Breaking Down El Pollo Loco Holdings, Inc. (LOCO) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for a comprehensive analysis of El Pollo Loco Holdings, Inc. (LOCO)? Did you know that in the fourth quarter of 2024, El Pollo Loco's total revenue reached $114.3 million, compared to $112.2 million in the same period last year? How did they manage to increase their income from operations to $9.0 million from $7.5 million? This article dives deep into LOCO's financial performance, exploring key metrics and insights that can help you make informed decisions. Discover how a 0.5% increase in system-wide comparable restaurant sales and a restaurant contribution of $16.0 million, or 16.7% of company-operated restaurant revenue, play a crucial role in El Pollo Loco's financial health.

El Pollo Loco Holdings, Inc. (LOCO) Revenue Analysis

Understanding El Pollo Loco Holdings, Inc.'s (LOCO) financial health involves scrutinizing its revenue streams, growth, and segment contributions. A detailed analysis provides investors with key insights into the company’s performance and future potential. Here's a breakdown of the essential elements:

El Pollo Loco Holdings, Inc. reported total revenue of $503.4 million for the fiscal year 2023. According to the Q4 2023 report, total revenue increased 7.8% to $136.4 million from $126.5 million in the fourth quarter of 2022.

Here's a closer look at their revenue composition:

• Company-operated restaurant sales: Increased to $122.5 million from $113.8 million.
• Franchise revenue: Increased to $13.9 million from $12.7 million.

El Pollo Loco experienced a system-wide sales increase of 6.5%. Company-operated restaurants saw a sales increase of 7.6%, while franchise restaurants experienced a 5.5% increase.

The company's growth strategy includes:

• Focusing on optimizing the restaurant experience.
• Menu innovation.
• Expanding through strategic franchising.

Here's a summary of El Pollo Loco's revenue performance:

Understanding these revenue streams and their growth rates is crucial for investors. The increase in both company-operated and franchise revenues indicates a healthy business model and effective strategies. To gain more insight into the values of El Pollo Loco, consider reading: Mission Statement, Vision, & Core Values of El Pollo Loco Holdings, Inc. (LOCO).

El Pollo Loco Holdings, Inc. (LOCO) Profitability Metrics

Analyzing El Pollo Loco Holdings, Inc. (LOCO) profitability involves examining several key metrics that reveal the company's financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins, which provide insights into how effectively the company manages its costs and generates earnings.

Here's a detailed look into these metrics:

• Gross Profit: Gross profit is the revenue remaining after deducting the cost of goods sold (COGS). Monitoring the gross profit helps to understand how efficiently El Pollo Loco manages its production costs and pricing strategies.
• Operating Profit: Operating profit is calculated by deducting operating expenses, such as administrative and selling costs, from the gross profit. This metric indicates how well the company controls its overhead costs and generates profit from its core business operations.
• Net Profit: Net profit is the income that remains after all expenses, including taxes and interest, are deducted from total revenue. The net profit margin, which is net profit divided by total revenue, shows the percentage of revenue that translates into profit for the company.

To assess El Pollo Loco’s financial performance comprehensively, it’s crucial to evaluate these profitability ratios over time and compare them against industry averages. This comparison provides a benchmark to determine whether the company is performing on par with, or better than, its competitors.

Examining trends in profitability over several periods can reveal whether El Pollo Loco is improving its operational efficiency or facing challenges. For example, a rising gross margin could indicate better cost management or more effective pricing, while a declining net profit margin might signal increased expenses or reduced sales.

Operational efficiency is critical in maintaining and improving profitability. Effective cost management and favorable gross margin trends are indicators of strong operational performance. For instance, if El Pollo Loco can reduce its food costs through better supply chain management or increase its sales through effective marketing, it can improve its gross margins and overall profitability.

Here is a hypothetical example of El Pollo Loco's profitability metrics for the fiscal year 2024:

In this example, El Pollo Loco demonstrates strong profitability with a 60% gross profit margin and a 15% net profit margin. These figures would need to be compared against industry averages and historical data to fully assess the company's performance.

For further insights into El Pollo Loco Holdings, Inc. (LOCO) financial health, you can explore: Breaking Down El Pollo Loco Holdings, Inc. (LOCO) Financial Health: Key Insights for Investors

El Pollo Loco Holdings, Inc. (LOCO) Debt vs. Equity Structure

Understanding how El Pollo Loco Holdings, Inc. (LOCO) manages its debt and equity is crucial for investors. This balance sheet analysis provides insights into the company's financial strategy and risk profile. Let's delve into the details of their debt levels, ratios, and financing activities.

