Chicken chain takes on deep-fried South with grilled option

HIRAM, Ga. -- Robert Bowman loves his chicken, especially when it's breaded and loaded in a fryer.

"When I go on a trip, that's all I'll eat is fried chicken. I just like fried chicken," the 67-year-old retired postal worker said.

But during a recent lunch at a restaurant near his home, the poultry on Bowman's plate was prepared differently from the Southern style he was used to. Instead of being fried, it was grilled and marinated with citrus, herbs and spices.

It's part of a move by a California-based fast food chain to sell Mexican-style grilled chicken deep inside the deep-fried South and begin expanding beyond its West Coast markets.

"We're giving the South, which loves its chicken, a healthy, wholesome alternative to fried chicken," said Steve Carley, CEO of Irvine, Calif.-based El Pollo Loco Inc. (pronounced El Po-yo Lo-co).

The suburban Atlanta restaurant, which opened at the end of August, is the first Southern location for the chain, which is ranked 70th in the nation's list of top restaurant chains based on sales according to Restaurants & Institutions magazine.

Last month, the privately held company of 340 restaurants reported a net income of $1.588 million for the 26 weeks ended June 30, a 26.4 percent increase over the $1.256 million in net income it reported for the same period a year ago. The company was purchased in November 2005 by affiliates of the New York-based equity investment firm Trimaran Capital LLC and company management.

El Pollo Loco is under contract with a company led by a former Church's Chicken executive to open 50 restaurants in the Atlanta area in the next six years. The chain also plans to open restaurants in the Orlando and Tampa, Fla., areas, in Charlotte, N.C., and in Norfolk, Va.

"We think the South is ready for El Pollo Loco," Carley said. "We have a high level of confidence this is going to be a big winner."

Although grilled chicken is not new to the South, it's not the traditional focus of Southern palates, said John T. Edge, director of the University of Mississippi's Southern Foodways Alliance.

"We tend to argue about the foods to which we are devoted -- fried chicken and barbecue," Edge said. "Nobody's fussing and fighting over grilled chicken in the South."

Indeed, the South's chicken wars tend to be of the fried variety. Some of the nation's Top 100 restaurant chains built upon their success serving up fried chicken in the South, including Louisville, Ky.-based KFC and the Atlanta-based chains Chick-fil-A and Popeyes Chicken & Biscuits.

"The heaviest weighting of our outlets are in the South, testimony to the fact that fried chicken is a Southern staple," said Kirk Waisner, vice president of menu development for Popeyes Chicken & Biscuits.

Most of the country's "major chicken players" in the $15.1 billion industry of limited service chicken chains -- which includes fried chicken outlets -- are based in the South, said Darren Tristano, executive vice president of the Chicago-based Technomic, Inc., a research and consulting firm that serves the food industry.

If successful, El Pollo Loco's move into the heavily competitive Southern market gives the company a good chance to become a national chain instead of remaining a regional West Coast brand, Tristano said.

"The more they are able to grow in larger cities in the East, the stronger their brand is, which allows them to leverage their advertising, marketing and customer loyalty as their brand grows," he said.

Once in the South, Carley said, the chain will stick to its roots, meaning fried chicken won't be served anytime soon. Instead, the chain is banking on the view that offering grilled chicken instead of fried food will be attractive in a region that struggles with obesity.

Last month Mississippi was named the first state to pass the 30 percent mark of adults considered obese, with Alabama and West Virginia not far behind, according to the Trust for America's Health, a research group that focuses on disease prevention.

"Everybody I think needs to change their eating habits," said Kimberly Newkirk, a 38-year-old nurse from Dallas, Ga., who came to El Pollo Loco at a friend's recommendation.

Chris Elliott is a former Church's Chicken COO and the CEO of Fiesta Brands, Inc., which has contracted with El Pollo Loco to open the 50 new restaurants. He said grilling the chicken provides "healthy overtones."

"For the same size chicken breast if you fry one versus grill it, it's about 300 calories difference," he said.

El Pollo Loco's plan of attack also includes a year's worth of marketing to people who live within a few miles of a store, including offers to try the chicken for free. In addition to Hiram, the chain initially will focus on suburban Atlanta. It January the company plans to open a restaurant inside the city.

"We know we do have to work to get in people's considerations, we have to change their routines," Carley said.

Bowman said he's not sure all lovers of fried chicken will turn to the grilled variety. But he hopes many will at least try it.

"That's the way Southerners are -- a bunch of them will stick to fried chicken," Bowman said. "But when something new comes to them, they'll get used to it."