El Pollo Loco Stock Surges 60% on IPO, But Is It a Buy?
This story has been updated from 3:38 pm ET with closing stock price.
NEW YORK (TheStreet) -- El Pollo Loco
The price was at the upper end of the $13 to $15 a share range given in its Securities and Exchange Commission registration filing.
Headquartered in Costa Mesa, Calif., El Pollo Loco, Spanish for "The Crazy Chicken," plans to use net proceeds from the offering to repay debt. Jefferies, Morgan Stanley and Baird are all acting as joint book-runners. William Blair and Stifel are acting as co-managers in the offering.
A healthier play on Yum! Brands'
"The consumer is demanding higher quality products, but also demanding healthier products. People are trading up from the QSRs [quick-service restaurants] to fast casual," CEO Steve Sather said in an interview with TheStreet on Friday. "We call our positioning QSR-plus," referring to higher quality menu items at the "speed, convenience and value that you get at the QSR segment."
That said, El Pollo Loco's prices are about 10% higher than typical fast-food chains but roughly 15% lower than Chipotle
"We think we're right on where consumers want to be in our QSR-plus position," Sather said.
El Pollo Loco is targeting 2,300 U.S. restaurants for the long term. It plans to grow the number of restaurants by 8% to 10% annually, at first by adding company-owned stores, but also by developing franchisee relationships, according to the filing. It has hopes of becoming a national brand one day but for now will stick to a targeted expansion plan within the Southwest, Sather adds.