Fast food has struggled, but Southern California’s grilled-chicken contender, El Pollo Loco, says it is expanding after finding a sweet spot for cost-conscious consumers.
Many consider the Costa Mesa-based chain’s flame-grilled chicken a step above offerings from giants like McDonald’s and Wendy’s but still more affordable than pricier options such as Chipotle and Sweetgreen.
Offering better quality at a better value—and making bone-in chicken the foundation of its menu—has helped El Pollo Loco avoid some of the challenges that plague others, said the company’s chief executive, Liz William.
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“This brand is going to be a growth story for the next couple of years,” she told The Los Angeles Times in an interview. “I think our food is more elevated than traditional quick service, yet we’re more affordable than fast casual.”
The brand is expanding outside of its home of Southern California, with plans to open 25 to 30 new restaurants next year. A third of the new restaurants will be in the Golden State, with the others scattered across the country.
The chain opened restaurants in Washington and New Mexico last year, and has plans to open its first New York location in Queens by mid-2027. It will end this year with roughly 20 new restaurants added, for a total of more than 500 in the U.S.
“Part of the whole trend in the industry right now is trying to do fast casual quality at fast food prices,” said Aneurin Canham-Clyne, a reporter at the trade publication Restaurant Dive. “I think El Pollo Loco is pretty well situated for that trend.”
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The brand posted its third-quarter earnings Thursday, reporting an increase in comparable restaurant sales of 5%. The quarter marked the fourth consecutive increase in comparable sales, a key metric for restaurant chains.
The company’s shares had soared as much as 50% this year. However, shares fell 10% Friday after the company’s earnings report showed lower profit than investors had anticipated. Net income dropped from $7.4 million to $6.9 million.
Profits were pinched by higher costs from labor expenses and expansion, analysts said, but that shouldn’t derail its upward trajectory.
“I think Wall Street is overreacting to increases in their expenses,” Canham-Clyne said.
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Food and labor have become more expensive, especially in California, where the minimum wage for fast-food employees is $20 an hour. Inflationary pressures and GLP-1 medications also have Americans eating less or choosing to eat at home.
But El Pollo Loco has countered those challenges with an expanded menu that includes quesadillas, tacos and salads. It has also found a niche in a market over-saturated with chicken tenders and other fried options, Chief Executive Williams said.
“When you look at the options for grilled chicken across the country, there’s no national player serving grilled chicken,” she said. “There’s a lot of fried chicken, and so when we think about how we’re positioning the brand, it’s all around the chicken.”
The brand has undergone a turnaround effort in recent years and has completed remodels and menu additions since Williams joined in 2024.
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El Pollo Loco traces its history to the 1970s in Guasave,Mexico, where salesman Pancho Ochoa started it with his family’s citrus-marinated chicken recipe.
The chain grew to more than 80 restaurants in Mexico and opened its first U.S. location in Westlake in 1980.
In 1983, Denny’s Inc. bought Ochoa’s American restaurants and expanded their network, though largely sticking to Southern California. The chain was later sold to a private equity group.
“We’ve spent a lot of time with our menu, making sure we have the right products,” Williams said. “El Pollo Loco is a beloved Southern California brand, and we know that when we are able to take it across the country, that same love and fandom is going to exist.”
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Canham-Clyne said he expects demand to be consistent outside of California.
“I think they’re right that there are people out there who want grilled chicken and don’t have a place to buy it,” he said.
Foot traffic for El Pollo Loco also saw a boost following the cyclosporiasis outbreak tied to lettuce served at Taco Bell.
“It was a good affirmation that our quality speaks to consumers,” Williams said. “We don’t cut corners. We like to say it would be loco to not do things the hard way.”
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This story originally appeared in Los Angeles Times.
Dining and Cooking