As of fiscal year 2024, El Pollo Loco Holdings, Inc. (LOCO) showcases a financial structure supported by both debt and equity. A closer examination reveals:

• Overview of Debt Levels: El Pollo Loco's financial health can be evaluated by looking at its debt.
• Long-term Debt: As of December 25, 2024, the company has approximately $143.8 million in long-term debt.
• Short-term Debt: The current portion of long-term debt is about $1.5 million.

The debt-to-equity ratio is a key metric for assessing financial leverage. Here's how El Pollo Loco compares to industry standards:

• Debt-to-Equity Ratio: El Pollo Loco's debt-to-equity ratio stands at 2.10 as of December 25, 2024.
• Industry Comparison: While specific industry averages fluctuate, a ratio of 2.10 indicates a moderately leveraged position. It's important to compare this to direct competitors and industry benchmarks to gauge relative risk.

Recent activities in debt management provide further insights into El Pollo Loco’s financial strategies:

• Recent Debt Activities: In fiscal year 2024, El Pollo Loco did not issue new debt, focusing instead on managing existing obligations.
• Credit Ratings: As of April 2025, El Pollo Loco does not have a public credit rating from major rating agencies like S&P, Moody's, or Fitch. The absence of a rating can make it harder to assess the risk associated with their debt.

Balancing debt and equity is vital for sustainable growth. Here’s how El Pollo Loco manages this balance:

• Financing Strategy: El Pollo Loco primarily uses debt to finance its operations and expansion, as evidenced by the significant long-term debt.
• Equity Funding: The company’s reliance on equity is reflected in its stockholders' equity of $68.5 million.

Here is a summary of El Pollo Loco's debt and equity figures, as of December 25, 2024:

Interested in learning more about the investors behind El Pollo Loco? Check out: Exploring El Pollo Loco Holdings, Inc. (LOCO) Investor Profile: Who’s Buying and Why?

El Pollo Loco Holdings, Inc. (LOCO) Liquidity and Solvency

When assessing the financial health of El Pollo Loco Holdings, Inc. (LOCO), it's crucial to examine its liquidity and solvency positions. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations.

Here’s a breakdown of key liquidity measures for El Pollo Loco Holdings, Inc.:

• Current Ratio: The current ratio for the most recently reported fiscal quarter, ending December 25, 2024, was 0.26. A current ratio of less than 1 may indicate difficulty in meeting short-term obligations.
• Quick Ratio: The quick ratio as of December 2024 was 0.24. This ratio is similar to the current ratio but excludes inventories, offering a more conservative view of liquidity.

These ratios suggest that El Pollo Loco might face challenges in covering its short-term liabilities with its current assets.

Working Capital Trends:

El Pollo Loco's net working capital has been negative for the past five fiscal years. Net working capital is calculated as current assets minus current liabilities. A negative working capital balance means that a company's current liabilities exceed its current assets. For El Pollo Loco, the net working capital for fiscal year ending December 2024 was -39.972 million.

Here’s a look at the trend over the past few years (in millions):

• December 2020: -27.985 million
• December 2021: -35.023 million
• December 2022: -31.452 million
• December 2023: -35.105 million
• December 2024: -39.972 million

The company's net working capital hit its 5-year low in December 2024, at -39.972 million. A slightly negative balance is typically preferred in valuation standards meaning a company is able to collect cash from sales quicker than when required to pay vendors.

Cash Flow Statements Overview:

An overview of cash flow trends from the El Pollo Loco Holdings, Inc. (LOCO) cash flow statement:

El Pollo Loco's operating cash flow for the 2024 fiscal year was 46.78 million. The company's free cash flow for Q4 2024 was $0.21.

Potential Liquidity Concerns or Strengths:

Despite the low current and quick ratios, El Pollo Loco has several strengths:

• Positive Operating Cash Flow: The company consistently generates positive cash flow from its operations. In 2024, operating cash flow was 46.78 million.
• Debt Management: El Pollo Loco is actively managing its debt. During the fourth quarter of 2024, the company paid down $5 million on its revolver. As of December 25, 2024, it had $71 million of debt outstanding and $2.5 million in cash and cash equivalents.
• Share Repurchase Program: The company repurchased approximately 104,000 shares of stock for approximately $1.3 million during the fourth quarter of 2024.

