El Pollo Loco's Net Income Jumps 19%, Boosted by Franchise Growth

Ticker: LOCO · Form: 10-Q · Filed: 2025-10-31T00:00:00.000Z

Sentiment: bullish

Topics: Restaurant Industry, Fast Casual, Franchise Growth, Debt Reduction, Earnings Beat, Cash Flow, QSR

TL;DR

**LOCO is cooking with gas, showing strong profit growth and smart debt reduction; buy the dip if you see one.**

AI Summary

El Pollo Loco Holdings, Inc. (LOCO) reported a robust increase in net income for the thirteen weeks ended September 24, 2025, reaching $7.358 million, up 19% from $6.186 million in the prior year. Total revenue also saw a modest increase to $121.520 million, compared to $120.395 million in the same period last year, driven primarily by a 13.5% surge in franchise revenue to $12.864 million. Company-operated restaurant revenue slightly decreased by 0.45% to $100.721 million. For the thirty-nine weeks ended September 24, 2025, net income rose to $19.946 million from $19.731 million, and total revenue increased to $366.531 million from $358.724 million. The company significantly improved its cash position, with cash and cash equivalents jumping to $10.872 million as of September 24, 2025, from $2.484 million at December 25, 2024. A key strategic move was the paydown of an additional $6.0 million on its 2022 Revolver subsequent to quarter-end, reducing outstanding borrowings to $55.0 million as of October 30, 2025, demonstrating a focus on debt reduction and improved liquidity.

Why It Matters

El Pollo Loco's strong net income growth and improved cash position signal operational efficiency and effective franchise expansion, which is crucial for investors seeking stable returns in the competitive fast-casual sector. The reduction in revolver loan debt from $71.0 million to $61.0 million (and further to $55.0 million post-quarter) enhances financial flexibility and reduces interest expense, directly benefiting shareholders. For employees, a healthier financial standing could mean greater job security and potential for growth. Customers might see continued investment in restaurant experience and menu innovation, while the broader market observes a regional player successfully navigating inflationary pressures and expanding its footprint through franchising.

Risk Assessment

Risk Level: medium — The company's concentration of revenue in the greater Los Angeles area, accounting for approximately 72.2% of total revenue for the thirteen weeks ended September 24, 2025, presents a geographic risk. Additionally, reliance on a single largest supplier for 24.7% of total expenses for the thirteen weeks ended September 24, 2025, indicates a supply chain concentration risk, which could impact profitability if supplier relationships or costs change.

Analyst Insight

Investors should consider El Pollo Loco's improved financial health and strategic debt reduction as positive indicators. Monitor franchise growth and geographic diversification efforts, as these will be key to sustained long-term performance. The company's strong cash flow from operations, at $34.166 million for the thirty-nine weeks ended September 24, 2025, suggests a solid foundation for future investments.

Financial Highlights

revenue
$121,520,000
total Assets
$602,748,000
total Debt
$61,000,000
net Income
$7,358,000
cash Position
$10,872,000
revenue Growth
+0.9%

Revenue Breakdown

SegmentRevenueGrowth
Company-operated restaurant revenue$100,721,000-0.45%
Franchise revenue$12,864,000+13.5%
Franchise advertising fee revenue$7,935,000+0.6%

Key Numbers

Key Players & Entities

FAQ

How did El Pollo Loco's net income change in the last quarter?

El Pollo Loco's net income for the thirteen weeks ended September 24, 2025, increased by 19% to $7.358 million, up from $6.186 million in the same period of the previous year.

What was El Pollo Loco's total revenue for the third quarter of 2025?

For the thirteen weeks ended September 24, 2025, El Pollo Loco reported total revenue of $121.520 million, a slight increase from $120.395 million in the prior year's comparable quarter.

How much did El Pollo Loco's franchise revenue contribute to its total revenue?

Franchise revenue for the thirteen weeks ended September 24, 2025, was $12.864 million, representing a 13.5% increase compared to $11.330 million in the same period last year.

What is El Pollo Loco's current cash position?

As of September 24, 2025, El Pollo Loco's cash and cash equivalents stood at $10.872 million, a significant increase from $2.484 million at December 25, 2024.

Has El Pollo Loco reduced its debt recently?

Yes, El Pollo Loco reduced its revolver loan balance from $71.0 million at December 25, 2024, to $61.0 million as of September 24, 2025. Subsequent to quarter-end, an additional $6.0 million was paid down, bringing the outstanding balance to $55.0 million as of October 30, 2025.

Where are most of El Pollo Loco's restaurants located?

As of September 24, 2025, El Pollo Loco operated 174 and franchised 324 restaurants in the United States. A significant concentration of revenue, approximately 72.2%, comes from company-operated and franchised restaurants in the greater Los Angeles area.

What are the main risks for El Pollo Loco?

Key risks include a high geographic concentration of revenue in the greater Los Angeles area (72.2% of total revenue) and a significant reliance on a single largest supplier, which accounted for 24.7% of total expenses for the thirteen weeks ended September 24, 2025.

How many restaurants does El Pollo Loco operate and franchise?

As of September 24, 2025, El Pollo Loco operated 174 restaurants and franchised 324 El Pollo Loco restaurants in the United States. Additionally, the company licenses eight restaurants in the Philippines.

What was El Pollo Loco's cash flow from operating activities?

For the thirty-nine weeks ended September 24, 2025, El Pollo Loco generated $34.166 million in net cash flows from operating activities, compared to $41.146 million in the prior year period.

