El Pollo Loco’s sales and profitability improved last quarter. | Photo: Shutterstock.
El Pollo Loco on Thursday released a quarterly earnings report that was as confident as the company has been in years.
The Costa Mesa, California-based chain said that its same-store sales rose 2.1% while restaurant margins improved better than the company expected. The company then released projections not only for 2026 but for 2027, when it expects adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, to grow in the “high single digits.”
And then CEO Liz Williams set the stage for the fast-food chicken chain to ramp up unit growth to levels not seen in years. “We are a brand that is ready to grow again through a business model that supports sustainable expansion,” she told analysts.
It was all enough to elicit cheers from investors. El Pollo Loco’s stock soared more than 16% on Friday on the report.
El Pollo Loco opened nine new locations, though four units closed, bringing the total number of restaurants to 503. But the company plans to speed that growth, with 18 to 20 projected new unit openings slated for 2026.
That would be the most in years. Since 2019, El Pollo Loco has opened just 3.5 net new locations per year on average. But it opened 13.5 locations per year on average in the five years before that.
Most of those new locations the company plans to open are outside of California, where fast-food chains are required to pay workers at least $20 per hour, and where most of El Pollo’s restaurants are located.
The company is doing this with an evolved expansion strategy that focuses on second generation sites that cost less to develop. Seven of the nine new locations El Pollo Loco opened in 2025 came through such sites.
Those locations cost in the “low-to-mid million dollar range” and have been averaging about $2 million in sales per year.
About 20% of the chain’s new builds this year are expected to be company locations. But most of them will come from franchisees. “It’s a lot of our existing franchise partners who have seen the improvement that we’ve made with the economics and they have that enthusiasm and love for the brand and they know how to grow the brand,” Williams said.
She said that El Pollo Loco has new franchise partners in Washington and New Mexico who are adding locations. And Williams added that interest is growing elsewhere. “We have a good amount of interest, but I think there’s more interest out there as we tell the story of the brand and we work our way across the United States,” she said.
Restaurant margins increased to 17.5% from 16.7% a year ago, despite cost challenges. The company this year expects that to improve to 18%.
That was unexpected, given various cost challenges. But Williams said El Pollo Loco took a “methodical approach to cost savings and enhanced labor productivity,” such as technology
She also cited the “operational transformation” the company worked on last year, which enabled employees to focus more on customers. And CFO Ira Fils said the company worked to lower the cost of goods sold.
“This has been a multi-year project for us to leverage what we’re buying to improve what we’re buying to improve margins,” Fils said. The company this year plans to have suppliers do some more prep work on ingredients to save labor inside stores.
“Having our suppliers do some of that prep for us, taking some of that labor and complexity out of our restaurants … will drive efficiency and margin for us,” Fils said.
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