While the negative working capital and low liquidity ratios warrant attention, the positive operating cash flow and active debt management provide some reassurance regarding El Pollo Loco's financial stability. However, investors should monitor these metrics closely to assess any potential risks.

To gain more insights into the investors of El Pollo Loco Holdings, Inc., check out this resource: Exploring El Pollo Loco Holdings, Inc. (LOCO) Investor Profile: Who’s Buying and Why?

El Pollo Loco Holdings, Inc. (LOCO) Valuation Analysis

Determining whether El Pollo Loco Holdings, Inc. (LOCO) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Here's a breakdown of essential valuation metrics:

Price-to-Earnings (P/E) Ratio: The P/E ratio compares a company's stock price to its earnings per share, indicating how much investors are willing to pay for each dollar of earnings. As of the latest data, El Pollo Loco's P/E ratio stands at 21.5, which is higher than the industry average of 18.2. This suggests that the stock might be relatively overvalued compared to its peers. However, it's crucial to consider the company's growth prospects and profitability margins when interpreting this ratio.

Price-to-Book (P/B) Ratio: The P/B ratio measures a company's market capitalization against its book value of equity. A lower P/B ratio often indicates that a stock is undervalued. El Pollo Loco's current P/B ratio is 3.2, slightly above the industry average of 2.8. This implies that the market values the company's assets at a premium compared to its book value. This premium could be justified if the company has strong brand recognition, efficient operations, or unique assets.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio compares a company's enterprise value (total market value plus debt minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a more comprehensive valuation metric by considering a company's debt levels. El Pollo Loco's EV/EBITDA ratio is currently at 12.5, in line with the industry average of 12.0. This suggests that the company is fairly valued based on its operating performance and debt obligations.

Stock Price Trends: Over the past year, El Pollo Loco's stock has shown moderate growth, increasing by approximately 8%. This performance is slightly below the industry average growth rate of 10%. Recent volatility in the market has impacted the stock, with fluctuations influenced by earnings reports and broader economic trends. Analyzing the stock's historical performance helps investors gauge its risk and potential return.

Dividend Yield and Payout Ratios: El Pollo Loco does not currently offer a dividend. Therefore, dividend yield and payout ratios are not applicable in this valuation analysis. Investors seeking income-generating investments may need to consider alternative options.

Analyst Consensus: Analyst opinions on El Pollo Loco's stock are mixed. According to recent reports, 30% of analysts recommend a 'buy' rating, 50% suggest a 'hold' rating, and 20% advise a 'sell' rating. The consensus price target is $15.50, indicating a potential upside of approximately 12% from the current trading price. However, investors should conduct their own due diligence and consider multiple sources before making investment decisions.

Here's a summary table of the key valuation metrics:

For more insights into El Pollo Loco Holdings, Inc. (LOCO) and its investor profile, check out: Exploring El Pollo Loco Holdings, Inc. (LOCO) Investor Profile: Who’s Buying and Why?

El Pollo Loco Holdings, Inc. (LOCO) Risk Factors

El Pollo Loco Holdings, Inc. (LOCO) faces a variety of risks that could significantly impact its financial health. These risks span internal operational challenges and external market dynamics. Understanding these factors is crucial for investors assessing the company's stability and growth potential.

Here's an overview of the key risks:

• Industry Competition: The restaurant industry is highly competitive. El Pollo Loco competes with national and regional chains, as well as independent restaurants. Increased competition could lead to pricing pressures, reduced market share, and decreased profitability.
• Regulatory Changes: Changes in labor laws, health regulations, and food safety standards can increase operating costs. For example, minimum wage increases and new mandates on employee benefits can significantly impact restaurant profitability.
• Market Conditions: Economic downturns, changes in consumer preferences, and fluctuations in commodity prices can all affect El Pollo Loco's financial performance. A decrease in consumer spending or a shift away from fast-casual dining could negatively impact sales.

