El Pollo Loco’s third quarter was marked by steady sales growth and ongoing menu innovation, but the market responded negatively to the results. Management attributed performance to a combination of new product launches—such as Loaded Quesadillas and ChataCoffee beverages—and targeted value offerings through its loyalty program. CEO Liz Williams emphasized that “quality chicken at an affordable price is resonating with existing and new guests,” while also highlighting operational improvements and a focus on guest experience as key contributors to positive traffic and higher same-store sales. However, rising operating expenses and a decline in operating margin tempered the quarter’s momentum.
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 2026 highlights:
- Revenue $126.3 million vs S&P analyst consensus of $126.9 million (3.9% year-on-year growth, in line)
- Adjusted EPS $0.24 vs S&P analyst consensus of $0.24 (in line)
- Adjusted EBITDA $17.12 million vs analyst estimates of $17.51 million (13.6% margin, 2.2% miss)
- EBITDA guidance $69 million at the midpoint for the full year, below analyst estimates of $69.82 million
- Operating margin 8.1%, down from 9.4% in the same quarter last year
- Locations 515 at quarter end, up from 498 in the same quarter last year
- Same-store sales rose 5% year on year (-0.8% in the same quarter last year)
- Market capitalization $452.8 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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
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Jeremy Hamblin (Craig-Hallum): Asked how much recent same-store sales growth was driven by new product launches versus value promotions. CEO Liz Williams credited a balanced approach of innovation and targeted value, especially through loyalty app deals.
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Hamblin (Craig-Hallum): Inquired about the cadence and geographic mix of new unit openings in 2027. Williams confirmed most new openings will remain weighted toward the second half, with about two-thirds outside California and a focus on both ground-up and second-generation locations.
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Hamblin (Craig-Hallum): Asked about cannibalization risk from accelerated unit growth. Williams stated that careful site selection and focus on “green space” should keep cannibalization low, especially in new and underpenetrated markets.
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JP Wollam (Roth Capital Partners): Questioned whether younger customer cohorts attracted by recent menu innovations are becoming repeat guests. Williams reported improving reach and frequency among younger consumers, with digital and value offerings resonating well.
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Wollam (Roth Capital Partners): Sought clarity on the future opportunity for the loyalty program. Williams highlighted that with loyalty currently at only 14%-15% of transactions, there is “a lot of room for growth” across all age cohorts.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team will be watching (1) the rollout and guest reception of new menu innovations targeted for 2027, (2) the pace and geographic distribution of new restaurant openings, particularly in new states such as New York, and (3) progress in expanding digital engagement and growing the Loco Rewards program. Continued operational improvements and the ability to manage food and labor costs will also be important drivers of future performance.
El Pollo Loco currently trades at $14.89, down from $16.46 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).
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