Fast food chain El Pollo Loco (NASDAQ:LOCO) beat analysts' expectations in Q1 CY2024, with revenue up 1.4% year on year to $116.2 million. It made a non-GAAP profit of $0.22 per share, improving from its profit of $0.14 per share in the same quarter last year.

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Liz Williams, Chief Executive Officer of El Pollo Loco Holdings, Inc., stated, “The strength of the El Pollo Loco brand centers around our signature product – fire-grilled, citrus-marinated chicken that is prepared fresh daily for our customers. Since starting as CEO almost two months ago, I have been impressed with the brand’s beloved status among customers and our long-term potential for growth. With our unique positioning at the intersection of the Chicken and Mexican categories, I believe that we can take El Pollo Loco to another level. To that end, I have focused our organization around five strategic pillars: Brand that Wins, Hospitality Mindset, Digital First, Winning Unit Economics, and New Unit Growth, all of which are designed with one goal in mind – to get the right building blocks in place for future success. El Pollo Loco should be and will be a national brand, and I believe we have the right strategy in place to achieve our immense potential.”

With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.

Traditional Fast Food

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

Sales Growth

El Pollo Loco is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.

As you can see below, the company's annualized revenue growth rate of 1.4% over the last five years was weak , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

This quarter, El Pollo Loco reported decent year-on-year revenue growth of 1.4%, and its $116.2 million in revenue topped Wall Street's estimates by 4.6%.

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Same-Store Sales

El Pollo Loco's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 2.5% year on year. With positive same-store sales growth amid an increasing number of restaurants, El Pollo Loco is reaching more diners and growing sales.

In the latest quarter, El Pollo Loco's same-store sales rose 5.1% year on year. This growth was an acceleration from the 0.8% year-on-year increase it posted 12 months ago, which is always an encouraging sign.

Key Takeaways from El Pollo Loco's Q1 Results

We were impressed that El Pollo Loco beat analysts' same store sales, revenue, gross margin, and EPS expectations this quarter. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The stock is up 12.3% after reporting and currently trades at $9.65 per share.

El Pollo Loco may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.