Dive Brief:
- El Pollo Loco will open its 500th restaurant this year with a unit in either Colorado Springs, Colorado or Arizona, CEO Liz Williams said during an earnings call on Thursday.
- The chain expects to open at least 10 units this year — the most systemwide unit growth since 2022 — and most of these openings will be outside of California, she said. New openings are expected in Arizona, Colorado, Idaho, New Mexico, Texas and Washington.
- The accelerated openings come as the company is also building its first prototype, called Iconic, that will have a target cost below $2 million. El Pollo Loco ground-up prototype includes an updated color palette, smaller footprint (about 2,200 square feet) and materials. The interior will include furniture upgrades, LED lighting and energy-efficient hoods and HVAC, according to an October press release.
Dive Insight:
El Pollo Loco expects to accelerate its openings in 2026 despite the current macroeconomic uncertainty surrounding tariffs. Williams said the chain’s flexible format allows the company and franchisees to more easily fit into second-generation spaces as restaurants close and convert them to an El Pollo Loco. The lower-cost prototype will not only reduce buildout costs, but also improve cash returns as it expands across the country, Williams said.
“The pipeline is coming together really nicely for next year,” Williams said. “Seeing those registrations and those LOIs and then leases being signed for projects for next year gives us even more confidence in being able to accelerate far beyond the 10 that we have this year.”
In addition to new builds, El Pollo Loco is also in the midst of a remodel that is expected to touch 60 to 70 restaurants this year. Management expects to remodel about half of the system over the next four years, using a two-tiered approach where restaurants will either receive a low-cost, five-year refreshment or a more extensive 10-year remodel investment, Williams said. The chain, which began remodels last year, has completed eight redesigns to date and the company is seeing “early sales and economic returns” on these restaurants, she said.
El Pollo Loco reported systemwide comparable sales decline of 0.6% during the first quarter. But the chain expects quarterly improvements in the third and fourth quarters, with a brand relaunch expected May 15 and a summer launch of additional quesadillas, CFO Ira Fills said during the earnings call. In addition to accelerating growth, EL Pollo Loco has been working on its five-point plan, which also includes hospitality improvements, sharper branding, digital focus and stronger restaurant-level margins.
