El Pollo Loco Holdings Inc. hopes the second time is a charm on its plans to go public.
The Costa Mesa-based company, which operates 401 company-owned and franchised restaurants, last week announced plans for a $100 million initial public offering.
A time frame for the IPO hasn’t been announced, and the company did not indicate the number of shares to be offered or the price range.
Proceeds will be used to pay off debt, which in turn should help the company proceed with its plans to expand outside California, where about 88% of its stores are located.
Its other restaurants are in Nevada, Arizona, Texas and Utah.
El Pollo Loco is the third largest restaurant chain based in Orange County, with sales of $657.6 million last year (see list, page 14), an 8% annual increase.
The company said in regulatory filings last week that it plans to increase its number of restaurants by 8% to 10% annually. The Southwestern U.S. will continue to be a key focus of that expansion, particularly over the next three to five years, according to the company.
Houston has been targeted as its next new market, and the company plans to build two to three restaurants there in 2014. It typically costs about $1.4 million to build a restaurant.
El Pollo Loco said it has 11 restaurant sites in various stages of development.
It’s a more measured approach to growth now than what was expected around the time of El Pollo Loco’s last attempt at an IPO in 2006.
The company planned to raise $150 million for an expansion into the Midwest, New England and the Pacific Northwest, among other areas. It owned or operated about 340 restaurants at the time.
The registration statement for the $150 million IPO was withdrawn in late 2006 due to unfavorable market conditions.
The restaurant chain spent the next several years absorbing fallout from the recent recession. El Pollo Loco had 21 restaurants east of the Rockies in 2009, all of which were closed by 2012.
The company, led by Chief Executive Steve Sather, has spent the last few years retooling store operations and renovating restaurants with an open-kitchen design.
About half of the company’s stores will have gotten the new Hacienda design by the end of this year.
Sales at locations that have gotten the makeover are running 3% ahead of restaurants still waiting for the remodel, according to company filings.
The rollout of the makeover to the entire chain could be completed by the end of 2018. It costs about $270,000 on average to remodel a store, according to regulatory filings.
El Pollo Loco is owned by private equity firms Trimaran Capital Partners in New York and Los Angeles-based Freeman Spogli & Co.
Trimaran Capital acquired a controlling interest in El Pollo Loco in 2005 for $415 million, while Freeman Spogli invested $45 million in 2007 for an undisclosed stake in the company.
The two owners haven’t disclosed what their ownership stakes will be following the IPO.
The restaurant chain is applying to list its common stock on the Nasdaq Global Select Market under the ticker symbol “LOCO.”
El Pollo Loco’s filing came a couple of days before reports surfaced that Lake Forest-based Del Taco LLC is seeking a buyer and could sell for $500 million or more.
The privately held fast-food chain is owned by Del Taco Holdings, a consortium of investors that includes Goldman Sachs Mezzanine Partners, Charlesbank Capital Partners and Leonard Green & Partners. The group refinanced debt and secured $260 million in new credit, mainly through GE Capital, earlier this year.
Piper Jaffray and Goldman Sachs Group Inc. are advising on the sale, reports said.
Del Taco declined comment on reports of a possible sale.
Reporter Paul Hughes contributed to this story.
