El Pollo Loco invades South

hiram, ga. -- Robert Bowman loves his chicken, especially when it’s breaded and dropped into a fryer.

“When I go on a trip, that’s all I’ll eat is fried chicken. I just like fried chicken,” the 67-year-old retired postal worker says.

But during a recent lunch at a restaurant near his home, the poultry on Bowman’s plate was prepared differently from the Southern style he was used to. Instead of being fried, it was grilled and marinated with citrus, herbs and spices.

It’s part of a move by Irvine-based El Pollo Loco Inc. to sell Mexican-style grilled chicken deep inside the deep-fried South and begin expanding beyond its West Coast markets.

“We’re giving the South, which loves its chicken, a healthy, wholesome alternative to fried chicken,” said Steve Carley, chief executive of El Pollo Loco.

The suburban Atlanta restaurant, which opened at the end of August, is the first Southern location for the chain, which is ranked 70th among the nation’s restaurant chains based on sales, according to Restaurants & Institutions magazine.

Last month, the privately held company of 340 restaurants reported a net income of $1.59 million for the first two quarters of 2007, a 26.4% increase over the $1.26 million it reported for the same period a year ago. The company was purchased in November 2005 by affiliates of the New York-based equity investment firm Trimaran Capital and company management.

El Pollo Loco is under contract with a company led by a former Church’s Chicken executive to open 50 restaurants in the Atlanta area in the next six years. The chain also plans to open restaurants in the Orlando and Tampa, Fla., areas, in Charlotte, N.C., and in Norfolk, Va.

Although grilled chicken is not new to the South -- it’s often found at backyard barbecues, a labor of love for weekend chefs -- it’s not the traditional focus of Southern palates, said John T. Edge, director of the University of Mississippi’s Southern Foodways Alliance.

“We tend to argue about the foods to which we are devoted -- fried chicken and barbecue,” Edge said. “Nobody’s fussing and fighting over grilled chicken in the South.”

Indeed, the South’s chicken wars tend to be of the fried variety. Some of the nation’s top restaurant chains were built on serving up fried chicken in the South, including Louisville, Ky.-based KFC, which is part of Yum Brands Inc.; the Atlanta-based chains Chick-fil-A and Popeyes Chicken & Biscuits; San Antonio-based Church’s Chicken; Charlotte-based Bojangles’ Restaurants Inc.; and Athens, Ga.-based Zaxby’s.

“The heaviest weighting of our outlets are in the South, testimony to the fact that fried chicken is a Southern staple,” said Kirk Waisner, vice president of menu development for Popeyes.

If successful, El Pollo Loco’s move into the heavily competitive Southern market gives the company a good chance to become a national chain instead of remaining a regional West Coast brand, Darren Tristano, executive vice president of Chicago-based Technomic, Inc., a research and consulting firm that serves the food industry.

“The more they are able to grow in larger cities in the East, the stronger their brand is, which allows them to leverage their advertising, marketing and customer loyalty as their brand grows,” he said.

Once in the South, Carley said, the chain would stick to its roots, meaning fried chicken won’t be served any time soon. Instead, the chain is banking on the view that offering grilled chicken instead of fried fowl will be attractive in a region that struggles with obesity.

Last month Mississippi was named the first state to pass the 30% mark of adults considered obese, with Alabama and West Virginia not far behind, according to the Trust for America’s Health, a research group that focuses on disease prevention.

“Everybody, I think, needs to change their eating habits,” said Kimberly Newkirk, a 38-year-old nurse from Dallas, Ga., who came to El Pollo Loco at a friend’s recommendation.

Chris Elliott is a former Church’s Chicken executive and is now the CEO of Fiesta Brands Inc., which has contracted with El Pollo Loco to open the 50 new restaurants. He said grilling the chicken provides “healthy overtones.”

“For the same size chicken breast, if you fry one versus grill it, it’s about 300 calories difference,” he said.

El Pollo Loco’s plan of attack also includes a year’s worth of marketing to people who live within a few miles of a store, including offers to try the chicken for free.

In addition to Hiram, the chain initially will focus on suburban Atlanta. In January the company plans to open a restaurant inside the city.

“We know we do have to work to get in people’s considerations, we have to change their routines,” Carley said.

Bowman said he was not sure all lovers of fried chicken will turn to the grilled variety. But he hopes many will at least try it.

“That’s the way Southerners are -- a bunch of them will stick to fried chicken,” Bowman said. “But when something new comes to them, they’ll get used to it.”