El Pollo Loco Holdings, Inc. (NASDAQ: LOCO) launched its Q2 2025 earnings outcomes on Thursday, reporting strong monetary efficiency pushed by menu innovation, digital channel development, and operational effectivity. Regardless of a difficult financial backdrop, the fire-grilled hen chain continues to navigate inflationary pressures whereas specializing in strategic growth.
Income Grows Modestly Amid Financial Pressures
El Pollo Loco reported Q2 income of $130.7 million, reflecting a 3.8% year-over-year enhance, barely exceeding Wall Road expectations. The expansion was primarily pushed by greater menu costs and elevated off-premise gross sales by way of supply and digital platforms.
Comparable restaurant gross sales rose 2.5%, marking the chain’s sixth consecutive quarter of same-store gross sales development. CEO Larry Roberts credited the model’s concentrate on value-driven menu innovation and focused promotions for sustaining buyer site visitors.
Internet Earnings Rises, Margins Present Resilience
Internet revenue for the quarter got here in at $9.2 million, or $0.25 per diluted share, in comparison with $8.5 million, or $0.23 per share, in Q2 2024. Adjusted EBITDA elevated 6.5% year-over-year to $17.4 million, pushed by disciplined value management measures and improved labor efficiencies.
Restaurant contribution margin remained strong at 18.7%, regardless of elevated commodity and labor prices. Administration emphasised continued efforts to optimize kitchen operations and renegotiate provider contracts to mitigate inflationary headwinds.
Digital and Supply Channels Proceed to Increase
Digital gross sales accounted for 16% of whole system-wide gross sales, up from 14% within the prior 12 months, reflecting El Pollo Loco’s ongoing investments in cellular ordering, loyalty applications, and third-party supply partnerships. The corporate highlighted its enhanced cellular app, which has seen important consumer engagement since its relaunch earlier this 12 months.
“Our digital technique is paying off, with extra prospects selecting on-line ordering and supply,” mentioned CEO Larry Roberts. “We’re dedicated to enhancing comfort whereas sustaining the standard and freshness that defines El Pollo Loco.”
New Retailer Openings and Franchise Growth
El Pollo Loco opened 4 new company-owned eating places and 3 franchise areas through the quarter, with plans to speed up improvement within the again half of 2025. The corporate is concentrating on 10-12 web new openings for the complete 12 months, specializing in underpenetrated markets in Texas and Nevada.
Franchisee curiosity stays robust, with a number of multi-unit improvement agreements signed in key development areas. Administration reiterated its long-term objective of reaching 500 system-wide areas by 2028.
Outlook for H2 2025
El Pollo Loco reaffirmed its full-year 2025 steering, projecting mid-single-digit same-store gross sales development and adjusted EBITDA within the vary of $68 million to $72 million. The corporate expects continued margin pressures however stays assured in its capability to drive earnings by way of operational efficiencies and gross sales leverage.
“Our crew is targeted on delivering worth to friends whereas managing by way of the macro challenges,” mentioned Roberts. “With our robust model positioning and strategic initiatives, we’re well-positioned for sustained development.”
Market Response
Shares of LOCO traded up 4% in after-hours buying and selling following the earnings launch, as traders welcomed the corporate’s strong execution and reaffirmed steering. Analysts praised El Pollo Loco’s concentrate on digital innovation and franchise improvement as key drivers for future development.
Conclusion
El Pollo Loco’s Q2 2025 earnings demonstrated the corporate’s capability to navigate a troublesome working setting by way of menu innovation, digital growth, and disciplined execution. With a transparent development roadmap and resilient margins, LOCO stays a compelling participant within the fast-casual eating area.
