El Pollo Loco isn’t pitching a turnaround anymore. It’s trying to prove it can sustain one.
Coming out of the first quarter, the fire-grilled chicken chain is leaning into a playbook covering menu innovation, operational discipline, and digital engagement. It’s also shifting attention toward long-term traffic growth and national expansion.
Leadership believes the brand has reached a key inflection point.
“As we enter the third year of our brand transformation, El Pollo Loco is building momentum on the strong foundation we’ve built over the past two years,” CEO Liz Williams said during the brand’s Q1 earnings call.
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Systemwide same-store sales increased 5.8 percent in Q1 year-over-year, comprising a 5.7 percent rise at company-owned stores and a 6.1 percent increase at franchise outlets. The comps increase for company-operated restaurants was fueled by a 5.7 percent lift in average check, partially offset by a 0.3 percent decline in transactions. The franchise comp sales consisted of a 4.9 percent increase in average check and 1.1 percent rise in transactions.
That momentum is showing up across multiple areas of the business. Traffic turned positive, margins landed within the company’s long-term target, and performance extended into the second quarter. But the more important question for El Pollo Loco isn’t what happened in Q1—it’s whether the company can keep it going in a pressured consumer environment.
“As we look at the remainder of the year, our main goal remains clear: to drive sustainable traffic growth across our system while maintaining the margin discipline and unit economic improvements that we’ve accomplished over the past two years and to thoughtfully grow El Pollo Loco across the country,” Williams said.
The strategy is based on a few core levers, starting with a significantly upgraded innovation pipeline. The brand has spent the past two years rebuilding its product engine, and early returns suggest it’s connecting with customers.
Baja Double Tostadas exceeded expectations and delivered a record-breaking 8.3 percent sales mix. The chain’s tostada and salad category peaked at over 20 percent sales mix in the quarter. The innovation played so well that El Pollo Loco will keep the chicken Baja Tostada on the menu through the summer.
Additionally, El Pollo Loco is broadening its appeal beyond core items. The recent launch of Loco Tenders is designed to be a significant traffic driver and bring in new customers who may not yet be familiar with the brand’s fire-grilled positioning. Also, the company didn’t treat the launch as just another product drop. Instead, it leaned heavily into cultural marketing, previewing the tenders at Coachella and generating billions of impressions across social platforms.
“We believe that the combination of bold flavors and bold activations is a winning equation for us,” Williams said.
That approach is becoming an important part of how El Pollo Loco introduces new products and builds relevance with younger consumers—an audience the brand is increasingly reaching.
Looking ahead, Williams said the pipeline remains deep, spanning multiple dayparts and categories.
“From testing loaded quesadillas to grilled chicken sandwiches to cheesy enchilada bowls and our newest beverage offering, our pipeline is the most robust we have delivered in years,” Williams said.
But product alone isn’t carrying the strategy. El Pollo Loco is pairing innovation with a stronger operational foundation around speed and accuracy.
The company is being methodical, starting with accuracy before chasing speed gains. From there, the brand is layering in operational improvements, including redesigned kitchen systems, streamlined ordering processes, and enhanced training protocols. Leadership believes improving the guest experience—especially in high-frequency channels like drive-thru—can unlock incremental traffic without relying solely on discounting.
“Our goal is to make it easier and faster for team members to deliver customer orders accurately and efficiently,” Williams said.
Digital is playing a growing role too. The company’s digital mix reached roughly 28 percent of sales in company-operated restaurants during the quarter, and loyalty engagement is accelerating. Programs like Loco Friday Drops and targeted promotions are meant to create urgency and drive repeat visits. The results are beginning to show up in behavior metrics, with increases in frequency and spend among loyalty members.
At the same time, El Pollo Loco is trying to balance traffic growth with disciplined economics. The chain reported 19.2 percent restaurant-level margin in the first quarter, well within its long-term range of 18 to 20 percent.
The next hurdle is expanding these margins and maintaining them while reinvesting in the business.
That includes new unit development, which is becoming a more prominent part of the growth story. The company expects to open between 18 and 20 restaurants this year, with most of that expansion happening outside California.
“Our pipeline is building momentum with existing franchise partners and new partners while also leveraging our company capital,” Williams said.
The push beyond core markets is deliberate. Leadership sees whitespace opportunity across the country and is actively pursuing new franchise relationships to accelerate expansion.
“With the addition of a new recruiter on our franchise development side, she’s having some great conversations with franchise partners in new markets, some very far away from California,” Williams said.
In some cases, the company is combining corporate development with franchise growth to seed new markets. Dallas is one example; the chain opened its first corporate unit in the market at the beginning of 2026.
Early results from new markets are encouraging.
“We are seeing a range. But I think really in totality, what we are seeing are volumes that give us confidence that they make sense for us to continue to deploy capital,” CFO Ira Fils said.
El Pollo Loco ended Q1 with 505 restaurants—176 corporately owned and 329 franchises.
All of this is unfolding against a consumer backdrop that remains uncertain. Elevated gas prices and inflationary pressures could weigh on discretionary spending, but so far, El Pollo Loco hasn’t seen a meaningful pullback.
The company is betting that its combination of value, product innovation, and improved operations can continue to resonate.
“Our performance to date and the progress we’ve made across our strategic pillars gives us confidence that El Pollo Loco is on the right path,” Williams said. “As we look ahead, we believe the investments we’ve made in innovation, operations and technology, coupled with the momentum in our development pipeline, have positioned us well to deliver on our commitments for 2026 and beyond.”
