COSTA MESA Calif. The private-equity firm Freeman Spogli & Co. has paid $45 million for an undisclosed stake in El Pollo Loco Inc., the franchisor and operator of flame-grilled chicken restaurants said Thursday.
El Pollo Loco said the funds would be used for the chain’s “accelerated” national expansion and for general corporate purposes.
The equity investment follows an announcement last week that the restaurant company’s principal owner, Trimaran Capital Partners’ Trimaran Fund II LLC, would issue a letter of credit on El Pollo Loco’s behalf. The letter, along with one issued by the chicken chain itself, were to be used as collateral against a bond for $22 million in damages the company was ordered to pay earlier in December as a result of a trademark dispute. A company that included the restaurant concept’s founder had sued El Pollo Loco over rights to develop restaurants in Mexico. The plaintiff, Mexico-based El Pollo Loco S.A. de C.V., said Mexican development rights had reverted to it because the Costa Mesa-based franchisor had failed to develop units in the Central American nation as it had previously agreed. A U.S. District Court judge in Texas agreed, upholding an earlier jury decision. El Pollo Loco said it posted the bond so it could appeal the decision.
Freeman Spogli has invested in a number of restaurant companies during the past two decades, including AFC Enterprises Inc., parent of the Popeyes Chicken & Biscuits concept, and CKE Restaurants, operator and franchisor of the Carl’s Jr. burger chain. The company has offices in Los Angeles and New York City.
El Pollo Loco franchises 230 restaurants and operates 159 more in nine states, with highest concentration in California.