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El Pollo Loco Expands in Concord, Focuses on Vision Design

Zacks Equity Research

El Pollo Loco, Inc. LOCO has been banking on expansion and menu innovation to fortify its brand presence among consumers. The company has been witnessing revenue growth by launching distinguished menu offerings and providing revamped ambiance in its restaurants.

Recently, the company announced the opening of a restaurant in Concord, CA. The restaurant marks El Pollo Loco’s second location in Concord, and is supposed to be owned and operated by franchise partners Manuel Perales, Joseph Rubin, and Jesse Villafana at Concord Pollo Inc.

This move is in line with the company’s continual efforts to foray into various markets. In the last year, El Pollo Loco launched a restaurant in Eastvale. Prior to that, it was expanding in Texas. Further, the company is expected to have opened eight company-owned and nine to 10 franchised restaurants in 2018.

A unique brand positioning and other sales-building strategies have led El Pollo Loco’s shares to gain 58.7% in the past year, outperforming the industry’s rally of 18.6%.

‘Vision Design’ to Aid Sales & Profits

El Pollo Loco is opening all of its restaurants under the ‘Vision Design’ initiative. Restaurants under this program offer authentic atmosphere inspired by Mexico that includes El Pollo Loco’s menu and brand identity. Those restaurants also have an open-kitchen layout to display the preparation of the signature dish.

The company believes that its vision model is going to position it better in the quick-service restaurant space. Per El Polo Loco, it is witnessing encouraging results from the implementation of this model in various company-owned and franchised restaurants. It also aims to reduce costs and drive sales through this initiative.

Bottom Line

We believe the addition of the latest restaurant will further strengthen El Pollo Loco’s hold in California. This will also contribute to the company’s revenue growth.

As it is, El Pollo Loco witnessed year-over-year sales growth of 7.5% in the first nine months of 2018. Moreover, the Zacks Consensus Estimate pegs revenues at $104.6 million for fourth-quarter 2018, suggesting 9.9% growth from the year-ago quarter.

Zacks Rank & Other Key Picks

El Pollo Loco currently carries a Zacks Rank #2 (Buy). Some other top-ranked restaurant stocks are Starbucks SBUX, Brinker EAT and Darden DRI. While Starbucks currently flaunts a Zacks Rank #1 (Strong Buy), Brinker and Darden carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings for Starbucks, Brinker and Darden for 2019 are projected to increase by 12.4%, 10% and 18.3%, respectively.

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