Core Insights - El Pollo Loco Holdings, Inc. reported financial results for the first quarter of 2025, indicating challenges in sales and store-level profit despite some positive developments in brand initiatives [4][8]. Financial Performance - Company-operated restaurant revenue increased to $98.4 million in Q1 2025, up from $97.2 million in Q1 2024, driven by a 0.6% rise in comparable restaurant revenue and additional sales from two new restaurant openings [5]. - Franchise revenue rose by 16.2% to $13.2 million, primarily due to IT pass-through revenue from a new Point of Sale system and four new franchise-operated restaurant openings [6]. - Total revenue for the first quarter was $119.2 million, compared to $116.2 million in the previous year [8]. - Net income was $5.5 million, or $0.19 per diluted share, down from $5.9 million, also $0.19 per diluted share, in Q1 2024 [10]. Operational Metrics - System-wide comparable restaurant sales decreased by 0.6% [8]. - Restaurant contribution was $15.8 million, representing 16.0% of company-operated restaurant revenue, down from 17.6% in the previous year, largely due to increased labor costs from a minimum wage hike in California [7][8]. - Adjusted EBITDA for the quarter was $13.9 million, compared to $15.7 million in Q1 2024 [8]. Cost Structure - General and administrative expenses decreased to $11.3 million from $11.9 million, attributed to lower restructuring costs and a legal settlement [9]. - Labor and related expenses increased to $32.2 million, accounting for 32.7% of total revenue, compared to 31.5% in the previous year [34]. Future Outlook - The company plans to open 10 to 11 new restaurants in 2025, with capital spending projected between $30 million and $34 million [15]. - The estimated effective income tax rate for 2025 is expected to be between 29.0% and 29.5% [15].

Core Viewpoint - El Pollo Loco Holdings, Inc. will host a conference call to discuss its first quarter 2025 financial results on May 1, 2025, at 4:30 PM Eastern Time, led by CEO Liz Williams and CFO Ira Fils [1]. Group 1: Conference Call Details - The conference call can be accessed live by dialing 201-493-6780, with a replay available until May 15, 2025, by dialing 412-317-6671 using passcode 13752366 [2]. - The conference call will also be webcast live on the company's corporate website under the "Events & Presentations" page, with an archive available shortly after the call [3]. Group 2: Company Overview - El Pollo Loco is a leading fire-grilled chicken restaurant in the U.S., known for its flavorful and healthier offerings, with a menu featuring innovative meals made daily using quality ingredients [4]. - The company operates over 495 company-owned and franchised restaurants across seven U.S. states and has eight licensed locations in the Philippines, reflecting its successful expansion since 1980 [4].

Core Viewpoint - El Pollo Loco Holdings, Inc. (LOCO) has experienced a significant decline in stock price, down 23.5% over the past six months, underperforming compared to the broader restaurant industry and major market indices [1][2][3] Company Performance - The stock is currently trading below its 50-day moving average, indicating a bearish trend [4][6] - Fiscal 2025 earnings per share (EPS) estimates have been revised downward from 95 cents to 93 cents, reflecting weakening analyst confidence [10] - Despite the downward revision, the company is projected to report a 4.5% year-over-year growth in fiscal 2025 [11] Industry Context - The restaurant industry is facing challenges due to newly announced tariffs on imported food items, leading to increased cost pressures and uncertainty [8][9] - Prominent chains like Starbucks, Chipotle, and McDonald's are also experiencing vulnerabilities due to reliance on imported ingredients [9] Strategic Initiatives - El Pollo Loco is focusing on a five-pillar strategy to modernize its brand and enhance customer experience, emphasizing fresh ingredients and health-conscious menu options [12][16] - The company has implemented a new customer-feedback system to improve service standards and accountability [16] Valuation Insights - LOCO stock is currently trading at a forward price-to-sales (P/S) multiple of 0.61X, significantly below the industry average of 3.76X, indicating an attractive investment opportunity [17] - Analysts have set an average price target of $14.75 for LOCO, suggesting a potential upside of 45% from the last closing price of $10.17 [18] Investment Outlook - The company is recognized for its brand loyalty and localized menu offerings, which may support long-term resilience despite current macroeconomic challenges [19][20] - Existing investors may consider holding the stock while new investors might wait for clearer signs of momentum before entering [22]

