El Pollo Loco, Inc. | 1983 Acquisition by Denny's, Inc.
1983 Acquisition by Denny's, Inc.
EPL never faltered under the stewardship of Ochoa. The chain began to experience its first difficulties when under the control of corporate parent companies, the first being Denny's, Inc. The operator of a massive chain of inexpensive family restaurants, Denny's acquired Ochoa's 12 El Pollo Locos in Los Angeles in 1983 for $11.3 million. Ochoa and his family retained control of the concept in Mexico. The transaction marked the beginning of a new era for EPL, one that would see the company benefit and suffer from the tutelage of much larger parent companies. The homespun business that began in Guasave had matured, for better or for worse, and now faced a future of great expectations in a decidedly corporate world.
EPL existed as a division within Irvine, California-based Denny's throughout the mid-1980s. In 1987, the company was swept up in corporate maneuverings beyond its control when TW Services, Inc., one of the largest restaurant companies in the world, acquired Denny's and EPL. The transaction gave EPL a new parent, one that, like Denny's, saw the concept as a growth vehicle. From 1983 to the end of the decade, EPL, under the control of Denny's and TW Services, grew to be a nearly 200-unit restaurant chain. The growth was impressive, but it was achieved almost entirely in California. Under TW Services' control, an attempt to greatly broaden the chain's geographic presence had scored only moderate success in Arizona, Nevada, and Texas. Elsewhere, the efforts to export the concept failed, leading to the closure of units in Florida, Hawaii, and as far away as Japan, by the beginning of the 1990s.
EPL opened its 200th restaurant in 1991, but celebrations for the milestone were muted. The failed forays into markets out-side California aside, the chain was beginning to perform slug-gishly as it exited the 1980s. The onset of a national recession in the early 1990s only served to exacerbate the company's woes. Some members of the business press at that time observed that TW Services was willing to sell EPL, but the restaurant conglomerate was unable to find an interested buyer. EPL's fortunes did not improve until Raymond Perry took control of the chain in 1993, the same year TW Services changed its name to Flagstar Corporation. Perry, a foodservice veteran who served for years as the day-to-day operations chief of the Carl Jr.'s burger chain, added an important new dimension to EPL's business. Since its inception, EPL had operated almost exclusively as a dinner establishment, attracting only a limited lunchtime crowd. Perry changed that, introducing an expanded menu featuring barbecued chicken, new varieties of burritos, and tacos al carbon that attracted lunchtime patrons.
Its business invigorated by soaring lunch sales, EPL began to exude strength again as it entered the mid-1990s. Perry used the opportunity to start an ambitious remodeling program in 1994. The restaurants' exteriors were refurbished and salsa bars were added, among several other alterations that cost between $60,000 and $100,000 for each location. When Perry left the chain in mid-1995, his efforts to broaden EPL's appeal beyond a narrow ethnic niche created a vibrant enterprise that represented the jewel of Flagstar's holdings.
EPL was performing admirably by the mid-1990s, but the company had recorded only negligible physical growth since the start of the decade. The chain increased from 12 units to 200 units between 1983 and 1991. During the next five years, only 16 units were added to the chain. Flagstar's management, which had viewed EPL as a hindrance earlier in the decade, now looked at the chain as one of its primary growth vehicles. The parent company's executives declared their intention in 1996 to make EPL a 600-unit chain by the end of the decade. To give themselves an opportunity for international growth, they acquired the foreign development rights for the El Pollo Loco concept from Ochoa, who retreated again, this time retaining the rights for only two small territories in Mexico. Flagstar's grand plans never materialized, however. Within months the company found itself in a severe financial crisis, leaving its well-performing subsidiary, EPL, to suffer from its parent company's malaise.
Flagstar had the desire to expand EPL, but not the capabilities to follow through on its goal. The company's other foodservice holdings—family dining chains Quincy's Family Steak-house, Denny's, Carrows, and Coco's—were producing lackluster results. Further, the company itself was awash in debt, occupying a precarious position as it entered the late 1990s. Roughly a year after proclaiming its intention to triple the size of EPL, Flagstar filed for bankruptcy, leaving the thriving EPL chain to wait for its parent company's attempt to recover. Flagstar emerged from bankruptcy in 1998 under a new name, Advantica Restaurant Group, Inc., and with a revamped strategic focus, one that did not include EPL within its scope.