Nasdaq:LOCO
El Pollo Loco Holdings, Inc.
A flame-grilled chicken specialist on the West Coast driving steady revenue growth with strong operating cash flows.
Key Metrics
Investment Thesis
Bull Case
Investors may buy this stock given its consistent revenue expansion from $470.0M in 2022 to $473.0M in 2024 alongside stable net income growth. The strong operating cash flow of $46.8M provides flexibility for strategic acquisitions or debt reduction while the share buyback program signals confidence in future earnings.
Bear Case
Bearish investors should consider the high level of current liabilities at $75.7M relative to current assets, which limits financial maneuverability during economic downturns. Additionally, the company is burning cash from investing activities at a rate of $18.9M annually, suggesting potential capital constraints if growth initiatives accelerate.
About El Pollo Loco Holdings, Inc.
El Pollo Loco Holdings operates as a fast-casual restaurant chain specializing in flame-grilled chicken across the United States, primarily serving West Coast markets. The company generates revenue through direct sales of core menu items like rotisserie chicken, tacos, and salads while maintaining a robust supply chain network. With total assets reaching $592.0M and consistent revenue growth, the firm positions itself as a leader in the healthy fast-food segment.
Analysis
Management Discussion
Management delivered solid operational results with net profit of $25.7M, reflecting effective margin control despite rising input costs. The company maintained a healthy cash flow from operations of $46.8M, though net cash decreased by $4.8M due to significant share repurchases totaling $20.6M and revolver repayments.
Industry Overview
The fast-casual dining industry is shifting toward healthier protein options like grilled chicken to meet evolving consumer dietary preferences. Competition is intensifying from national chains adopting similar health-focused menus while regional players like El Pollo Loco focus on localized brand authenticity. Market consolidation continues as operators seek scale to offset rising labor and real estate costs.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $470.0M | $468.7M | $473.0M |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $470.0M | $468.7M | $473.0M |
| Operating Expenses | $439.8M | $428.9M | $431.8M |
| Operating Income | $30.1M | $39.8M | $41.2M |
| G&A | $39.1M | $42.0M | $46.3M |
| Stock-Based Comp | $3.5M | $3.0M | $3.9M |
| D&A | $14.4M | $15.2M | $15.7M |
| Depreciation | $14.4M | $15.2M | — |
| Other OpEx | $400.7M | $386.8M | $385.6M |
| Non-Operating Income | $-1.2M | $-4.9M | $-5.9M |
| Interest Expense | $1.7M | $4.8M | — |
| Pre-Tax Income | $28.9M | $34.9M | $35.3M |
| Income Tax | $8.1M | $9.3M | $9.6M |
| Continuing Ops | $20.8M | $25.6M | $25.7M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $20.8M | $25.6M | $25.7M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $20.8M | $25.6M | $25.7M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $37.4M | $25.1M | $19.9M |
| Cash & Equivalents | $20.5M | $7.3M | $2.5M |
| Inventory | $2.4M | $1.9M | $1.9M |
| Prepaid Expenses | $3.7M | $5.6M | $5.5M |
| Other Current Assets | $10.9M | $10.3M | $10.0M |
| Long-Term Assets | $559.8M | $567.2M | $572.1M |
| PP&E (Net) | $78.6M | $84.0M | $86.1M |
| Goodwill | $248.7M | $248.7M | $248.7M |
| Operating Leases | $165.6M | $168.0M | $170.5M |
| Other LT Assets | $66.9M | $66.5M | $66.8M |
| Total Assets | $597.2M | $592.3M | $592.0M |
| Current Liabilities | $68.5M | $72.6M | $75.7M |
| Accounts Payable | $12.7M | $12.5M | $12.1M |
| Current Leases | $20.0M | $19.5M | $19.7M |
| Deferred Revenue | $4.7M | $4.9M | $5.1M |
| Taxes Payable | $0 | $70.0K | $2.1M |
| Other Current Liab | $31.1M | $35.6M | $36.6M |
| Long-Term Liabilities | $247.6M | $269.0M | $255.7M |
| LT Operating Leases | $165.1M | $168.1M | $170.5M |
| Other LT Liab | $82.4M | $100.9M | $85.2M |
| Total Liabilities | $316.1M | $341.6M | $331.3M |
| Shareholders' Equity | $281.1M | $250.7M | $260.7M |
| Retained Earnings | $-11.6M | $14.0M | $18.9M |
| AOCI | $126.0K | $0 | — |
| Total L&E | $597.2M | $592.3M | $592.0M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $20.8M | $25.6M | $25.7M |
| Non-Cash Adjustments | $27.8M | $11.9M | $37.1M |
| Working Capital Changes | $-10.1M | $3.2M | $-16.0M |
| Cash from Operations | $38.5M | $40.7M | $46.8M |
| Capital Expenditures | $19.9M | $21.3M | $19.1M |
| Cash from Investing | $-18.9M | $-13.4M | $-18.9M |
| Share Buybacks | — | $59.2M | $20.6M |
| Dividends Paid | $55.6M | — | — |
| Cash from Financing | $-29.2M | $-40.4M | $-32.6M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-9.6M | $-13.2M | $-4.8M |
| Beginning Cash | $30.0M | $20.5M | $7.3M |
| Ending Cash | $20.5M | $7.3M | $2.5M |
Frequently Asked Questions
How does El Pollo Loco Holdings, Inc. make money?
Core restaurant operations generating $473.0M in revenue; Franchise development and royalties; Corporate dining and catering services; Food distribution to retail partners
What are the main risks for LOCO?
High leverage with current liabilities at $75.7M creating refinancing pressure; Sensitivity to inflation impacting cost of goods and labor expenses; Dependence on limited geographic concentration in the US West Coast market
What is LOCO's competitive advantage?
Proprietary flame-grilling method offering superior taste and food safety compared to competitors; Strong brand loyalty in health-conscious West Coast demographics; Significant goodwill of $248.7M indicating a valuable intangible asset base
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.