El Pollo Loco Q4 Earnings Call Highlights

Key Points

• El Pollo Loco reported Q4 revenue of $123.5 million and adjusted EBITDA of $16.9 million, with restaurant contribution margin improving to 17.5% and adjusted net income of $7.3 million; company-operated comparable sales were modestly positive in Q4 (+0.4%) and system-wide comps accelerated to +2.4% in early 2026.
• 2026 guidance: the company expects system-wide comparable store sales growth of 2%–3%, adjusted EBITDA of $66M–$68M, 3–4 company and 15–16 franchised openings, and $37M–$40M in capital spending, and it laid out a multi-year plan targeting continued unit growth and high-single-digit adjusted EBITDA expansion toward 18%–20% restaurant margins.
• Management is investing in expansion, menu innovation and technology—opening nine restaurants in 2025 (entering Washington and New Mexico), completing 69 remodels, growing loyalty participation and digital revenue >20%, upgrading to a cloud POS and hiring a CTO—while noting these investments will increase near-term G&A.

El Pollo Loco NASDAQ: LOCO executives highlighted what they described as improving sales momentum, expanding margins, and an accelerating development pipeline during the company’s fourth-quarter 2025 earnings call held March 12, 2026. Management also issued financial guidance for 2026 and introduced a multi-year framework for 2027 and 2028, pointing to continued comparable sales growth, restaurant expansion, and adjusted EBITDA gains.

Fourth-quarter results show revenue growth and margin improvement

Chief Financial Officer Ira Fils said total revenue for the fourth quarter ended Dec. 31, 2025 rose to $123.5 million from $114.3 million in the prior-year period. Company-operated restaurant revenue increased 7.1% to $102.4 million, which Fils said was driven by 0.4% growth in company-operated comparable restaurant sales and an additional operating week in the quarter. The company’s fourth quarter included 14 weeks, compared with 13 weeks in the year-ago period.

Within comparable sales for company-operated restaurants, average check increased 2.7% while transactions decreased 2.3%. Fils said the effective price increase versus 2024 was about 3.2%.

Franchise revenue increased 15.5% to $13.0 million, driven by a 3.2% increase in comparable restaurant sales, the additional operating week, revenue recognized related to terminated franchise development agreements, and revenue tied to franchise restaurant openings since the fourth quarter of 2024. Franchise comparable sales growth reflected a 2.4% increase in average check and a 0.8% increase in transactions.

Restaurant-level profitability improved in the period. Food and paper costs as a percentage of company restaurant sales decreased 70 basis points to 24.4%, which Fils attributed to higher menu pricing and about 100 basis points of commodity deflation, partially offset by higher discounting. Labor and related expenses decreased about 90 basis points to 31.5% as the company benefited from operating efficiencies, labor deployment and scheduling improvements, and the continued use of technology and equipment. Occupancy and other operating expenses rose 80 basis points to 26.6%, driven by higher utilities, software maintenance fees related to kiosk and point-of-sale rollouts, rent, and liability insurance, partially offset by lower repairs and maintenance.

As a result, restaurant contribution margin improved to 17.5% from 16.7% a year earlier. General and administrative expenses rose to $13.1 million from $11.1 million, reflecting incremental labor costs, severance and executive transition costs, and other G&A, partially offset by lower management bonus expense.

El Pollo Loco reported GAAP net income of $6.5 million, or $0.22 per diluted share, compared with $6.0 million, or $0.20 per diluted share, in the year-ago quarter. Adjusted EBITDA was $16.9 million, up from $14.3 million, with Fils noting the additional week contributed approximately $770,000 to adjusted EBITDA. Adjusted net income was $7.3 million, or $0.25 per diluted share, compared with $5.9 million, or $0.20 per diluted share, in the prior-year quarter.

Same-store sales trends and early 2026 momentum

For full-year 2025, Fils said system-wide comparable store sales increased 0.1%, driven by a 0.7% increase in average check and partially offset by a 0.6% decline in transactions (including “Q3 true ups,” as described on the call).

Management said momentum continued into early 2026. System-wide comparable store sales for the first quarter-to-date through Feb. 25, 2026 increased 2.4%, consisting of a 1.8% increase in company-operated restaurants and a 2.8% increase in franchise restaurants.

When asked about consumer demand, CEO Liz Williams said consumers remain focused on “great food at a great value,” with interest in healthier and quality options while staying within budget. Williams pointed to value responses in the fourth quarter tied to burrito bowls, app offers, and third-party delivery. She also said the company was lapping some prior-year factors on the West Coast that kept consumers at home and said the company was “not seeing as much of that this year.”

In response to a question on higher gas prices in California following geopolitical events, Williams said the company had not seen anything notable, while adding the company was watching the situation closely.

Menu innovation, marketing, and operational focus

Williams credited fourth-quarter performance in part to the Street Corn Double Chicken and Queso Crunch Double Chicken Burrito Bowl introduced in late September. She said those items exceeded expectations in guest response and sales contribution, prompting the company to keep both bowls as permanent menu items. The company also launched a $29.99 “Fam Feast” during the quarter, described as an eight-piece fire-grilled chicken meal with sides, tortillas, salsas, and churros.