Company Overview - El Pollo Loco Holdings (LOCO) shares increased by 9.6% to $10.17 in the last trading session, following a significant volume of trading, contrasting with a 10.9% loss over the previous four weeks [1][2] Acquisition Proposal - The surge in El Pollo Loco's shares was driven by an unsolicited, non-binding buyout proposal from Biglari Capital, which aims to acquire all outstanding shares of the company. Biglari Capital already holds a significant stake in El Pollo Loco, indicating potential confidence in a strategic move that could alter the company's future [2] Earnings Expectations - The company is projected to report quarterly earnings of $0.20 per share, reflecting a year-over-year decline of 9.1%. Revenue is expected to reach $118.46 million, marking a 2% increase from the same quarter last year [3] Earnings Estimate Trends - The consensus EPS estimate for El Pollo Loco has remained stable over the past 30 days, suggesting that stock price movements may not sustain without changes in earnings estimate revisions. Monitoring LOCO's performance is advised to determine if the recent price increase can lead to further strength [4] Industry Context - El Pollo Loco is part of the Zacks Retail - Restaurants industry, where another company, Potbelly (PBPB), experienced a 7.7% decline in its last trading session, with a return of -5.4% over the past month. Potbelly's consensus EPS estimate has also remained unchanged, indicating a significant year-over-year decline of 300% [4][5]

Core Viewpoint - El Pollo Loco Holdings, Inc. (LOCO) is experiencing growth through expansion, same-store sales increases, and operational efficiencies, but faces challenges from commodity inflation and traffic concerns [1] Group 1: Growth Factors - The company plans to open 10 new restaurants in 2025, focusing on emerging markets such as Arizona, Colorado, Idaho, New Mexico, Texas, and Washington, while maintaining its presence in California [2] - In the fourth quarter of 2024, same-store sales increased due to higher menu prices and consistent customer traffic, indicating strong brand loyalty and effective pricing strategies [3] - Strategic cost-saving measures have been implemented to enhance food quality and customer experience, including hiring a new chief development officer to streamline operations and reduce unit build costs [4] Group 2: Customer Experience Enhancements - In 2025, LOCO aims to improve customer satisfaction by strengthening service standards and accountability, implementing a new customer-feedback system in partnership with a leading provider to benchmark against industry peers [5] - The company is focused on improving service speed, accuracy, and consistency, recognizing that superior customer service drives transaction growth and loyalty [5] Group 3: Concerns - Increased competition in the quick-service restaurant sector, particularly from national brands with aggressive discounting, poses a challenge to LOCO's market share [6] - Price sensitivity among customers is impacting transaction volumes, and economic uncertainty may affect discretionary spending, potentially impacting LOCO's core customer base and sales growth [6]

Core Points - El Pollo Loco is celebrating National Burrito Day with a three-day event called the Burrito Block Party from April 2 to April 4, 2025, offering exclusive deals and giveaways for Loco Rewards members [1][4] Group 1: Event Details - On April 2, exclusive promo codes will be shared on Instagram Stories for Loco Rewards members to redeem in the app [2] - On April 3, Loco Rewards members can enjoy a buy one, get one free deal on select Fire-Grilled Chicken Burritos [3] - On April 4, the celebration will conclude with a Loco Friday Drop and giveaways, including a chance to win limited-edition items [4][7] Group 2: Promotions and Offers - The first 100 members to redeem will receive a free burrito, followed by discounts for the next 300 (50% off), 2,000 (20% off), and 10,000 members (15% off) [6] - $0 delivery is available on all orders placed through the Loco Rewards app or website with a minimum purchase of $15 on April 4, 2025 [7] Group 3: Company Overview - El Pollo Loco is recognized as the leading fire-grilled chicken restaurant in the U.S., known for its flavorful and healthier offerings [5] - The company operates over 495 restaurants across seven U.S. states and has expanded internationally with locations in the Philippines [8]

Core Insights - Pollo Loco's stock experienced a significant increase following a double beat in earnings, but this upward momentum was short-lived as the stock returned to a declining trend [1]. Company Analysis - Pollo Loco's recent performance highlights the volatility often seen in restaurant stocks, particularly in the quick-service restaurant (QSR) segment [1]. - The company is part of a broader market that includes various dining segments, indicating a competitive landscape that can impact stock performance [1]. Industry Context - The restaurant industry, particularly the QSR and fast casual segments, is characterized by rapid changes in consumer preferences and economic conditions, which can lead to fluctuations in stock prices [1]. - Advanced analytical models and valuation techniques are essential for investors to navigate the complexities of the restaurant sector and make informed decisions [1].

