Fast-Food Veteran to Head Up El Pollo Loco
Turning up the heat as it expands into new markets in the Southwest, grilled-chicken specialist El Pollo Loco on Tuesday appointed veteran fast-food marketer Stephen E. Carley its president and chief executive.
Carley, 48, spent 12 years during the 1980s and early ‘90s at Taco Bell Corp. and its then-parent company, PepsiCo Inc., before moving on to stints as president of Universal Studios Hollywood and, most recently, the online digital photography business PhotoPoint Corp.
He succeeds Nelson J. Marchioli, who left El Pollo Loco in January to head Advantica Restaurant Group Inc. of South Carolina, which owns the nationwide Denny’s chain and sold the regional El Pollo Loco operation to a New York investment firm in December 1999.
Carley joins El Pollo Loco as the Irvine chain begins an expansion plan to add 100 locations in the next five years, pushing deeper into out-of-state markets.
It now has 282 locations, consisting of 129 company-owned stores and 153 franchised outlets, in California, Arizona, Nevada and Texas. About 90% of its operations, however, are in California.
In a business in which national chains have the marketing muscle, El Pollo Loco plans to spend extra on high-visibility locations, Carley said, and conducting “guerrilla marketing” campaigns: putting fliers on cars, sponsoring high-school car washes, hanging ads on doorknobs.
“It’s really an entrepreneurial approach, trying everything that a feisty little single-unit operator would do,” he said. “The competition will always be extreme in this segment. And for sure, you won’t be able to outspend them.”
Restaurant consultant Robert Sandelman in Brea said El Pollo Loco has become “a very strong chain” in its core markets around Los Angeles, winning loyalty from Spanish-speaking diners and health-conscious patrons with its signature grilled chicken, made-from-scratch salsa and other “fresh Mex” cuisine.
Those offerings make it something of a cross between fast-food and the more expensive restaurants known in the trade as “casual dining,” Sandelman said. Still, it will be tough to expand outside California.
“They are very well-managed, and they test high [for customer satisfaction] in L.A.,” Sandelman said. “But it’s a very competitive market. . . . It’s not easy to expand in markets where they are an unknown.”
Carley is building on a strong base: El Pollo Loco’s revenue rose 11% to $305 million last year from $275 million the previous year, and the chain registered strong gains at established stores. Sales at restaurants open more than a year jumped 7.5% two years ago, 7.3% last year and are running at 7.7% so far this year. Spokeswoman Julie Weeks said menu additions such as chicken burritos and tostada salads have increased lunch business.
The chain, purchased for $114 million by American Securities Capital Partners, “was kind of an orphan brand of Advantica,” eclipsed by Denny’s and with little capital to expand, said David Horing, managing director at American Securities and chairman of Pollo Loco.
So far, the new owners have been more than pleased. American Securities aims for a 30% rate of return on equity, Horing said, “and we are more than achieving our objectives.”