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: El Pollo Loco says Q2 is off to a strong start thanks to Shredded Beef Birria


El Pollo Loco Holdings Inc. reported first-quarter sales that beat expectations, and says the second quarter is off to a strong start thanks to a limited-time Shredded Beef Birria menu item.

El Pollo Loco’s take on the food trend is shredded beef served in tacos, quesadillas and burritos with consomé dipping sauce, chips and salsa.

“Shredded Beef Birria product mix reached 12.5%, which helped drive new company, franchise and system sales records three weeks in a row during March and April,” said Laurance Roberts, chief executive officer and interim chief financial officer for El Pollo Loco
on the late Wednesday earnings call.

“Sales mix for Beef Birria remained above 10% for six straight weeks, and as a result of the success, we’re testing the use of the shredded beef product for future LTOs [limited-time offers] to further diversify our offerings while still staying true to our L.A. Mex positioning.”

In the meantime, the company will offer tostadas, which Roberts said was the “strongest limited-time offer promotion last year” for the company.

The Beef Birria offer coincided with the launch of new marketing strategies that relied heavily on social media, with a hashtag and Tik Tok campaign drawing millions of views.

“We expect same-store sales to decelerate from April levels, but to remain solid, driven by improved marketing focusing more on social media, a strong limited-time offer calendar (Tostadas in June and another beef product in Nov.), improved operations at company stores (operations identified as the primary reason same-store sales are lagging franchisees), including a drive-thru initiative starting
May 6, and continued digital penetration,” Truist Securities said in a note.

Truist rates El Pollo Loco stock hold with a $15 price target, down from $16.

El Pollo Loco reported first-quarter net income of $2.1 million, or 6 cents per share, down from $4.0 million, or 11 cents per share, last year. Adjusted EPS of 7 cents was in line with the FactSet consensus. Revenue of $110.0 million was up from $107.7 million and ahead of the FactSet consensus for $106.7 million.

El Pollo Loco stock has fallen 24% for the year to date.

Read: Chipotle earnings: Price increases, new locations boost bottom line despite inflation

Chipotle Mexican Grill Inc. CMG has also found success with limited-time protein offers, including carne asada and pollo asado, which the company said was “the most popular new protein to-date.” It will next test Garlic Guajillo Steak.


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