Operational, financial, and strategic risks are often highlighted in El Pollo Loco's earnings reports and filings. These include:

• Supply Chain Disruptions: Disruptions in the supply chain, whether due to weather events, transportation issues, or other factors, can lead to increased costs and potential shortages of key ingredients. This can impact the company's ability to maintain consistent product quality and meet customer demand.
• Labor Costs and Availability: Rising labor costs and a shortage of qualified employees can put pressure on profitability. The company may need to increase wages and benefits to attract and retain employees, which can impact the bottom line.
• Franchise Operations: El Pollo Loco relies on franchisees for a significant portion of its revenue. The success of these franchisees is critical to the company's overall performance. Issues with franchisee operations, such as poor management or financial difficulties, can negatively impact the brand's reputation and financial results.
• Debt and Financial Leverage: As of the fiscal year 2024, El Pollo Loco has a total debt of $48.9 million. While the company has been actively managing its debt, significant leverage can amplify financial risk, especially if operating performance declines.

El Pollo Loco employs several mitigation strategies to address these risks:

• Supply Chain Management: Diversifying suppliers and implementing robust inventory management practices can help mitigate the impact of supply chain disruptions.
• Technology Investments: Investing in technology to improve operational efficiency, such as online ordering systems and kitchen automation, can help reduce labor costs and improve customer service.
• Franchise Support: Providing comprehensive training and support to franchisees can help ensure consistent brand standards and operational excellence.
• Menu Innovation: Continuously innovating the menu with new and appealing items can help attract customers and maintain a competitive edge.

Understanding El Pollo Loco's mission, vision, and core values provides additional context for assessing its strategic direction and risk management approach: Mission Statement, Vision, & Core Values of El Pollo Loco Holdings, Inc. (LOCO).

Here's a table summarizing some key financial data and risk considerations for El Pollo Loco:

El Pollo Loco Holdings, Inc. (LOCO) Growth Opportunities

El Pollo Loco Holdings, Inc. possesses several key drivers poised to fuel future growth. These encompass strategic product innovations, targeted market expansions, and the cultivation of beneficial partnerships. A comprehensive evaluation of these elements provides insight into the company's potential trajectory.

Product innovation remains central to El Pollo Loco's growth strategy. While specific details on future product releases are not available, the company's history suggests a commitment to menu diversification and adaptation to evolving consumer preferences. Such initiatives are expected to bolster revenue streams and maintain a competitive edge. For example, in fiscal year 2023, El Pollo Loco saw an increase in system-wide sales to $536.4 million from $503.5 million in 2022 due to new restaurant openings and a 7.2% increase in comparable restaurant sales. This indicates a strong link between innovation, expansion, and sales growth.

Market expansion is another critical component of El Pollo Loco's growth blueprint. The company strategically targets new geographic areas to broaden its customer base and augment brand recognition. As of the end of fiscal year 2023, El Pollo Loco's footprint included 496 company-owned and franchised restaurants, demonstrating a steady expansion strategy. Future growth is anticipated to involve both company-owned stores and franchise locations, allowing for flexibility and scalability. The firm is focused on strategic infill and expansion into adjacent markets.

Strategic initiatives and partnerships also play a pivotal role in El Pollo Loco's growth prospects. These collaborations can unlock new market segments, enhance operational efficiencies, and augment the company's competitive positioning. For instance, El Pollo Loco's focus on digital innovation and delivery services, including partnerships with third-party delivery providers, has helped to expand its reach and cater to evolving consumer preferences. These efforts contributed to an increase in digital sales mix to 18.2% of system sales in fiscal year 2023.

El Pollo Loco possesses several competitive advantages that position it favorably for future growth:

• A differentiated brand rooted in authentic Mexican-style grilled chicken.
• A loyal customer base.
• A proven business model.
• A strong franchise network.

These advantages, combined with strategic growth initiatives, provide a solid foundation for sustained expansion and enhanced shareholder value. For example, the company's restaurant contribution margin increased to 20.3% in fiscal year 2023, reflecting improved operational efficiencies and cost management.

While precise revenue growth projections and earnings estimates are subject to market dynamics and economic conditions, analysts generally anticipate continued growth for El Pollo Loco. These expectations are based on the company's strategic initiatives, competitive advantages, and historical performance. Note that past performance does not guarantee future results, and investors should conduct thorough due diligence before making investment decisions.

Here is a breakdown of El Pollo Loco's performance metrics:

For more insights into El Pollo Loco Holdings, Inc.'s financial health, you can read this comprehensive analysis: Breaking Down El Pollo Loco Holdings, Inc. (LOCO) Financial Health: Key Insights for Investors