Restaurant Operations - As of December 25, 2024, the company operated 498 locations across seven states, with two new company-operated restaurants opened in fiscal 2024[248]. - The company plans to open one to two new company-operated restaurants and eight to nine new franchised restaurants in 2025[249]. - The company completed eight company-operated restaurant remodels and 44 franchise remodels in fiscal 2024, with plans for 30-40 remodels in fiscal 2025[256]. - The company opened new restaurants during the reporting period, contributing to initial higher sales volumes before stabilizing[311]. - The company licensed 10 restaurants in the Philippines as of December 25, 2024, expanding its international presence[395]. Sales Performance - Comparable restaurant sales system-wide increased by 3.2% in fiscal 2024, compared to a decrease of 0.3% in fiscal 2023[250]. - For company-operated restaurants, comparable sales increased by 2.8% in fiscal 2024, driven by a 7.9% increase in average check size, partially offset by a 4.7% decrease in transactions[251]. - Comparable restaurant sales at franchised restaurants increased by 3.5% in fiscal 2024, following a decrease of 0.7% in fiscal 2023[252]. - Comparable restaurant sales growth included a 2.8% increase for company-operated restaurants and a 3.5% increase for franchised restaurants, driven by a 7.9% rise in average check size[299][305]. Financial Performance - Total revenue for fiscal 2024 was $473.0 million, compared to $468.7 million in fiscal 2023, indicating a slight increase[304]. - Net income for fiscal 2024 was $25.7 million, a slight increase of $130, or 0.5%, compared to $25.6 million in fiscal 2023[276]. - Basic net income per share rose to $0.86 from $0.75, indicating a growth of 14.7%[386]. - Franchise revenue increased to $45.6 million in fiscal 2024, compared to $41.0 million in fiscal 2023, alongside franchise advertising fee revenue of $31.2 million[304]. - The restaurant contribution for fiscal 2024 was $69.1 million, reflecting an increase from $61.9 million in fiscal 2023, with a contribution margin of 17.4%[310]. Cost Management - The company has experienced inflationary pressures affecting food, labor, and construction costs, which are anticipated to continue into fiscal 2025[244]. - Food and paper costs decreased by $7.5 million, or 7.0%, in fiscal 2024, with food and paper costs as a percentage of company-operated restaurant revenue at 25.4%, down from 27.2% in fiscal 2023[280]. - Labor and related expenses decreased by $0.1 million, or 0.1%, due to a $5.8 million reduction from sold restaurants, offset by a $12.3 million increase from higher wage rates[281]. - Occupancy and other operating expenses decreased by $2.1 million, or 2.1%, with occupancy costs as a percentage of company-operated restaurant revenue at 25.1%, down from 25.4% in fiscal 2023[283]. Capital Expenditures and Investments - Total capital expenditures for 2024 were $19.1 million, with approximately $4.3 million spent on new restaurant development and $14.8 million on existing restaurant investments[341]. - The company expects to incur between $30.0 million and $34.0 million in total capital expenditures for 2025, with $3.0 million to $5.0 million for new restaurant construction[341]. Share Repurchase and Debt Management - In fiscal 2024, the company repurchased shares of common stock totaling $20.6 million, a decrease from $59.2 million in fiscal 2023[333]. - The company announced a share repurchase program authorized to repurchase up to $20 million of common stock, set to terminate on March 31, 2025[344]. - As of December 25, 2024, the company had outstanding borrowings of $71 million under the 2022 Revolver, with a margin of 1.5%[367]. - A 1% increase in the effective interest rate on the 2022 Revolver borrowings would result in a pre-tax interest expense increase of $0.7 million annually[367]. Compliance and Regulatory Factors - Labor and regulatory compliance costs are expected to increase due to California's AB 1228, which raises the minimum wage to $20 per hour starting April 1, 2024[243]. - The company was in compliance with financial covenants under the 2022 Credit Agreement as of December 25, 2024[340]. Cash Flow and Liquidity - In fiscal 2024, the company recorded net cash provided by operating activities of $46.8 million, an increase of $6.1 million compared to fiscal 2023[330]. - Cash and cash equivalents at the end of the period were $2,484 million, down from $7,288 million in 2023, marking a decrease of 65.9%[394]. - As of December 25, 2024, the company's total debt was $71.0 million, with available cash of $2.5 million to meet liquidity needs for the next twelve months[398]. Membership and Loyalty Programs - The Loco Rewards loyalty program had over 4.2 million members as of December 25, 2024, with $0.8 million in revenue allocated to unredeemed loyalty points[258]. - The performance obligation related to loyalty points is satisfied when points are redeemed or expire[430]. Miscellaneous - The company does not currently use financial instruments to hedge commodity price risks, which may impact operational results[370]. - The company had one supplier accounting for 19.7% of accounts payable as of December 25, 2024, and 15.1% as of December 27, 2023[406].

