El Pollo Loco Q1 Earnings Call Highlights

Key Points

• El Pollo Loco delivered a strong Q1 with system‑wide same‑store sales up 5.8%, restaurant contribution margin expanding 320 basis points to 19.2%, revenue of $126.2 million, GAAP net income of $8.2 million and adjusted EBITDA of $18.2 million.
• Menu innovation and marketing boosted traffic and checks — the Baja Tostada lineup hit a record 8.3% sales mix (tostadas and salads >20% of sales) and the Loco Tenders launch generated over 2 billion impressions, while digital sales rose to about 28% of sales and loyalty activity meaningfully increased.
• The company updated 2026 outlook, targeting system‑wide comp growth of 2%–4%, adjusted EBITDA of $67.5M–$69.5M, restaurant‑level margin around 18.25%–18.75%, plans to open 18–20 new restaurants, and reported roughly $44M of debt and $3.9M cash (debt later rose to $46M).

El Pollo Loco NASDAQ: LOCO reported first-quarter 2026 results that management said reflected continued momentum from its ongoing brand transformation, highlighted by same-store sales growth and margin expansion alongside increased marketing and operational initiatives.

First-quarter sales and margin performance

Chief Executive Officer Liz Williams said the company was “proud of our first quarter results,” citing system-wide same-store sales growth of 5.8% and restaurant-level margin expansion of 320 basis points year-over-year. Williams also pointed to “balanced daypart performance,” with lunch traffic returning, dinner continuing to grow, and late evening gaining traction.

Chief Financial Officer Ira Fils said total revenue for the quarter ended April 1, 2026 was $126.2 million, up from $119.2 million a year earlier. Company-operated restaurant revenue rose 7.6% to $105.9 million, driven primarily by 5.4% growth in company-operated comparable restaurant sales and contributions from two company restaurants opened since the first quarter of 2025.

Fils said the increase in company-operated comparable sales reflected a 5.7% increase in average check, partially offset by a 0.3% decline in transactions. He added that the company’s effective price increase versus 2025 was 4.6% in the first quarter.

On profitability, Fils said the restaurant contribution margin improved to 19.2% from 16% in the year-ago period. Food and paper costs declined 30 basis points as a percentage of company restaurant sales to 24.9%, which he attributed to menu pricing and cost management initiatives, partially offset by “approximately 70 basis points of commodity inflation and higher discounts.” Labor and related expenses declined about 260 basis points as a percentage of sales to 30.1%, reflecting operating efficiencies and lower insurance-related costs, as well as leverage on the comparable sales increase.

The company reported GAAP net income of $8.2 million, or $0.27 per diluted share, compared with $5.5 million, or $0.19 per diluted share, in the prior-year quarter. Adjusted EBITDA was $18.2 million, up from $13.9 million, and adjusted net income was $8.3 million, or $0.28 per diluted share.

Menu innovation and marketing focus

Williams emphasized menu innovation as a key driver of traffic and engagement. She highlighted the quarter’s product pipeline, including the Double Pollo Salad lineup introduced in three flavors and the mid-February launch of Baja Double Tostadas, which feature “double portion of fire-grilled chicken or seasoned shrimp” with a lime crema sauce.

According to Williams, the Baja Tostada lineup “exceeded expectations,” delivering a “record-breaking 8.3% sales mix” for the brand, with the combined tostada and salad category peaking at “over 20% of our total sales mix.” She said the company decided to keep the chicken Baja Tostada on the menu into summer to support check-building opportunities.

Late in the quarter, the company launched Loco Tenders, which Williams described as “all-white meat, boldly seasoned tenders” accompanied by three dipping sauces: Baja Lime, House Ranch, and Pollo Loco Sauce. She said the company expected tenders to help drive traffic, including from new consumers less familiar with the brand.

Williams also discussed the marketing rollout behind Loco Tenders, including seeding the product at the REVOLVE Festival at Coachella and hosting a media and influencer event. She said the campaign generated “over 2 billion impressions across social channels leading up to the launch day,” adding that the product was “already meeting our expectations” early in the launch.

In response to analyst questions, Williams said the company was seeing “a nice amount of trial,” and that the sauces and a “little bit of a spice” differentiator were part of the product’s positioning. She also said the company was seeing tenders added to larger orders, in addition to being purchased as a standalone meal.

