El Pollo Loco's Q2 2025: Unpacking Key Contradictions in Pricing, Growth, and Innovation Strategies

Menu price increase strategy, unit growth and franchise confidence, menu innovation and strategic focus, pricing strategy and consumer behavior, franchise growth and economic environment are the key contradictions discussed in El Pollo Loco's latest 2025Q2 earnings call.



Sales and Traffic Trends:
- El Pollo Loco reported system-wide comparable store sales decrease of 0.7% for the third quarter to date, with a 0.6% increase in company-operated restaurants and a 1.4% decrease in franchise restaurants.
- The mixed trends were attributed to macroeconomic challenges, consumer value sensitivity, and differing discounting strategies between company and franchise locations.

Margin Expansion:
- The company achieved a company-operated restaurant revenue increase of 2% to $104.3 million from $102.3 million in the same period last year, despite a slightly negative sales performance.
- This margin expansion was driven by a focus on operational excellence, strategic pricing, and cost management, allowing for profitability despite discounting efforts.

Menu Innovation and Brand Relaunch:
- El Pollo Loco introduced new products like the Fresca Wrap and Salads, and premium chicken quesadillas, which are mixing at 4% to 5% and 4 to 5 points respectively.
- The brand relaunch, including a new marketing campaign, was aimed at differentiating El Pollo Loco in the QSR industry, with early customer feedback indicating a positive response to the new offerings.

Digital and Unit Growth:
- The company's digital business, including kiosks, grew to 25.5% of sales compared to 17.1% in the previous year.
- Plans to open at least 10 new restaurants in 2025, with a significant expansion expected in 2026, driven by the attractiveness of the business model, improved unit economics, and an incentive-driven franchise strategy.