Stock Story -
Fast food chain El Pollo Loco (NASDAQ:LOCO) beat analysts' expectations in Q2 CY2024, with revenue flat year on year at $122.2 million. It made a non-GAAP profit of $0.26 per share, improving from its profit of $0.23 per share in the same quarter last year.
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El Pollo Loco (LOCO) Q2 CY2024 Highlights:
- Revenue: $122.2 million vs analyst estimates of $120.4 million (1.5% beat)
- EPS (non-GAAP): $0.26 vs analyst estimates of $0.21 (25.3% beat)
- Gross Margin (GAAP): 23%, up from 21.1% in the same quarter last year
- Locations: 495 at quarter end, up from 492 in the same quarter last year
- Same-Store Sales rose 4.5% year on year (-3.4% in the same quarter last year)
- Market Capitalization: $356.6 million
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthEl Pollo Loco is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's annualized revenue growth rate of 1.3% over the last five years was weak, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, El Pollo Loco reported decent year-on-year revenue growth of 0.6%, and its $122.2 million in revenue topped Wall Street's estimates by 1.5%.
Same-Store SalesSame-store sales growth is an important metric that tracks organic growth and demand for a restaurant's established locations.
El Pollo Loco's demand within its existing restaurants has been relatively stable over the last eight quarters but fell behind the broader sector. On average, the company's same-store sales have grown by 2.2% year on year. With positive same-store sales growth amid an increasing number of restaurants, El Pollo Loco is reaching more diners and growing sales.
In the latest quarter, El Pollo Loco's same-store sales rose 4.5% year on year. This growth was a well-appreciated turnaround from the 3.4% year-on-year decline it posted 12 months ago, showing the business is regaining momentum.
Key Takeaways from El Pollo Loco's Q2 Results We were impressed by how significantly El Pollo Loco blew past analysts' gross margin expectations this quarter. We were also excited its revenue and EPS outperformed Wall Street's estimates. Zooming out, we think this was an impressive quarter that should make shareholders go loco. The stock remained flat at $11.89 immediately after reporting.