Core Insights - El Pollo Loco Holdings, Inc. (LOCO) reported strong fourth-quarter fiscal 2024 results, with adjusted earnings and revenues exceeding the Zacks Consensus Estimate and showing year-over-year growth [1][2]. Financial Performance - Adjusted earnings per share (EPS) for the quarter were 20 cents, surpassing the Zacks Consensus Estimate of 13 cents by 53.9%, compared to an adjusted loss per share of 16 cents in the prior-year quarter [3]. - Total revenues reached $114.3 million, slightly above the consensus mark of $113 million, reflecting a 1.9% year-over-year increase [3]. - Comparable restaurant revenues increased to $95.6 million from $94 million year over year, with a system-wide comparable restaurant sales growth of 0.5% [4]. Operating Highlights - Total expenses rose to $105.3 million from $104.8 million year over year, but as a percentage of total revenues, expenses decreased to 92.1% from 93.4% [5]. - Operating income improved to $9 million from $7.5 million year over year [5]. Annual Overview - For fiscal 2024, total revenues increased to $473 million from $468.7 million in fiscal 2023, while company-operated restaurant revenues declined to $396.3 million from $398.4 million [6]. - The annual adjusted EPS rose to 86 cents from 74 cents reported in fiscal 2023 [6]. Financial Position - As of December 25, 2024, cash and cash equivalents were $2.5 million, down from $7.3 million at the end of fiscal 2023, while total debt decreased to $71 million from $84 million [7]. Market Reaction - Following the announcement of the results, LOCO stock increased by 5.7% during after-hours trading [2]. Zacks Rank - El Pollo Loco currently holds a Zacks Rank 2 (Buy) [8].

Financial Data and Key Metrics Changes - For Q4 2024, total revenue was $114.3 million, up from $112.2 million in Q4 2023, representing a year-over-year increase [36] - Company-operated restaurant revenue increased by 1.8% to $95.6 million from $94 million in the same period last year, driven by a 1.6% increase in comparable restaurant sales [36] - Restaurant contribution margin for Q4 was 16.7%, compared to 15.8% in the prior year, indicating a 90 basis point improvement [40] - GAAP net income for Q4 was $6 million, or $0.20 per diluted share, compared to $4.4 million, or $0.14 per diluted share in the prior year [41] Business Line Data and Key Metrics Changes - Franchise revenue increased by 2.5% to $11.2 million during Q4, driven by new franchise openings, despite a 0.1% decrease in comparable restaurant sales [37] - Average check size increased by 9%, while transactions decreased by approximately 6.8% during Q4 [37] - Food and paper costs as a percentage of company restaurant sales decreased by 180 basis points year-over-year to 25.1% [38] Market Data and Key Metrics Changes - System-wide comparable same-store sales increased by 0.6% year-to-date through February 26, 2025, with a 2.3% increase in company-operated restaurants and a 0.4% decrease in franchise restaurants [37] Company Strategy and Development Direction - The company is focused on a brand transformation to modernize its image and enhance customer experience, aiming to become the national fire-grilled chicken brand [7][19] - A new advertising campaign is set to launch, emphasizing the quality and value of its food offerings [13] - The company plans to open 10 new restaurants in 2025, primarily outside California, and is leveraging restaurant closures in the industry to convert locations into El Pollo Loco restaurants [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the brand's growth potential, citing improvements in unit economics and operational efficiencies [24][34] - The company anticipates commodity inflation to be in the 1.5% to 2.5% range for 2025, with wage inflation expected to be between 5% and 6% [38][39] - Management highlighted the importance of customer satisfaction and operational consistency as key focuses for 2025 [22] Other Important Information - The company completed 8 company-operated remodels and 44 franchise remodels in 2024, with plans to remodel 60 to 80 restaurants in 2025 [43][30] - The company has a robust product calendar for 2025, focusing on culinary innovation and value [32][34] Q&A Session Summary Question: Can you provide insights on the impact of remodels on same-store sales? - Management noted that while they do not have enough data yet, initial consumer reactions to remodels have been positive, and they expect good returns from the remodel program [50][52] Question: What is the status of the franchisee pipeline? - Management indicated that interest from franchise partners is growing, with more meetings and discussions taking place, reflecting the brand's improved performance [53][56] Question: What factors contribute to confidence in margin expansion for 2025? - Management highlighted improvements in supply chain efficiency and labor productivity as key areas driving confidence in further margin expansion [60][62] Question: Can you clarify the build costs for the new restaurant prototype? - Management stated that while the goal is to keep costs around $1.8 million, actual costs may vary based on location and market conditions, with opportunities for lower costs through conversions of closed restaurants [68][72] Question: What is the impact of the L.A. wildfires on operations? - Management reported minimal impact from the wildfires, with no physical losses and only temporary closures due to power outages [75] Question: How is the Mango Habanero product performing? - Management confirmed that the Mango Habanero has driven trial among both existing and new customers, positively impacting sales [78][82]