LOCO's Growth Strategy: New Units, Customer Focus & Cost Efficiencies

El Pollo Loco Holdings, Inc. LOCO is benefiting from expansion efforts, same-store sales growth and operational efficiencies. However, commodity inflation and concern regarding traffic remain woes for the company.Factors Aiding LOCO’s GrowthEl Pollo Loco plans to expand its footprint with 10 new restaurant openings in 2025. While California remains central to the brand’s history, the company is focusing on growth beyond its home state. Most of the upcoming locations will be in emerging markets, including Arizona, Colorado, Idaho, New Mexico, Texas and Washington, reflecting its strategic push into new territories to strengthen presence and customer base.The company witnessed an increase in same-store sales in fourth-quarter 2024, driven by higher menu prices and a steady flow of customer traffic. This indicates strong brand loyalty and effective pricing strategies.El Pollo Loco has taken a strategic approach to its cost-saving measures, ensuring that food quality and customer experience are enhanced throughout the process. The company made strategic hires, including a new chief development officer, to streamline operations and reduce unit build costs. These efforts are expected to improve franchise growth and financial performance in the coming years.In 2025, the company, which shares space with Kura Sushi USA, Inc. KRUS, Potbelly Corporation PBPB and The ONE Group Hospitality, Inc. STKS, aims to enhance customer satisfaction by strengthening service standards and accountability. To achieve this, LOCO has implemented a new customer-feedback system in partnership with a leading provider, enabling more effective benchmarking against industry peers and refining its closed-loop feedback process. By leveraging these insights, the company is focused on improving service speed, accuracy and consistency. Recognizing that superior customer service drives transaction growth and loyalty, it remains committed to optimizing the guest experience and sees significant potential for improvement in these areas.ConcernsIncreased competition in the quick-service restaurant space, particularly from national brands offering aggressive discounting and promotions, puts pressure on LOCO’s ability to maintain market share. Customers have been more price-sensitive, impacting transaction volumes.Economic uncertainty and a cautious consumer spending environment are likely to weigh on discretionary spending, which might impact LOCO’s core customer base, further impacting traffic and sales growth.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Potbelly Corporation (PBPB): Free Stock Analysis Report El Pollo Loco Holdings, Inc. (LOCO): Free Stock Analysis Report The ONE Group Hospitality, Inc. (STKS): Free Stock Analysis Report Kura Sushi USA, Inc. (KRUS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks