El Pollo Loco Expands Delivery Partnership With DoorDash

El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) has recently expanded its delivery partnership with privately held restaurant delivery service, DoorDash.

In September 2017, the partnership began with the duo launching a pilot program in El Pollo Loco’s 98 restaurants in Nevada, Las Vegas and Orange County, CA. Following the expansion, delivery is now available from over 280 of El Pollo Loco’s restaurants, which is more than half of the total number of restaurants operated by the company.

Notably, the new participating markets include Los Angeles, Houston, Phoenix, Dallas, Ariziona, San Francisco, San Jose, San Diego and Sacramento. While ordering is available at El Pollo Loco’s website and app, DoorDash will take care of delivery only.

We observe that El Pollo Loco shares have lost 18.2% in a year’s time against the industry’s 11.9% gain.

Delayed Entry Into Delivery

Though relatively late, El Pollo Loco’s entry in to delivery makes sense. This is because delivery is considered to be the fastest growing channel in the business and an effective way of addressing changing needs of customers.

Moreover, the move should help the company better compete with the likes of Chipotle Mexican Grill (NYSE:CMG) , YUM! Brands’ (NYSE:YUM) Taco Bell and Rubio’s Coastal Grill that offer delivery directly through apps like DoorDash and Postmates.

El Pollo Loco Holdings, Inc. Net Income (TTM)

El Pollo Loco Holdings, Inc. Net Income (TTM) | El Pollo Loco Holdings, Inc. Quote

Targeting Millennials

With millennials getting more concerned about convenience and seeking speedier options, enhancing delivery has become crucial for quick-service industry players.

Per market research firm The NPD Group, delivery currently represents 1.7 billion foodservice visits annually and young adults represent 56% of foodservice delivery orders.

We believe that with increased focus on delivery, El Pollo Loco will be in a better position to capture a bigger share of millennial traffic.

Zacks Rank & Key Picks

El Pollo Loco carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is DineEquity (NYSE:DIN) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DineEquity posted better-than-expected fourth-quarter 2017 results, wherein adjusted earnings surpassed the Zacks Consensus Estimate by 15.6% and revenues outpaced the same marginally. The company’s 2018 earnings are projected to grow 22.7%.

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