Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $125.8 million, up from $122.2 million in Q2 2024, representing a year-over-year increase of 2.9% [24] - Company-operated restaurant revenue increased by 2% to $104.3 million, driven by a 1.2% increase in comparable restaurant sales and additional sales from two new restaurant openings [24] - GAAP net income for Q2 2025 was $7.1 million, or $0.24 per diluted share, compared to $7.6 million, or $0.25 per diluted share in the prior year [31] Business Line Data and Key Metrics Changes - Franchise revenue increased by 14.8% to $13.4 million, driven by IT pass-through revenue related to a new point of sale system and five new franchise openings [25] - Restaurant contribution margin improved to 19.1% from 18.6% year-over-year, with expectations for the full year to remain between 17.25% and 17.75% [29] Market Data and Key Metrics Changes - System-wide comparable store sales decreased by 0.7% in Q3 to date, with a 0.6% increase in company-operated restaurants and a 1.4% decrease in franchise restaurants [26] - Digital sales grew to 25.5% of total sales compared to 17.1% in the same quarter last year, indicating a significant increase in digital engagement [17] Company Strategy and Development Direction - The company is focused on menu innovation, operational improvements, digital growth, and unit development as key growth drivers [8] - A new brand campaign, "Let's Get Loco," was launched to modernize the brand and emphasize its commitment to quality [11] - The company plans to open at least 10 new restaurants in 2025, marking the largest system-wide unit growth since 2022 [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment but expressed confidence in the brand's long-term potential and the effectiveness of recent initiatives [27] - The company expects modest improvement in comparable sales trends for the remainder of the year, driven by brand relaunch momentum and new product offerings [26] Other Important Information - Food and paper costs as a percentage of company restaurant sales decreased to 24.4%, while labor costs decreased to 30.8% due to operational efficiencies [27][28] - The company completed 20 remodels in 2025, with remodeled locations seeing an average mid-single-digit uplift in sales [32] Q&A Session Summary Question: Can you elaborate on the challenging macro environment? - Management noted that consumer spending is cautious across income groups, with a pronounced focus on value [40] Question: What is the dynamic behind franchise traffic and check sizes? - Franchisees have been cautious with pricing due to previous increases, which has affected average check sizes [41] Question: What is the confidence level in accelerating unit growth? - Management expressed strong confidence in the pipeline, citing healthy average unit volumes and reduced build-out costs for new locations [45][46] Question: How did same-store sales trends progress through Q2? - There was sequential improvement in sales, particularly in May and June, but July has been choppier due to timing issues [52] Question: What are the initial reactions to the new menu items? - The new Fresca wraps and quesadillas have received favorable reception, contributing to increased transaction frequency [64] Question: What are the expectations for pricing and margins in the back half of the year? - Management expects targeted price increases of about 2.5% in Q3 and 2.7% in Q4, with a focus on maintaining margins despite the macro environment [72][75]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 increased by 2% year-over-year to $123.8 million [17] - System-wide comparable restaurant sales increased by 4.4%, with company-owned restaurants up 4.7% and franchise restaurants up 2.9% [17] - Company average unit volumes were $1.31 million in Q1 [17] - Net loss for Q1 was $9.1 million, or a loss of $0.20 per diluted share, compared to a net loss of $6.1 million, or a loss of $0.14 per diluted share in the previous year [19] - Adjusted EBITDA for Q1 was $2.4 million, down from $5.5 million in Q1 2024 [20] Business Line Data and Key Metrics Changes - Same-store sales increased by 4.7% in company-owned restaurants and 4.4% system-wide, driven by new menu items and marketing efforts [5][17] - Traffic increased by 1.8% and average check increased by 2.9%, including a 1.3% effective pricing increase [17] - Restaurant-level contribution margin decreased to 10.3% from 13.1% in Q1 2024 [19] Market Data and Key Metrics Changes - The Easter holiday shift positively impacted Q1 comparable sales by approximately 50 basis points [17] - The company experienced a significant increase in brand awareness and digital engagement following the new menu launch [14] Company Strategy and Development Direction - The company is focused on operational excellence and has implemented a comprehensive training program for staff to support the new menu rollout [6][7] - A major menu transformation was executed, with nearly two-thirds of the menu being new or improved, aimed at increasing brand relevance and customer engagement [10][12] - The marketing strategy