El Pollo Loco pops 50% in trading debut

Investors are hoping the chain can emulate the rapid growth of Chipotle Mexican Grill.

By MSN Money Partner Jul 25, 2014 2:26PM
Credit: © John Crowe/Alamy

Caption: An El Pollo Loco Restaurant in Upland Calif.By Brian Solomon, Forbes

Forget tech. The real hot IPOs are in the restaurant business.


Chicken chain El Pollo Loco (LOCO) debuted on the Nasdaq on Friday and shares went crazy. 


While the company set its final initial public offering price at $15, El Pollo Loco shares opened at $19 and surged to $22.73 a share by the afternoon. That's a pop of over 50 percent.


Investors love El Pollo Loco, translated as "The Crazy Chicken," because it's the latest quick service/fast casual chain to emulate Chipotle Mexican Grill's (CMG) rapid growth. The Mexican-style grilled chicken restaurant has just over 400 locations across 5 states, but the vast majority (352) are in California.


It also has locations in Nevada, Texas, Arizona, and Utah -- split between 168 company-owned stores and 233 franchises. El Pollo Loco opened seven new stores in 2013, and plans to up to 16 in 2014.


The chain’s IPO timing couldn’t be better. Zoe's Kitchen (ZOESpopped over 70 percent in its first day of trading in April and have risen even higher in the last three months as investors sought to get in on the ground floor of the next Chipotle.


In 2013, El Pollo Loco posted overall system-wide sales of $657.6 million and claims positive comparable store growth in each of the last 11 quarters.


But those numbers haven't turned the chain profitable yet. El Pollo Loco turned negative $16.9 million in net income last year, bringing total losses over the last three years to $56.8 million. It also has nearly $290 million in debt currently on the books.


El Pollo Loco lists its competitors as fast casual restaurants like Chipotle, Panera (PNRA), and Qdoba, as well as quick service restaurants like Chick-fil-A, KFC, Popeyes, and Taco Bell (YUM).


More from Forbes


6Comments
Jul 25, 2014 2:56PM
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Breaking Bad chicken franchise from the sothwest lol. Hasnt turned a profit in 3 yrs not very exciting at all. But hey Look at FB value is greater that ATT and COKE now thats a joke.
Jul 25, 2014 3:03PM
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Opened at 19 and went to 22.73.  That is not 50%.  Gain should be based on what it could be bought for... NOT what the IPO price was set at.
Jul 25, 2014 3:16PM
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"Public offering price was $15", priced the night before..To people that applied and were able to buy.


"Opened at $19 and surged to $22.73"....in brackets (LOCO +52.67%)


Yes Brian Solomon from Forbes was correct, "it rose over 50%".

Jul 25, 2014 2:52PM
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I guess I missed out on the IPO.  Did not pull the trigger  on the stock because I don't like the food they serve too much.  Live and learn.
Jul 25, 2014 2:44PM
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The Crazy Chicken.............. sounds a little too much like The Mad Cow to me.
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