According to El Pollo Loco, Q2 got off to a strong start thanks to Shredded Beef Birria

El Pollo Loco Holdings Inc. reported first-quarter sales that beat expectations and says the second quarter got off to a strong start thanks to a limited-time shredded beef birria menu item.

El Pollo Loco’s take on the food trend is ground beef served in tacos, quesadillas and burritos with consommé dip, fries and salsa.

“Shredded Beef Birria product mix achieved 12.5%, which helped set new corporate, franchise and system sales records for three straight weeks in March and April,” said Laurance Roberts, chief executive officer and interim chief financial officer of El Pollo Loco LOCO.
on the earnings call late Wednesday.

“Sales mix for Beef Birria stayed above 10% for six consecutive weeks and based on success we are testing use of the ground beef product for future LTOs [limited-time offers] to further diversify our offering while staying true to our positioning in LA Mex.”

In the meantime, the company will be offering Tostadas, which Roberts said was the company’s “strongest limited-time sale in the last year.”

Beef Birria’s offering coincided with the launch of new marketing strategies that relied heavily on social media, with a hashtag and Tik-Tok campaign that garnered millions of views.

“We expect same-store sales to slow from April levels but remain solid, driven by improved marketing more focused on social media, a strong limited-time sales calendar (tostadas in June and another beef product in June). November) and improved operations at the company’s stores (establishments identified as the primary reason same-store sales are lagging behind franchisees), including a drive-through initiative beginning
May 6 and continued digital penetration,” Truist Securities said in a note.

Truist ranks El Pollo Loco shares at a price target of $15 compared to $16.

El Pollo Loco reported net income of $2.1 million, or 6 cents a share, for the first quarter, compared to $4.0 million, or 11 cents a share, a year ago. Adjusted EPS of 7 cents was in line with FactSet consensus. Revenue of $110.0 million increased from $107.7 million, beating the FactSet consensus of $106.7 million.

El Pollo Loco shares are down 24% year to date.

Read: Chipotle Earnings: Price increases, new locations boost earnings despite inflation

Chipotle Mexican Grill Inc. CMG has also had success with limited-time protein offerings, including Carne Asada and Pollo Asado, which the company says were “the most popular new protein yet.” It will test Garlic Guajillo Steak next. According to El Pollo Loco, Q2 got off to a strong start thanks to Shredded Beef Birria

Brian Lowry

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