El Pollo Loco CEO Larry Roberts is bullish on the brand’s growth – both units and sales – because of the progress the chain has made throughout the past year since he moved into that role. During a presentation Monday morning at the ICR Conference in Orlando, Roberts outlined several of those efforts. Among the biggest is a more intentional focus on younger consumers, defined as 18 to 32 years old.
“We believe we have a big opportunity with that consumer base. The last year and a half we’ve asked how we attract those younger consumers, and we believe authenticity, healthier food that is grilled and not fried should appeal to that consumer base,” he said. “We are going after that younger consumer starting with the menu and our LTO strategy.”
As an example, Roberts pointed to the chain’s beef birria, launched last year. Birria is a traditional Mexican stew typically made with goat meat that El Pollo Loco put its own spin on for U.S. consumers by using beef. The dish has experienced significant growth in the past two years and birria tacos were the top Googled food in the world in 2021. Roberts said the product did “phenomenally well with younger consumers” and increased usage. He predicts beef could become a bigger focus for the flame-grilled chicken brand.
“The menu and LTO platforms we’ll be launching are strong and several items could be permanent. This year, we’ll have beef for half of the year at least and then make a call if it can be permanent,” he said. “I’m optimistic that it can. Consumers buy a lot of it. I’m excited about items we have that can build layers of sales.”
El Pollo Loco has also shifted its marketing approach to target this younger demographic, moving its TV spend from 80-to-85% down to 50% and ramping up its digital and social media spend to 50%. TikTok is a priority channel, Roberts said.
“Not only have we shifted our media more to social media, we’ve gotten more disciplined and detailed about what we do on those platforms. It has to be the right type of media for the consumers on those platforms,” he said.
On the digital side, El Pollo Loco plans to “completely revamp” its loyalty program and app this year.
“This is critical if you want to appeal to younger consumers,” Roberts said. “We were one of the first in QSR to launch a loyalty app, but we have to continue evolving because it’s super competitive. That’s where the shift is happening.”
The menu, marketing and digital pieces will be the primary drivers of sales for the brand this year, executives predict. Operational improvements are also a major focus as the company plans to recruit new franchisees and achieve single-digit net new unit growth. Many of these improvements began in early 2022, including menu simplification and labor redeployment. Many more are expected this year as the chain recently named a new chief operating officer, Maria Hollandsworth.
“The big ones are coming in the next three to six months – things like a new salsa processor and soap tanks, which make it easier for grill masters to clean grills and broilers,” Roberts said. “Those two things combined are worth about two hours of labor a day.”
El Pollo Loco is also testing kiosks and new dishwashers. These simplification efforts have helped bring the chain’s employee retention rates up. After a challenging end of 2021 and beginning of 2022, labor in general has returned to positive at the company.
“We’re in a good spot from a labor perspective and are at a point now where all restaurants are running all operating hours and all channels every day. We still have some where I’d like to have more staff because we’re paying more overtime than we’d like, but overall, our staffing continues to get better,” Roberts said.
The company will stick to these efforts as it aims for new unit growth with a target of 5% this year, including new markets like Colorado, Seattle and Kansas City.
“The most important thing is on the operations side. You cannot go into a new market and not execute. It’s not exciting. It’s not sexy, but you have to have the systems and processes nailed down,” Roberts said. “There are no direct competitors out there. There is no reason we shouldn’t be successful going into new markets.”
Contact Alicia Kelso at [email protected]