Dive Brief:
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Building off its new logo, which was revealed in March, El Pollo Loco will aggressively refocus marketing efforts and menu innovation on dinner and delivery in 2019, the company announced in a third-quarter earnings call last week. Revenue jumped 5.5% to $106.7 million, up from $101.2 million, while net income clocked in at $7.6 million, up from $6 million at this time last year. Its stock has likewise surged 38% in 2018 to almost $15.50 a share.
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About 50% of El Pollo Loco's customer base is Hispanic, the California-based chain learned from a recent customer study, and its family meals account for 30% of sales. In addition to growing delivery through DoorDash, which accounts for 7.5% of total sales, El Pollo Loco will also promote limited-time menu items and target more advertising to Hispanic customers.
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With about 500 restaurants in Southern California and Las Vegas, El Pollo Loco has expanded to Sacramento, Texas and Arizona. In Dallas, it’s testing the new logo and store design featuring an open kitchen that harkens to an authentic Mexican taqueria.
Dive Insight:
El Pollo Loco has made this transition before. In 2011 it reported a nearly $40 million net loss, a year after introducing steak in a failed marketing campaign under the tagline, “Feel the Mexcellence!” Starting in 2012, the Costa Mesa-based chain renovated existing stores and opened new ones with more open, modern designs, and wisely upgraded quality with freshly made salsas and sliced avocados. It doubled down on its namesake citrus-marinated grilled chicken, added a line of salads and removed 12 to 15 slow-moving items to focus on food quality and customer service.
After completing a brand architecture overhaul late last year, El Pollo dedicated itself to understanding its customer base. In October the company hired Estee Lauder human resources vet Jennifer Jaffe as its first Chief People Officer, a move that signals increased attention on employees, management and customer perception. For instance, managers can share ideas and build community in specialized Facebook groups.
The combo platters — a mix of signature chicken legs and thighs with two or three sides and tortillas — feed four, six or eight people. On a menu more akin to a traditional Mexican taqueria than a Taco Bell or a Chipotle, customers can also choose tostadas, salads, rice bowls, burritos and quesadillas. As part of its 2019 vision, El Pollo will continue pushing limited-time items, which currently include a $20 Grande Value Dinner with extra-large sides and 10 or 14 pieces of chicken, tostada salads with chile lime, barbeque bacon or mango habanero chicken, and tamales.
The chain has long focused on lunch but wants to position itself as a go-to dinner destination. The high family meal numbers no doubt drove that shift, and El Pollo will accordingly add employees to speed up the drive-thru, especially at company-owned restaurants — which lag behind franchised stores in transaction counts. Company spots, however, post higher check averages, CEO Bernard Acoca said in the earnings call. Acoca also expects to focus on expanding DoorDash delivery and its growing loyalty program, which he said garners about 10,000 new members every week.
Delivery could help the chain differentiate from competitors, especially as top rivals like Del Taco center their marketing around similar fresh and authentic claims, which has driven strong growth this year.