Operational initiatives and digital/loyalty performance

Williams said the company continued to make progress on operational execution, citing sequential improvement across guest satisfaction metrics tracked by SMG, including accuracy, quality, friendliness, cleanliness, and speed. She described initiatives designed to improve speed and order accuracy, including redesigning kitchen display screens, reconfiguring point-of-sale keys, streamlining ordering, and enhanced training protocols such as “triple-checking every order.” The company is also testing enhanced product labels and consumer-facing order confirmation boards.

Digital sales mix also increased. Williams said total digital business (including kiosks) represented approximately 28% of sales in corporate restaurants during the first quarter. She reported year-over-year improvement in sales and transactions from loyalty members, which she attributed to a more aggressive approach to app-based promotions, targeted value through the Loco Rewards program, and app enhancements.

Williams highlighted loyalty initiatives such as “Loco Friday Drops,” tier-based “boosts,” and national food holiday promotions. She said a National Burrito Day activation delivered the “single highest loyalty sales day in our company’s history,” with a 30% increase in redemptions over last year, a participation rate of 21% (up from 19%), and a 7% increase in average check compared with the prior year. She added that over the trailing 12 periods, member frequency was up 13% and member spend was up over 17% year-over-year.

Development outlook, remodeling activity, and balance sheet

Williams said the company remained on track to open 18 to 20 new restaurants system-wide in 2026, with most openings expected outside California, and about 75% expected to be lower-cost second-generation sites. She also said the company continued to see “strong returns” from its remodel program and would balance remodel pace to avoid operational disruption.

Fils said the company completed six franchised remodels and seven company remodels during the first quarter. He also noted that franchise revenue declined 8.8% to $12 million, primarily due to $1.9 million of franchise IT pass-through revenue in the prior-year period tied to a point-of-sale rollout completed in 2025, partially offset by comparable sales growth and franchise store openings.

On liquidity, Fils said that as of April 1, 2026, the company had $44 million of debt outstanding and $3.9 million in cash. He added that the company subsequently borrowed a net additional $2 million on its revolver, bringing debt outstanding to $46 million as of May 7, 2026.

Updated 2026 guidance and near-term trends

Fils said system-wide traffic turned positive in the quarter, with system-wide traffic up 0.6%. He added that sales momentum continued into the second quarter, with system-wide comparable store sales up 4.8% quarter-to-date through April 29, consisting of a 3.9% increase in company-operated restaurants and a 5.3% increase in franchise restaurants. Looking ahead, he said the company expected second-quarter same-store sales to be in the 3% to 4% range.

The company updated full-year 2026 guidance, including:

• System-wide comparable store sales growth: now expected to be 2% to 4%
• Adjusted EBITDA: now expected to be $67.5 million to $69.5 million
• Restaurant-level margin: expected to be 18.25% to 18.75% (an increase of 25 basis points from prior guidance), with Q2 margin expected at 19% to 19.5%
• Unit growth: at least 3 to 4 company-operated openings and 15 to 16 franchise-operated openings
• Capital spending: $37 million to $40 million
• G&A: $52 million to $54 million, excluding one-time charges and including approximately $6.5 million in stock compensation
• Effective tax rate: approximately 29% (29.5% before discrete items)
• Depreciation and amortization: expected at $18.5 million to $19 million

On pricing, Fils told analysts the company expected pricing to “step down” from first-quarter levels to about 3% to 3.5% in the second quarter and “just a little above 3%” in the second half, with a “small menu price increase scheduled for midyear of about 1.5%.”

Williams acknowledged broader consumer pressures tied to elevated energy and gas prices, but said on the call that the company’s consumer “remained steady.” Fils added that the company had not seen an impact from increased inflationary pressures and gas prices in its current trends.

About El Pollo Loco NASDAQ: LOCO

El Pollo Loco NASDAQ: LOCO is a fast-casual restaurant chain specializing in Mexican-style fire-grilled chicken and complementary menu offerings. The company's signature product is its marinated, flame-grilled chicken, which is prepared in an open-flame rotisserie and served in a variety of formats including tacos, burritos, bowls and salads. In addition to its core chicken offerings, El Pollo Loco menu items feature fresh-made salsas, guacamole, sides such as charro beans and fresh tortillas, as well as a selection of beverages and desserts.

Founded in 1975 in Guasave, Sinaloa, Mexico, by Juan Francisco Ochoa, the concept expanded into the United States in 1980 with its first U.S.

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