In early 2026, Williams highlighted Double Pollo Salads launched in January, including Street Corn, Mexican Caesar, and Bacon Ranch options, each with more than 50 grams of protein and a double portion of chicken. She said Street Corn and Mexican Caesar salads earned permanent placement on the menu. The company also launched Baja Double Tostadas in mid-February, including a seasonal seafood option with shrimp, with Williams calling early response encouraging.

Williams said the company introduced a “protein menu” in February featuring items with more than 20 grams of protein, emphasizing that it requires “no new operational lift.” Looking ahead, she said the company plans to launch “Loco Tenders” later in the spring, featuring dipping sauces including Pollo Loco Sauce, Baja Lime, and House Ranch. She also said the company is testing loaded quesadillas, a crispy grilled chicken sandwich (still in test, with potential timing later in the year), and beverages including Horchata Iced Coffee and Cold Foam Coolers planned for later in 2026.

On marketing, Williams cited the company’s “Let’s Get Loco” campaign and brand activations such as the “Loco AI Challenge,” “12 Days of Pollo,” and a promotion declaring Monday “Leg & Thigh Day.” She also said local marketing has shifted toward more grassroots support for fundraising and catering, particularly in new markets. Williams added that early data suggests momentum with younger consumers, particularly ages 25-34.

Operationally, Williams said the company invested in third-party measurement and customer feedback benchmarking, and that overall satisfaction scores were outpacing the QSR industry as measured by SMG. She also noted sequential improvements across accuracy, quality, friendliness, cleanliness, and speed, with friendliness showing the largest sequential increase. The company is deploying tools and AI applications to improve efficiency and customer experience, and Williams cautioned that these investments will increase G&A in the near term.

Digital growth and technology investments

Williams said the company’s digital business gained momentum in the fourth quarter, aided by app-based promotions and targeted value through the Loco Rewards program. She said loyalty revenue and participation rates grew more than 20% year-over-year. The company refreshed the program in January with “Boost,” described as seasonal offers exclusive to rewards members.

Williams also said delivery grew 12% year-over-year in 2025, and management believes those transactions are incremental rather than cannibalizing existing traffic. On technology, she said the company completed an upgrade of all company and franchise restaurants to a cloud-enabled point-of-sale platform. The company also hired a Chief Technology Officer, Vadim Parizher, who Williams said previously worked at Taco Bell, Allergan, and Amgen.

Development, remodels, balance sheet, and outlook

Williams said El Pollo Loco opened nine new restaurants in 2025, including its 500th restaurant in Colorado Springs, and entered two new states (Washington and New Mexico), bringing its footprint to nine states. She said restaurants opened since 2024 are averaging over $2 million annually. Of the nine restaurants opened in 2025, six were outside California and seven used second-generation restaurant assets with lower build costs.

She highlighted a company-owned Dallas location built in a former Arby’s site with a $1.4 million build cost and early sales results in line with expectations. Williams also pointed to strong openings in Washington and New Mexico during Q&A, describing the first Washington unit (in Kent) as exceeding expectations and generating demand high enough that the restaurant had not enabled third-party delivery.

On remodels, management said the company completed 69 planned remodels in 2025 and has seen consistent mid-single-digit sales lifts in company-operated locations. For 2026, the company plans 25-35 company-operated remodels and 30-40 franchise-operated remodels. Fils added that in the fourth quarter the company completed 25 franchise re-remodels and 10 company remodels, bringing full-year totals to 17 company and 52 franchise remodels.

As of Dec. 31, 2025, the company had $51 million of debt outstanding and $6.2 million in cash. Fils said the company paid down an additional $3 million on its revolver after year-end, bringing debt outstanding to $48 million as of March 12, 2026. In discussing capital allocation, Fils said the company plans to invest cash into corporate unit development, remodels, and operational improvements in 2026, while also evaluating potential shareholder returns over time.

For 2026, the company guided to:

• System-wide comparable store sales growth: 2% to 3%
• New unit openings: 3 to 4 company-operated and 15 to 16 franchised-operated restaurants
• Capital spending: $37 million to $40 million
• G&A expenses: $52 million to $54 million (excluding one-time charges and including about $6.5 million in stock compensation)
• Adjusted EBITDA: $66 million to $68 million
• Effective tax rate: approximately 29% before discrete items

Fils said the company expects commodity inflation of 1% to 2% in 2026 and wage inflation of 2% to 3% for company-owned locations. Management also expects full-year 2026 restaurant-level margin of 18% to 18.5%, with first-quarter margins expected between 17.5% and 18%.

Additionally, the company introduced longer-term guidance for 2027 and 2028, calling for low-single-digit system-wide comparable restaurant growth, mid-single-digit system-wide restaurant growth, and high-single-digit adjusted EBITDA growth. In Q&A, management said the multi-year outlook reflects continued margin opportunities toward an 18% to 20% restaurant-level margin range and expected G&A leverage after 2026 investments.

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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