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Another activist investor is taking a closer look at El Pollo Loco.
CapitalSpring Finance Company LLC, a middle-market private equity and debt investment firm focused on franchised and multi-location businesses, disclosed in a May 29 regulatory filing that it has 5.2% stake in the company with about 1.6 million shares.
According to the filing, the Nashville-based firm is discussing “a potential extraordinary transaction involving” the Costa Mesa-based chain and other third parties, “including potential acquirers and financing sources” with which CapitalSpring “may participate, as investor, financing source, or otherwise.”
El Pollo Loco (Nasdaq: LOCO) shares rose 7.9% to $10.50 apiece the day after the filing. At press time, the stock price landed around $10.69 apiece with a market cap of $320 million. El Pollo Loco stock was still down almost 10% year to date at press time.
The private equity firm, led by co-founder and Managing Partner Richard Fitzgerald, acquired El Pollo shares for an aggregate purchase price of $14.7 million via the working capital of CapitalSpring’s two investment funds, CSIP VI and CSFC Fin I. According to a previous filing from February 2024, the purchase was completed by Dec. 31, 2023.
CapitalSpring aims to discuss the chain’s “performance, business, strategic direction, capital structure and prospects” with El Pollo Loco management, the board and other stakeholders. The firm signed a confidentiality agreement with the chain on May 21 that stops the investment firm from taking any further action for the next 12 months.
The quick-service chain is Orange County’s fifth-largest restaurant company based in the region ranked by systemwide sales of $1.1 billion for 2024.
Slow Grower
The firm also clarified these talks were separate from Biglari Capital Corp.’s unsolicited bid in April to acquire the chain.
“This will discourage Biglari, only somewhat,” restaurant analyst John Gordon of Pacific Management Consulting Group told the Business Journal.
Biglari holds a 14.9% stake in El Pollo Loco. Gordon added that it’s likely an executive reached out to CapitalSpring, the potential “White Knight” in a possible proxy battle.
El Pollo Loco, known for its citrus-marinated fire-grilled chicken, operates nearly 500 restaurants across seven U.S. states.
The company has been in pursuit of a sales turnaround after generating slow sales for the past five years; in 2024, revenue inched up about 1% to $473 million. The restaurant chain in May reported first-quarter revenue of $119 million, up 2.6% compared to a year ago, and a decrease of 0.6% in system-wide comparable restaurant sales.
Chief Executive Liz Williams said the results “fell short of our expectations on sales and store level profit.”
Analysts have not been expecting much sales growth, predicting 4.2% to $493 million this year followed by a 1.1% increase to $498 million in 2026.
Yet Another Investor
Fitzgerald founded CapitalSpring in 2005 and has since invested in more than 70 brands across the U.S. and other countries. According to its website, CapitalSpring has $3.7 billion of capital invested in the consumer sector and oversees over 6,500 operating locations globally.
Its target investment ranges from $10 million to $150 million. So far in 2025, CapitalSpring had made deals with Café Yumm!, Bone-A-Patreat and Coast Sign. It acquired the latter Anaheim-based manufacturer in April.
CapitalSpring’s interest in El Pollo Loco follows a much more dramatic offering in April by Biglari, a well-known proxy battle instigator.
Founded and led by Chairman and CEO Sardar Biglari, the San Antonio-based company began purchasing shares in El Pollo Loco in 2023.
The restaurant chain “received an unsolicited, non-binding indication of interest” from Biglari on April 6 and reported that board members were evaluating the proposal. Biglari Capital also entered into a confidential customary standstill agreement with El Pollo Loco.