What is the fiscal year structure for El Pollo Loco?

El Pollo Loco uses a 52- or 53-week fiscal year ending on the last Wednesday of the calendar year. Fiscal 2025 is a 53-week year ending on December 31, 2025, while Fiscal 2024 was a 52-week year ended on December 25, 2024.

Risk Factors

Industry Context

El Pollo Loco operates in the highly competitive fast-casual restaurant sector, characterized by evolving consumer preferences for healthier options and convenient dining. Key trends include the growth of digital ordering and delivery, increased focus on value, and the need for efficient supply chain management. The company competes with a wide range of national and regional players, necessitating continuous innovation and operational efficiency.

Regulatory Implications

The company must comply with various regulations, including food safety standards, labor laws, and financial reporting requirements. Changes in lease accounting standards (ASC 842) have impacted balance sheets by recognizing lease liabilities and ROU assets. Furthermore, any new regulations concerning franchising or restaurant operations could affect business models and profitability.

What Investors Should Do

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Key Dates

Glossary

Revolver loan
A type of revolving credit facility that allows a company to borrow, repay, and re-borrow funds up to a certain limit over a specified period. (The company has a significant revolver loan balance ($61.0 million as of Sept 24, 2025) which it is actively reducing, impacting its financial leverage and liquidity.)
ROU asset
Right-of-Use asset, representing the right to use an underlying asset for the lease term under ASC 842 lease accounting standards. (El Pollo Loco has substantial ROU assets ($169.957 million) related to operating leases, indicating significant long-term lease commitments.)
Goodwill
An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net assets. (The company holds $248.674 million in goodwill, primarily from past acquisitions, which is subject to impairment testing.)
Additional paid-in-capital
The amount of capital a company receives from shareholders in exchange for stock that exceeds the stock's par value. (Represents a significant portion of the company's equity ($245.619 million), reflecting past stock issuances.)
Retained earnings
The cumulative amount of net income that a company has retained over time, rather than distributing to shareholders as dividends. (Shows a healthy increase to $37.014 million, indicating profitability and reinvestment of earnings.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, El Pollo Loco Holdings, Inc. has demonstrated a robust increase in net income, up 19% for the thirteen weeks ended September 24, 2025. Total revenue saw a modest increase of approximately 0.9%, driven by a strong surge in franchise revenue (+13.5%) which offset a slight decrease in company-operated restaurant revenue (-0.45%). The company has significantly improved its liquidity, with cash and cash equivalents more than quadrupling from $2.484 million to $10.872 million, alongside a reduction in its revolver loan balance. No new significant risk factors were explicitly detailed in this 10-Q excerpt, but existing risks related to revenue and supplier concentration remain pertinent.

Filing Stats: 4,487 words · 18 min read · ~15 pages · Grade level 15.1 · Accepted 2025-10-31 17:17:06

Key Financial Figures

Filing Documents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION 3

Financial Statements

Item 1. Financial Statements. 3 Condensed Consolidated Balance Sheets (Unaudited) 3 Condensed Consolidated Statements of Income (Unaudited) 4 Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) 5 Condensed Consolidated Statements of Cash Flows (Unaudited) 7 Notes to Condensed Consolidated Financial Statements (Unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 26

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 43

Controls and Procedures

Item 4. Controls and Procedures. 43

—OTHER INFORMATION

PART II—OTHER INFORMATION 44

Legal Proceedings

Item 1. Legal Proceedings. 44

Risk Factors

Item 1A. Risk Factors. 44

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 44

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities. 44

Mine Safety Disclosures

Item 4. Mine Safety Disclosures. 45

Other Information

Item 5. Other Information. 45

Exhibits

Item 6. Exhibits. 46

Signatures

Signatures 48 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. EL POLLO LOCO HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in thousands, except share and per share data) September 24, December 25, 2025 2024 Assets Current assets: Cash and cash equivalents $ 10,872 $ 2,484 Accounts and other receivables, net 10,258 9,471 Inventories 1,736 1,938 Prepaid expenses and other current assets 3,348 5,509 Income tax receivable 2,239 493 Total current assets 28,453 19,895 Property and equipment, net 88,893 86,149 Property and equipment held under finance lease, net 1,356 1,499 Property and equipment held under operating leases, net ("ROU asset") 169,957 170,494 Goodwill 248,674 248,674 Trademarks 61,888 61,888 Deferred tax assets — 336 Other assets 3,527 3,079 Total assets $ 602,748 $ 592,014 Liabilities and Stockholders' Equity Current liabilities: Current portion of obligations under finance leases $ 152 $ 170 Current portion of obligations under operating leases 17,060 19,738 Accounts payable 10,845 12,087 Accrued salaries and vacation 10,803 13,926 Accrued insurance 11,716 11,417 Accrued income taxes payable — 2,105 Accrued interest 349 319 Other accrued expenses and current liabilities 18,925 15,896 Total current liabilities 69,850 75,658 Revolver loan 61,000 71,000 Obligations under finance leases, net of current portion 1,474 1,583 Obligations under operating leases, net of current portion 172,655 170,529 Deferred tax liabilities, net 8,745 6,357 Other noncurrent liabilities 6,092 6,218 Total liabilities 319,816 331,345 Commitments and contingencies (Note 8) Stockholders' equity Preferred stock, $ 0.01 par value, 100,000,000 shares authorized; 100,000 shares designated as Series A Preferred Stock; none issued or outstanding — — Common stock, $ 0.01 par value, 200,000,000 shares authorized; 29

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