El Pollo Loco is preparing to accelerate restaurant development in 2027, with plans to open as many as 30 locations as improving sales performance attracts franchisees and creates opportunities to take the fire-grilled chicken brand into new markets.
The company expects to open 25 to 30 restaurants next year, compared with a projected 18 to 20 in 2026. Roughly two-thirds of the new locations will be outside California. The expansion includes an anticipated debut in New York City, where the chain has secured agreements for 15 restaurants over the next five years.
The development outlook follows another quarter of positive traffic and same-store sales growth. Systemwide same-store sales increased 5 percent in the third quarter, marking the fourth consecutive quarter of positive comparable sales. Traffic rose 0.7 percent, and restaurant contribution margin reached 18.4 percent, within the company’s long-term target of 18 to 20 percent.
“Our positive traffic for the quarter is another proof point that more guests are choosing El Pollo Loco and that our quality chicken at an affordable price is resonating with existing and new guests,” CEO Liz Williams told investors.
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The sales momentum continued into October, with systemwide comparable sales increasing 3.6 percent through October 28. El Pollo Loco expects full-year same-store sales growth of approximately 4.5 percent.
Menu innovation has been a significant contributor to the performance. The third quarter featured Loaded Quesadillas in Queso and Street Corn varieties, featuring citrus-marinated, fire-grilled chicken breast. Priced below $10 individually or $10.99 as a combo, the products attracted incremental purchases without displacing sales of existing quesadillas. Their popularity prompted the company to retain them as an exclusive offering for Loco Rewards members.
El Pollo Loco also introduced its Chatacoffee beverage lineup, featuring horchata, iced coffee, and cold foam. A Caramel Apple variation followed in late September. The beverages have helped increase average checks and offer an opportunity to capture additional afternoon traffic.
The chain expanded its menu with Cheesy Enchilada Double Chicken Bowls and Pumpkin Pie Mini Churros, which contributed incremental sales to their respective categories.
Additional innovation is planned for 2027, including crunch salads, deluxe wraps featuring grilled and crispy chicken, and a line of grilled chicken sandwiches.
“More than ever, people are looking for protein-forward meals and fire-grilled chicken is what we do best and fits perfectly,” Williams said. “We believe these new items give us even more ways to deliver what new and existing guests are craving.”
The company is also gaining traction among younger consumers, with improvements in customer reach and visit frequency. Williams attributed the progress to portable menu offerings, competitive pricing, and the chain’s evolving brand messaging.
Digital sales, including orders through the company’s app, website, and kiosks, accounted for 31 percent of systemwide sales during the quarter, up from 27 percent a year earlier.
Loco Rewards membership increased nearly 11 percent year-over-year. Members now account for 14 percent of restaurant visits and visit twice as frequently as nonmembers annually.
The company has used exclusive promotions to boost engagement. Its four-week Loco Days summer event drove a more than 40 percent increase in daily loyalty sign-ups and 16 percent growth in loyalty transactions.
Another major marketing initiative came September 9, when the company celebrated the inaugural National Grilled Chicken Day. A free two-piece chicken meal promotion produced 56,000 redemptions and 25,000 new rewards sign-ups, making it the highest transaction day in Loco Rewards history.
The company plans to continue using targeted offers, including weekly Loco Friday promotions, two-for-$5 Taco Tuesdays, and an upcoming 12 Days of Pollo holiday event.
“In this economic environment, guests are looking for deals, and we are building our Loco Rewards program as the place for the best deals,” Williams said.
The company opened 12 restaurants through the end of the third quarter and added two more afterward. Its development pipeline includes a mix of second-generation conversions and ground-up construction, with approximately one-quarter of next year’s openings expected to come from new franchise partners.
New York represents one of the most significant opportunities in the pipeline. Franchise partners Al and Liz Amiri and Mina Behboudi have signed a lease for the brand’s first Queens restaurant, targeting an opening in mid-2027. The group already operates El Pollo Loco locations in Southern California and Denver.
Williams sees the New York debut as an opportunity to establish distribution infrastructure that could eventually support expansion along the East Coast.
“People love fire-grilled chicken. We think they’re going to love it in New York,” Williams said. “And then we’ll set up the distribution for the New York metropolitan area, but that same distribution can serve up and down the Eastern Seaboard. So we think there’s a ton of potential to unlock that.”
El Pollo Loco also expanded into Idaho earlier this year, opening restaurants in Meridian and Nampa. Additional third-quarter openings occurred in Dallas, Lubbock, Albuquerque, and Ceres, California, each utilizing a second-generation restaurant property.
To support development, the company has adjusted its franchise incentives for 2027, reducing them in California and established expansion markets but increasing support in new territories where operators face additional startup and distribution costs.
“Where we got a little more aggressive was in the brand-new markets, i.e., the New York market,” CFO Ira Fils said. “We actually increased those incentives as we’re looking to set up the brand, all the operating efficiencies needed and a new distribution center, we got a little more aggressive to get that market up and running.”
The company is seeking to support that expansion without sacrificing the restaurant profitability improvements achieved over the past two years.
Food and paper costs declined 30 basis points to 24.4 percent, despite approximately 2 percent commodity inflation during the quarter. Labor expenses held steady at 30.4 percent, with wage inflation below 1 percent.
Occupancy and other operating expenses increased 20 basis points to 26.7 percent, driven by delivery and mobile ordering fees, utilities, repairs, and maintenance. The company recorded an effective menu price increase of 3.9 percent compared with the prior year.
Williams indicated that future margin improvements could come from operational efficiencies, including moving certain food preparation processes upstream to simplify kitchen operations, improve consistency, and free employees to spend more time serving customers.
The company also upgraded its Pollo Zone training platform to improve employee onboarding and preparation for new menu launches. Early results indicate that restaurants completing the training are delivering better order accuracy.
El Pollo Loco recently appointed Damon Thomas as COO bringing experience from Shake Shack and Raising Cane’s.
Q3 revenue increased to $126.3 million from $121.5 million a year earlier. Net income decreased to $6.9 million, or 23 cents per diluted share, from $7.4 million, or 25 cents per share. Adjusted EBITDA declined to $17.1 million from $17.4 million. The company reiterated its full-year adjusted EBITDA outlook of $68 million to $70 million, with results expected near the midpoint.
El Pollo Loco also completed 21 restaurant remodels during the third quarter, bringing its year-to-date total to 45, including 23 company-operated locations and 22 franchised restaurants.
