El Pollo Loco Pushes Expansion, Appoints Public Company CFO
By JENNIFER BELLANTONIO
Irvine-based El Pollo Loco Inc. is pushing ahead with an expansion that includes 20 new restaurants this year and the remodeling of older ones.
The move comes on the heels of big growth last year, when the Mexican fast-food chain opened 18 sites.
Two of this year’s stores are local , one in Anaheim that opened earlier this year and one in Cypress set to debut later this year.
The push is part of a five-year plan to open some 100 stores in that period, according to company officials.
El Pollo Loco now counts 301 stores, with about half owned by the privately held company and the rest run by franchisees. El Pollo Loco counted 2001 sales of $340 million.
The company, which was bought by New York investment bank American Securities Capital Partners LP from Advantica Restaurant Group Inc. in 1999, also has brought on a seasoned corporate hand to watch over its expansion,and a possible public offering down the road.
Earlier this month, El Pollo Loco taped Joseph Stein as its new chief financial officer. Stein joined the company from publicly traded Rubio’s Restaurant Inc. of Carlsbad. Stein also had a stint as senior vice president and chief financial officer of Santa Barbara-based CKE Restaurants Inc., the operator of Carl’s Jr. that recently moved from Anaheim.
The move to El Pollo Loco is Stein’s first “foray” working for a private company, he said. A public offering could be in the cards for El Pollo Loco, he said, though no immediate plans are in the works.
American Securities, which traces its roots to William Rosenwald and his family fortune from Sears, Roebuck & Co., views its El Pollo Loco stake as a “long-term investment,” according to Stein.
El Pollo Loco’s growth is holding up during the economic slowdown, Stein said, despite “a little bit of softness” among Hispanics, which make up a sizable chunk of business (see related story, this page).
“We’re higher (in price) than your average (quick-service restaurant) but we’re still a great value,” Stein said. “Plus, we’ll add value with the promotions that we do. That’s how we counter the softness,and it seems to be working.”
The chain showed systemwide same-store sales growth of 5.9% last year, 7.3% in 2000 and 7.5% in 1999, Stein said.
El Pollo Loco is testing four remodeling prototypes,including one in Anaheim Hills,to see which style to roll out to all of its stores.
El Pollo Loco’s last remodel was about seven years ago, Stein said.
“There’s a lot of testing that goes on to make sure we’re spending the right level of money to get the right look and the right sales from it,” Stein said. “We’re getting pretty close.”
Among the things being considered are Southwest colors and updated signage on the exterior, and a lighter, brighter, homier dining room, he said.
Another big company project this year: installing new computers and cash registers at its 137 company-owned stores and helping franchisees do so also.
El Pollo Loco is spending about $3 million on the upgrades, Stein said.
“It’s a big project but we see a lot of efficiencies both for our guests and how we can ring up their orders and manage food and labor costs,” he said.
El Pollo Loco’s Hispanic Pitch
El Pollo Loco Inc. has launched a new Hispanic advertising campaign aimed at countering slower sales in what is a key demographic for the chain.
The economy has taken its toll with Hispanic markets being impacted “as much or maybe even more than other markets that we serve,” said Joseph Stein, the company’s new chief financial officer.
Hispanics have been a main focus of El Pollo Loco since the inception of the concept in 1975 in Guasave, Mexico.
“The Hispanic markets have been very strong for us,” Stein said.
Much of the lure revolves around the chain’s “authentic preparation of our chicken,” according to Julie Weeks, a company spokeswoman. The chicken is marinated in a blend of herbs, spices and fruit juices and then flame-broiled, the same way it is at roadside taco stands in Mexico.
The new advertising, created by Los Angeles-based cruz/kravetz: IDEAS, El Pollo Loco’s Hispanic ad shop since 1998, introduces consumers to two characters: Loco, an animated spokesbird, and Pepe, an El Pollo Loco cook.
The campaign, which launched late last month in select West Coast markets, features 15- and 30-second TV commercials and 60-second radio spots.
Billings were not disclosed. The new Hispanic campaign represents “a significant portion of our $15 million marketing budget,” Weeks said.
El Pollo Loco also launched a new general market campaign, which features the Loco character.
“One of the advantages of using Loco in both campaigns is that we can later integrate the character into our restaurants as both audiences have been exposed to him,” Weeks said.
All ads focus on El Pollo Loco’s new limited-time promotion: 10 legs and thighs for $6.99.
“We had to have extra trucks of chicken shipped in to handle the velocity of what we’re selling,” said Stein, who oversees purchasing.
,Jennifer Bellantonio
