COSTA MESA Calif. El Pollo Loco Inc., the privately held operator-franchisor of 406 grilled-chicken restaurants, swung to a net loss in its second quarter as a $10.7 million legal settlement and higher commodity costs erased the chain’s sales gains.
For the quarter ended June 30, El Pollo Loco posted a net loss of $5.6 million, compared with profit of $1.4 million a year ago.
Latest quarter revenue rose 9.6 percent to $76.4 million and reflected 15 new locations and a systemwide same-store sales increase of 1.9 percent.
In June, El Pollo Loco paid a $10.7 million settlement to El Pollo Loco Mexico SA over former development rights and agreements in Mexico. Excluding the one-time settlement expense, El Pollo Loco’s operating income would have totaled $7.7 million in the latest quarter, down from $8.6 million a year ago.
Other items that hurt profit included a 12.5-percent jump in chicken and other commodity costs and higher rent and utility expenses, the company said.
Despite “adverse economic and liquidity conditions” that have delayed some franchised unit openings, El Pollo Loco said it still planned to open 10 corporate locations and between 20 and 25 franchised restaurants this year.