El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) has authorized a $40 million share repurchase program, the Costa Mesa, California-based restaurant chain said Thursday evening.
The board of directors approved the repurchase of up to $40 million of its common stock, representing approximately 9% of the company's current market capitalization.
Share repurchases at that scale relative to market cap are a more material capital return signal than a typical small-program authorization and provide the company with a defined mechanism for returning capital to shareholders.
The authorization is a ceiling rather than a commitment. The company has flexibility on the pace and timing of repurchases, and the program does not obligate El Pollo Loco to buy any specific number of shares. El Pollo Loco did not detail the duration of the authorization, expected funding sources, or the methods through which repurchases will be executed.
Shares of El Pollo Loco added around 10.1% on Friday morning.
El Pollo Loco Holdings is the nation's leading fire-grilled chicken restaurant chain, operating company-owned and franchised restaurants centered on its Mexican-inspired menu.