Financial Data and Key Metrics Changes - For Q3 2025, total revenue was $121.5 million, a slight increase from $120.4 million in Q3 2024 [29] - Company-operated restaurant revenue decreased by 0.5% to $100.7 million from $101.2 million in the same period last year [30] - GAAP net income rose to $7.4 million, or $0.25 per diluted share, compared to $6.2 million, or $0.21 per diluted share in the prior year [36] Business Line Data and Key Metrics Changes - Franchise revenue increased by 13.5% to $12.9 million, driven by IT pass-through revenue and new franchise openings [30] - Company-operated comparable restaurant sales decreased by 1.1%, with a 1.3% decrease in average check size, partially offset by a 0.1% increase in transactions [30] - Restaurant contribution margin improved to 18.3% compared to 16.7% in the year-ago period [34] Market Data and Key Metrics Changes - System-wide traffic growth was positive at 1.6%, with franchise traffic up 2.5% in Q3 [31] - Digital business, including kiosks, grew to 27% of system sales compared to 20% in the same period last year [19] - Third-party delivery sales represented 15.1% of the business, up from 13.8% year-over-year [20] Company Strategy and Development Direction - The company is focused on five strategic pillars: brand marketing and menu innovation, operational excellence, digital-first approach, winning unit economics, and new unit growth [6][7] - A robust pipeline of menu innovations is planned for 2026, including new salads and portable options [12][13] - The company aims to open at least 10 new restaurants in 2025, with a strong pipeline for 2026 [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and noted improvements in customer engagement metrics, with complaints at a three-year low [17] - The company anticipates continued sales momentum into Q4 2025, despite a challenging macro consumer environment [31] - Management acknowledged ongoing challenges but emphasized operational improvements and customer experience enhancements [43] Other Important Information - The company completed 34 system-wide remodels in 2025, with plans for at least 55 remodels for the full year [26][37] - The "Let's Get Loco" brand campaign has resonated well with customers, driving engagement and brand awareness [15][16] Q&A Session Summary Question: Performance relative to peers in California - Management indicated that the company is outperforming peers in California in both sales and transactions, attributing this to value positioning and operational enhancements [40][41] Question: Tactics to offset market pressures - Management noted that adjustments made throughout the year have helped maintain performance, with no significant deterioration in consumer behavior observed [42][43] Question: Future cost efficiencies - Management believes there are still opportunities for cost savings and efficiencies, particularly in labor and supply chain [44][45] Question: Menu item testing and introduction - Management confirmed that new menu items like Loco Tenders and a chicken sandwich are in testing and could be introduced in 2026 [47][48] Question: Chicken contracting for next year - Management stated that they are in good shape regarding chicken contracts for the upcoming year, with some pressure on dark meat prices [49] Question: Supply chain innovations - Management is testing various ideas to improve consistency and quality, including pre-marination processes [51] Question: Margin outlook for Q4 - Management expects to grow margins year-over-year in Q4, despite some pressure from sales volume differences [54] Question: Marketing efforts and consumer response - Management noted that the "Let's Get Loco" campaign is driving awareness and attracting new customers, with a focus on balancing value and check protection [56][58]