El Pollo Loco Opens Outlet In Yuba City With Vision Design

El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) recently announced the opening of its latest location in Yuba City, CA.

Owned and operated by the company’s franchise partner, V S Pollo King, Inc., the restaurant is located at 1212 Colusa Hwy. The 2,273-square foot restaurant can accommodate 66 guests.

Continued Focus on ‘Vision Design’

Notably, the new restaurant is part of El Pollo Loco’s ‘Vision Design’ initiative. Restaurants under this program offer an authentic, Mexican-inspired atmosphere, includes El Pollo Loco’s menu and brand identity, and has an open kitchen layout to display the preparation of its signature dish.

The company believes that its vision model will position it better in the quick-service restaurant space. El Polo Loco is seeing encouraging results from the implementation of this model in various company-owned and franchised restaurants. The company also aims to reduce costs and drive sales through this initiative.

For 2018, the company targets to complete 20 company-owned and 30 franchised remodels, all of which will feature the Vision Design.

Sales-Boosting Efforts

The latest Yuba outlet reflects the company’s efforts to strengthen its franchise partnerships. V S Pollo, which has been El Pollo Loco’s franchise partner for over two decades, brought the company’s brand back to Yuba City. The latest launch is expected to boost the company’s franchise revenues, which have increase 1.6% year over year in the third quarter as well.

Management is focused on maintaining its existing franchise relations as well as develop new ones. The franchise business model helps the company expand its footprint in various cities, which in turn is expected to drive traffic and overall sales.

The company also expects to boost growth through advertising and providing excellent service at reasonable price. Banking on menu innovation, limited time offers and a strong brand position, the company witnessed traffic growth in the third quarter of 2017. Management believes that these sales-building efforts will pay off in the upcoming quarters as well.

Limited Expansion & Macro Woes

Although the latest move underscores the company’s rigorous expansion strategy, it also shows that the company is only expanding within its domestic periphery. While other restaurant operators like Yum! Brands (NYSE:YUM) , McDonalds (NYSE:MCD) and Papa John’s (NASDAQ:PZZA) are pursuing aggressive global expansion, El Pollo Loco is losing out in terms of international presence.

Moreover, the U.S. restaurant space has been challenging for quite some time now. Soft consumer spending has led to declining traffic and sales. El Pollo Loco has also been bearing the brunt of a soft industry environment, where consumer preference toward spending on dine-out services has been volatile.

Shares of the company have lost 23.1% in the past six months as against the industry’s gain of 7.2%.

The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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