanding within its domestic periphery. While other restaurant operators like Yum! Brands (YUM - Free Report) , McDonald’s (MCD - Free Report) and Domino’s (DPZ - Free Report) are pursuing aggressive global expansion, El Pollo Loco is losing out in terms of international presence.
The restaurant opening is in line with El Pollo Loco’s strategies for reaching out to a greater number of customers. The distinguished menu that is served in the restaurant also shows that the company is focusing on enriching guest experience to drive foot traffic and sales.
The company’s relentless focus on providing excellent service and reasonable pricing is expected to continue driving revenues. Banking on menu innovation, limited-time offers and a strong brand positioning, the company witnessed year-over-year sales growth of 5.7% in the last-reported quarter.
Further, we believe that relentless expansion, increased focus on ‘Vision Design’ and other sales-building efforts are going to continue to aid the company’s sales in the current quarter. Subsequently, the Zacks Consensus Estimate for the current year earnings is pegged at $430.1 million, reflecting 7.1% year-over-year growth.
El Pollo Loco currently carries 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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