El Pollo Loco Expansion On Track, To Open Stores in Texas

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The leading fire-grilled chicken chain in the U.S., El Pollo Loco Holdings, Inc.LOCO , is geared up to further expand in Texas.

The company has extended its franchise development deal with Chicken Time Holdings, LLC, which is an affiliate of Henry Investment Group. Per the agreement, 13 new restaurants will be built in Texas during the course of the next few years. Of these, three outlets will be in Dallas-Fort Worth metro area, six in Austin and four in Waco. Resultantly, Henry Investment Group aims to own a total of 20 restaurants in the Texas market by 2022.

Meanwhile, El Pollo Loco also announced the opening of its newest outlet in Spring, TX. This 2,960 square feet restaurant is located at 2825 Riley Fuzzel Road and can accommodate 108 guests.

The outlet features the brand's hacienda design and has an open kitchen layout to display the preparation of its signature dish. Owned and operated by franchise partner AA Pollo, Inc., it marks the second outlet for El Pollo Loco in Spring and the 10th for the franchisee.

Currently, the company has more than 460 company-owned and franchised restaurants in Arizona, California, Nevada, Texas and Utah. Also, it looks ahead to expand its presence in key markets like Oklahoma, New Mexico, Louisiana and Arkansas. In fact, El Pollo Loco has opened nine restaurants year to date and expects to open seven more in the coming weeks.

However, the company loses out in terms of international presence. While other restaurateurs like Yum! Brands, Inc. YUM , McDonalds Corporation MCD and Papa John's International, Inc. PZZA pursue aggressive global expansion policies, it seems to be weak on this front.

Going forward, the company expects to drive growth through a number of initiatives such as its authentic advertising campaign, highlighting the brand's differentiated offering, its recently launched mobile and online ordering app along with its plan to launch a loyalty program in the future. Meanwhile, menu innovation and limited time offers have been contributing to traffic at the restaurants.

Yet, a challenging sales environment given lower consumer spending in the U.S. restaurant space remain headwinds to the company's top line.

Notably, shares of the company have underperformed the Zacks categorized Retail-Restaurants industry in the last one year, given the soft industry backdrop. While, El Pollo Loco shares declined 12.1%, the industry fell 5%.

Nevertheless, the company's continuous expansion plans are expected to add immensely to the top line and boost its overall performance as well.

Currently, El Pollo Loco has 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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