El Pollo Loco’s margin, marketing, menu momentum continues

Turnaround progress

El Pollo Loco’s turnaround plan put into place under CEO Liz Williams when she came on board in 2024 showed its strongest signs of traction yet in the first quarter of 2026. The chain reported a 5.8% increase in same-store sales, while restaurant margins expanded by 320 basis points, to 19.2%.

Williams’ restaurant-level margin target put into place two years ago was 18% to 20%.

During the company’s earnings call last week, Williams said this improvement has come from operating efficiencies, strategic menu pricing, technology investments and cost management initiatives.

“What's particularly encouraging is that this performance reflects strength across multiple fronts,” she said. “These results demonstrate that our strategy is working. Our momentum is sustainable and we are well-positioned to deliver on our priorities for 2026.”

Menu innovation momentum

That momentum has so far continued in Q2, with 4.8% quarter-to-date same-store sales and high expectations from its April Loco Tenders launch, which Williams expects to be a traffic and new guest driver. Indeed, the company’s sharpened focus on menu innovation has been one of its strongest drivers amid this turnaround. In Q1, for instance, the Double Pollo Salads and new Baja Double Tostados performed well; the tostada lineup delivered a record-breaking 8.3% sales mix for the brand, while the salad and tostada categories peaked at over 20% of the total sales mix.

“We remain confident in our innovation pipeline. 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. “(I’m) really proud of everything we’re doing with culinary innovation and the response we’re getting from our customers. In this environment, people want to try new things … When we can do that, we’re seeing a lot of success.”

El Pollo Loco has also benefited from its Let’s Get Loco marketing campaign launched last year, which has driven brand engagement and “cultural relevance,” according to Williams. In Q1, the campaign included Loco Moments during March Madness, while the company introduced its Loco Tenders at the Revolve Festival, an invite-only party hosted during Coachella.

Additionally, the company’s digital business grew to 28% at company-owned restaurants during the quarter, including year-over-year sales and transaction increases from loyalty customers.

“Our strategy for loyalty is focused on three key areas: providing everyday value, delivering personalized offers and creating exclusive experiences for our members,” Williams said. “We deliver on everyday value through our all-member perks, including our Loco Friday Drops, our member boosts and our national food holiday deals. We launched our Loco Friday Drops in 2025 as a tribute to our 50th year, and given its performance, we've decided to keep our Loco Friday Drop perks alive for the remainder of 2026.”

The program also includes more personalized messaging based on purchase history, as well as new member-exclusive experiences such as the chance to win a VIP trip to the Major League Soccer All-Star Game in July.

Loyalty program growth

“Our approach to loyalty has returned healthy increases in member frequency, up 13% for the trailing 12-period and member spend is up over 17% year-over-year,” Williams said.

On the operations side, metrics have improved across every key metric, including accuracy, quality, friendliness, cleanliness, and speed. The company has deployed new tools and standards to continue this trajectory, including new order displays and reconfigured point-of-sale keys to streamline the ordering process. The company is also enhancing its training protocols and product labels and testing consumer-facing order confirmation boards.

With its Q1 performance under its belt, El Pollo Loco expects its restaurant-level margins for the full year to be between 18.25% and 18.75%, an increase of 25 basis points from its prior guidance. That includes Q2 margins between 19% and 19.5%. The company also increased its full-year same-store sales guidance to 2% to 4%.

CFO Ira Fils said the company’s investment priorities for 2026 include “resources to drive new store development, operations excellence and technology.”

The company expects to open 18 to 20 restaurants this year, including three to four company-owned and 15 to 16 franchised locations, which is an acceleration from recent years. A majority of those new stores will be outside of California or other existing core markets. Williams said those new locations are performing similarly to existing restaurants, with a few below system average. But the company is confident those few will grow to system average levels.

“We're excited about what we're seeing. We are seeing a range, but in totality, what we are seeing are volumes that give us confidence that they make sense for us to continue to deploy capital and it makes sense for franchisees to deploy capital, and we expect to continue to grow in these markets,” Fils said.