- Freeman Spogli & Co. invested $45 million in El Pollo Loco in 2007 for an undisclosed stake alongside majority owner Trimaran Capital Partners.
- The capital was aimed at accelerating national expansion and supporting general corporate needs.
- The deal came amid a $22 million trademark/development-rights judgment tied to a dispute with the Mexican El Pollo Loco entity that the company was appealing.
- At the time, El Pollo Loco had 389 restaurants across nine U.S. states (159 company-operated and 230 franchised), with California as its core market.
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The investment in 2007 by Freeman Spogli & Co. in El Pollo Loco reflects a classic growth-stage PE deal aimed at providing liquidity, funding expansion, and resolving legal constraints that may have held back development. The $45 million stake acquisition came at a time when El Pollo Loco had 389 stores (159 company-operated; 230 franchised) across nine states—significant scale but with substantial room to grow nationally.
One key strategic driver of the investment was the legal judgment requiring El Pollo Loco to pay $22 million in damages to its Mexican counterpart, following a trademark and development rights dispute. The requirement to post letters of credit, one by the company and one by its principal owner, to secure the bond and to allow appeal suggests legal risk was a material factor in the capital raise.
Typical portfolio fit: Freeman Spogli had prior, and continued, exposure to restaurant chains (e.g., Popeyes, Carl’s Jr.), making El Pollo Loco a natural extension of its investment strategy. Also, as later indicated in their portfolio, Freeman Spogli’s focus on infrastructure, geographic expansion, and brand building in multi-unit restaurant chains aligns with the goals stated in the investment announcement.
From a valuation perspective, while the exact percentage stake was undisclosed, $45 million in 2007 suggests meaningful ownership, especially given that El Pollo Loco was owned by Trimaran Capital Partners and management prior to its IPO in 2014. Considering the need to invest in growth, likely store openings and franchising expansion, this tranche would improve El Pollo Loco’s financial flexibility.
Open questions include: how the ownership structure changed post-IPO; whether the capital was efficiently deployed to yield proportional store growth; and what the long-term impact of the legal dispute with El Pollo Loco Mexico was on the brand’s cross-border strategy. Also, how did El Pollo Loco’s store count, geographic footprint, and prototype costs evolve relative to this injection of capital? Later sources indicate remodeling, prototype redesigns, and a strong reliance on franchisee-driven growth as continuing strategic themes.
Supporting Notes
- Freeman Spogli invested $45 million for an undisclosed stake in El Pollo Loco and Trimaran Capital Partners’ Trimaran Fund II LLC was the principal owner at the time.
- The funds were earmarked for accelerated national expansion and general corporate purposes.
- El Pollo Loco had 230 franchised locations and 159 company-operated stores in nine states, with the highest concentration in California.
- The investment followed a $22 million judgment in a trademark dispute; letters of credit were issued by both the company and its principal owner as collateral.
- Freeman Spogli later “realized its investment” in El Pollo Loco via public market transactions from 2014 to 2024.
- By December 25, 2024, El Pollo Loco had 498 domestic restaurants, of which 173 were company-operated and 325 franchised, located in seven U.S. states plus licensing in the Philippines.
- El Pollo Loco’s remodel initiative included completing 8 company-operated and 44 franchised restaurant refreshes in 2024 and targeting 30-40 company and 30-40 franchise remodels for 2025. Typical restaurant size ranges 2,200-3,000 sq ft, seating 50-70 people.