0001606366-26-000038
SEC filingEl Pollo Loco delivered strong top- and bottom-line growth in Q1 FY2026, with revenue up 5.9% and net income up 48.8%, reflecting operating leverage on higher sales and disciplined cost management — though elevated capital expenditures reflect ongoing investment in restaurant remodeling and infrastructure.
Revenue for Q1 FY2026 was $126.2M, an increase of 5.9% compared to $119.2M in Q1 FY2025. This growth reflects continued execution against core business drivers, including pricing actions and higher sales volume. The increase in food and paper costs was primarily due to higher sales, increased discounts, and higher produce pricing — illustrating how revenue growth interacts with input cost pressures. Operating income rose 36.2% to $12.2M, and operating margin expanded to 9.7%. This margin improvement resulted from leverage on the comparable store sales increase, as noted in management commentary, and reflects disciplined control over fixed and semi-variable costs despite rising delivery, mobile order, and credit card fees.
Net cash provided by operating activities was $13.0M, more than double the $4.7M in Q1 FY2025. This robust operating cash flow demonstrates the strength of the company’s core business model. Capital expenditures totaled $10.2M, up significantly from $3.4M in the prior year, primarily related to restaurant remodeling and new restaurant development — consistent with management’s stated liquidity priorities. Free cash flow, defined as operating cash flow less capital expenditures, was $2.8M. This reflects the company’s ability to fund strategic investments while retaining meaningful cash generation capacity. Management notes that primary liquidity requirements include new restaurants, existing restaurant capital investments, lease obligations, interest payments, working capital, and general corporate needs — all of which remain well-supported by current cash flow generation.
Management cautions that inflationary and other cost pressures are expected to continue through 2026, and the company may not be able to fully offset future cost increases. Additionally, tariffs on imported goods are anticipated to adversely impact both revenue and cost of goods sold in the United States. These factors underscore the importance of sustained operational discipline and pricing power as the company navigates external uncertainty.