El Pollo Loco Holdings Stock

El Pollo Loco Holdings, Inc. (El Pollo Loco), through its indirect wholly-owned subsidiary, El Pollo Loco, Inc. (EPL), develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco.

The restaurants, which are located principally in California but also in Arizona, Nevada, Texas, Colorado, Utah and Louisiana, specialize in fire-grilling citrus-marinated chicken in a wide variety of contemporary Mexican and LA-inspired entrees, including specialty chicken burritos, chicken quesadillas, chicken tostada salads, chicken tortilla soup, variations on the company’s Pollo Bowl, Pollo Salads and the company’s Pollo Fit entrees.

The company operates within the broader LSR segment, and the company strives to offer the food and dining experience of a fast-casual restaurant and the speed, value, and convenience of a quick-service restaurant (‘QSR’).

Growth Strategy

The company’s key strategies are to embed the company’s unique El Pollo Loco culture; build awareness and own the company’s lane; deliver exceptional service – profitably; and accelerate development.

Franchise Program

Franchisees range in size from single-restaurant operators to the company’s largest franchisee. The company’s existing franchise base consists of many successful, longstanding, multi-unit restaurant operators. As of December 28, 2022, approximately 89% of franchised restaurants were owned and operated by franchisees.

Marketing and Advertising

The company uses multiple marketing channels, including television, radio and digital. The company advertises on local broadcast and cable television.

El Pollo Loco has partnered with DoorDash, UberEats and Grubhub as additional methods for ordering. El Pollo Loco also operates direct delivery via elpolloloco.com or the Loco Rewards App, which is exclusively fulfilled by DoorDash.

Purchasing and Distribution

The company contracts with McLane Company (its ‘primary distributor’), a major foodservice distributor, for substantially all of the company’s food and supplies, including the poultry that the company’s restaurants receive from suppliers. The company’s primary distributor delivers supplies to most of the company’s restaurants three times per week. The company’s restaurants in Texas, Louisiana and Colorado utilize regional distributors for produce. The company’s franchisees are required to use its primary distributor or an approved regional distributor, and franchisees must purchase food and supplies from approved suppliers.

Intellectual Property

The company has registered El Pollo Loco, Pollo Bowl, The Crazy Chicken, and certain other names used by the company’s restaurants as trademarks or service marks with the U.S. Patent and Trademark Office, and El Pollo Loco in approximately 43 foreign countries and the European Union. In addition, the El Pollo Loco logo, website name and address, Facebook, Twitter, Instagram and YouTube accounts are the company’s intellectual property.

Regulation and Compliance

The company and its franchisees are subject to various federal, state and local laws and regulations that govern the company’s business operations, including those governing:

Employment and wage and hour practices, including but not limited to, minimum wage rates, overtime, meal and rest periods, prevention of discrimination, harassment, and retaliation, employment of minors, paid and family leave, unemployment tax rates, workers’ compensation rates, suitable seating, and citizen requirements, and other working conditions;

Privacy and data security, including the collection, maintenance and use of information regarding employees and guests;

Compliance with the Americans with Disabilities Act and similar laws affording various protections and accommodations to employees and guests with disabilities;

Environmental practices, including the discharge, storage, handling, release and disposal of hazardous or toxic substances; regulation of discharges into the air, water and soils, storage and disposal of liquid and solid waste, and clean-up of contaminated soil and groundwater, and regulations restricting the use of straws, utensils and the certain packaging materials;

Compliance with Federal Trade Commission and laws that govern the franchisor-franchisee relationship, including the offer and sale of franchises and certain disclosures to franchisees;

The preparation, sale and labeling of food, including regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspections and mandatory food recalls, menu labeling and nutritional content;

Working conditions, health, sanitation, safety and fire standards, building and zoning requirements, public accommodations and safety conditions, environmental matters, and data privacy;

Building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use;

Health and sanitation and public safety; and

Restaurant operations related to COVID-19.

The company is also subject to the Americans with Disabilities Act, which prohibits discrimination on the basis of disability in public accommodations and employment.

Seasonality

Seasonal factors, including weather and the timing of holidays, cause the company’s revenue to fluctuate from quarter to quarter. The company’s revenue per restaurant is typically lower in the first and fourth quarters (year ended December 2022) due to reduced January and December transactions and higher in the second and third quarters.

History

El Pollo Loco Holdings, Inc., formerly known as EPL Holdings, Inc., was founded in 1975. The company was incorporated in 2005.