Fast food chain El Pollo Loco (NASDAQ: LOCO) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 3% year on year to $125.8 million. Its non-GAAP profit of $0.28 per share was 16.7% above analysts’ consensus estimates.
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El Pollo Loco (LOCO) Q2 CY2025 Highlights:
- Revenue: $125.8 million vs analyst estimates of $125.1 million (3% year-on-year growth, 0.6% beat)
- Adjusted EPS: $0.28 vs analyst estimates of $0.24 (16.7% beat)
- Adjusted EBITDA: $18.47 million vs analyst estimates of $16.28 million (14.7% margin, 13.5% beat)
- Operating Margin: 9%, down from 10.1% in the same quarter last year
- Locations: 499 at quarter end, up from 495 in the same quarter last year
- Same-Store Sales were flat year on year (4.5% in the same quarter last year)
- Market Capitalization: $319.5 million
Liz Williams, Chief Executive Officer of El Pollo Loco Holdings, Inc., stated, “During the quarter, we made meaningful progress against our strategy as the investments we’ve made in our brand re-launch and menu innovations are resonating with our customers. Despite ending the quarter with slightly negative sales performance, we saw modest sequential improvement in overall sales and achieved a return to positive system-wide traffic growth. Additionally, we had profitability growth across both the restaurant and corporate-level. With the successful introduction of Fresca Wraps and Salads, followed by premium Quesadillas, we are building a strong foundation for long-term sustainable growth. Our solid unit growth in 2025, combined with a growing development pipeline for further acceleration in 2026 position us well for national expansion as the fire-grilled chicken leader.”
Company Overview
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ: LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $479.7 million in revenue over the past 12 months, El Pollo Loco is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.
As you can see below, El Pollo Loco grew its sales at a weak 1.4% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as its restaurant footprint remained unchanged and it barely increased sales at existing, established dining locations.
This quarter, El Pollo Loco reported modest year-on-year revenue growth of 3% but beat Wall Street’s estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to grow 3.7% over the next 12 months. While this projection implies its newer menu offerings will spur better top-line performance, it is still below the sector average.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow.
El Pollo Loco operated 499 locations in the latest quarter, and over the last two years, has kept its restaurant count flat while other restaurant businesses have opted for growth.
When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.
Same-Store Sales
The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
El Pollo Loco’s demand within its existing dining locations has been relatively stable over the last two years but was below most restaurant chains. On average, the company’s same-store sales have grown by 1.8% per year. Given its flat restaurant base over the same period, this performance stems from a mixture of higher prices and increased foot traffic at existing locations.
In the latest quarter, El Pollo Loco’s year on year same-store sales were flat. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if El Pollo Loco can reaccelerate growth.
Key Takeaways from El Pollo Loco’s Q2 Results
We were impressed by how significantly El Pollo Loco blew past analysts’ EBITDA expectations this quarter. We were also glad its same-store sales outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 1.2% to $10.45 immediately following the results.
El Pollo Loco may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
