El Pollo Loco’s third quarter was marked by a positive market response, despite revenue coming in below Wall Street expectations. Management pointed to effective menu innovation—such as the successful introduction of new quesadilla and burrito bowl offerings—and increased digital engagement as key factors supporting traffic growth and margin expansion. CEO Elizabeth Williams highlighted the company’s focus on balancing value and quality, with targeted promotions and operational improvements driving profitability even in a challenging consumer environment.
Is now the time to buy LOCO? Find out in our full research report (it’s free for active Edge members).
El Pollo Loco (LOCO) Q3 CY2025 Highlights:
- Revenue: $121.5 million vs analyst estimates of $124 million (flat year on year, 2% miss)
- Adjusted EPS: $0.27 vs analyst estimates of $0.21 (26.2% beat)
- Adjusted EBITDA: $17.42 million vs analyst estimates of $15.56 million (14.3% margin, 12% beat)
- Operating Margin: 9.4%, up from 8.4% in the same quarter last year
- Locations: 498 at quarter end, up from 496 in the same quarter last year
- Same-Store Sales were flat year on year (2.7% in the same quarter last year)
- Market Capitalization: $318.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From El Pollo Loco’s Q3 Earnings Call
- Jake Bartlett (Truist Securities) asked about market share gains in California. CEO Elizabeth Williams confirmed that El Pollo Loco is outperforming peers in the region, attributing this to value positioning and operational enhancements.
- Jake Bartlett (Truist Securities) inquired about strategies to maintain positive sales trends amid sector softness. Williams explained adjustments to menu value and improved guest experience have supported resilience.
- Jake Bartlett (Truist Securities) questioned the sustainability of margin improvements. CFO Ira Fils said there are still significant efficiency opportunities, especially in labor and cost of goods sold.
- Andrew Barish (Jefferies) asked about the progress and goals for testing new menu items like tenders and sandwiches. Williams detailed ongoing market tests and a timeline for broader rollout in the coming year.
- Jeremy Hamblin (Craig-Hallum) pressed for details on Q4 margin pressures. Fils cited lower seasonal volume as the primary factor affecting restaurant-level margins in the final quarter.
Catalysts in Upcoming Quarters
In the coming quarters, our StockStory team will be monitoring (1) the adoption and performance of new menu items, (2) the pace and success of unit openings outside California, and (3) the impact of ongoing restaurant remodels on sales and customer engagement. Additionally, we will track progress on operational cost initiatives and the effectiveness of digital channel investments.
El Pollo Loco currently trades at $10.64, up from $9.06 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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