Orange County Business Journal

El Pollo Loco Sales Slump, Profits Up on Cuts

Michael Lyster Tuesday, May 10, 2011

The parent company of Costa Mesa-based El Pollo Loco saw sales fall again in the first quarter while shoring up profits with cost cutting.

The Mexican restaurant chain operator, which is wading through a prolonged slump, reported quarterly sales of $67 million, down 1.7% from a year earlier.

A 2.4% drop in sales at restaurants open at least 15 months drove the decline.

El Pollo Loco’s holding company, EPL Intermediate Inc., operates a chain of 405 restaurants in California, other western states, Connecticut, Georgia and Illinois.

The company owns 170 El Pollo Locos with franchisees operating the rest.

Same-store sales at company owned restaurants fell 1.7% in the recently ended quarter. Same-store sales at franchise-operated restaurants fell 3%.

High unemployment and foreclosure rates in California and lingering effects from the downturn on El Pollo Loco’s key Hispanic customers continued to play out in El Pollo Loco's results.

El Pollo Loco is privately held but reports results for debt holders. New York-based private equity firm Trimaran Capital Partners owns the majority of the company.

Operating income rose 32% from a year earlier to $5.7 million as El Pollo Loco cut product and advertising costs.

It also saw less expense from restaurant closures that largely played out in early 2010.

The company is looking to open one to two restaurants and franchisees are expected to open a few, according to Chief Executive Steve Sather.

“We currently anticipate more expansion after 2011 assuming the economy recovers and as we finalize our new restaurant design,”

In February, Hollywood-based Goodness Mfg. was named the chain’s new agency of record with its work on TV commercials and in-store displays for El Pollo Loco expected to debut in later this month.