has shifted to include broader reach awareness channels, such as connected TV and digital audio, to attract a wider audience [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales momentum and the effectiveness of the new menu and marketing strategies, despite a challenging macroeconomic environment [5][16] - The company anticipates continued sales growth and improvements in cost management throughout the year [22] Other Important Information - The company plans to open two new company-owned restaurants in 2025 and close 13 to 17 company-owned and four franchise restaurants [24] - Capital expenditures for 2025 are estimated to be between $11 million and $13 million, significantly lower than previous years [24] Q&A Session Summary Question: Marketing commitment and loyalty customer response to the new menu - Management indicated that marketing investment has been doubled for the new menu and is expected to continue at a high level [28] - Loyalty members have shown a strong response, with double-digit transaction growth noted [32] Question: Traffic trends since the menu launch and future plans - Traffic has remained strong, with over 5% growth since the menu launch, and management plans to maintain this momentum through continued execution [36][37] Question: Understanding margin pressures and one-time costs - Management acknowledged one-time costs related to the menu launch, including marketing and training expenses, but expects margins to improve as sales grow [41][43] Question: Free cash flow expectations - The company was slightly free cash flow positive in Q1 and anticipates being free cash flow positive in Q3 and Q4 [50][51]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 increased by 2% year-over-year to $123.8 million [19] - System-wide comparable restaurant sales increased by 4.4%, with a 4.7% increase at company-owned restaurants and a 2.9% increase at franchise restaurants [19] - Company average unit volumes were $1.31 million in Q1 2025 [19] - Net loss for Q1 2025 was $9.1 million, or a loss of $0.20 per diluted share, compared to a net loss of $6.1 million, or a loss of $0.14 per diluted share in the previous year [21] - Adjusted EBITDA for Q1 2025 was $2.4 million, down from $5.5 million in Q1 2024 [22] Business Line Data and Key Metrics Changes - Same-store sales increased by 4.7% in company-owned restaurants and 4.4% system-wide, driven by new menu items and marketing efforts [5][19] - Traffic increased by 1.8% and average check increased by 2.9%, including a 1.3% effective pricing increase during the quarter [19] Market Data and Key Metrics Changes - The Easter holiday shift from Q1 2024 to Q2 2025 benefited Q1 2025 comparable sales by approximately 50 basis points [19] - The company experienced a significant improvement in sales trends post-March menu launch, with a 5% increase through April [19][20] Company Strategy and Development Direction - The company is focused on operational excellence and has implemented a comprehensive training program for the new menu rollout [6][7] - A significant menu transformation was executed, with nearly two-thirds of the menu being new or improved, aimed at increasing brand relevance and customer engagement [10][12] - The marketing strategy has shifted to include broader reach awareness generating vehicles, such as connected TV and digital audio, to attract a wider audience [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundation laid for future growth, citing strong sales momentum and strategic cost savings [18][23] - The company anticipates continued sales growth and improved margins as one-time costs related to the menu rollout are expected to normalize [45][46] - Full-year guidance for 2025 includes total revenue of $503 million to $512 million, with mid-single-digit comparable restaurant sales growth [24] Other Important Information - The company opened one new company-owned restaurant and closed three in Q1 2025, with plans to open two new company-owned restaurants in 2025 [22][25] - Capital expenditures for Q1 2025 totaled $2.9 million, significantly lower than $8.6 million in 2024 [22] Q&A Session Summary Question: Marketing commitment and loyalty customer response to the new menu - Management indicated that marketing investment has roughly doubled, with a focus on broader reach awareness generating vehicles, and loyalty members have shown double-digit transaction growth [30][34] Question: Traffic trends since the menu launch and future plans - Management reported strong sales growth and maintained that traffic has remained robust since the menu launch, with plans to continue executing at a high level [39][40] Question: Understanding one-time costs and ongoing expenses - Management clarified that one-time costs included approximately $500,000 in marketing and $1 million in other menu rollout costs, with expectations for COGS to stabilize around 26% for the remainder of the year [46][48] Question: Free cash flow expectations - Management confirmed that the company was slightly free cash flow positive in Q1 and anticipates being free cash flow positive in Q3 and Q4 [54]