El Pollo Loco(LOCO)2021-08-08 13:44Financial Data and Key Metrics Changes - Total revenue increased by 22.5% to 99.6 million in Q2 2020 [19] - Company-operated restaurant revenue increased by 22% to 87.7 million in the same period last year [19] - GAAP net income was 0.24 per diluted share, compared to 0.16 per diluted share in the prior year [23] Business Line Data and Key Metrics Changes - System-wide comparable restaurant sales increased by 21% in Q2 2021, with a two-year growth of 14.8% [6][7] - Company-operated comparable restaurant sales increased by 16.4%, driven by a 0.4% increase in average check and a 15.9% improvement in transactions [19] - Franchise revenue increased to 6.7 million in the prior year, driven by a 24.5% increase in franchise comparable restaurant sales [20] Market Data and Key Metrics Changes - Dine-in traffic currently accounts for 8% to 9% of transactions, still below pre-COVID levels, indicating potential for continued sales growth [9] - The LA market has shown improvement, with system comparable sales exceeding outer markets by 150 basis points in June [8] Company Strategy and Development Direction - The company aims to expand its brand in new geographies through franchise agreements, with a recent four-unit development agreement in Denver [13] - Focus on enhancing off-premise business, including a free delivery promotion that doubled system dispatch sales [11] - The company is committed to sustainability by eliminating styrofoam from its operations, which will significantly reduce waste [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued sales growth, particularly in the LA market, as dine-in traffic gradually increases [8][28] - The company anticipates labor cost pressures in the second half of the year due to wage inflation and increased hiring efforts [14][36] - Management is cautious about providing full-year guidance due to ongoing labor and supply chain challenges [25][52] Other Important Information - The company is applying for employee retention credits, which may benefit results in the second half of the year [24] - Capital spending for 2021 is expected to be in the range of 25 million [19] Q&A Session Summary Question: Current sales trends and drivers - Management noted that dine-in business is gradually improving but may not return to pre-COVID levels due to changes in consumer behavior [28] Question: Planned price increase details - The anticipated price increase is expected to be in the range of 2% to 3% [30] Question: Labor cost pressure and inflation - Wage inflation is expected to be around 4.5% to 5%, with additional costs for training and retention [36] Question: Menu newness and marketing strategies - Management is optimistic about new product launches in the fall, while also focusing on existing products to drive sales [41] Question: Sales momentum and future expectations - Management is bullish on sales momentum and believes strong same-store sales growth can be sustained [44] Question: Labor hours and efficiency - Labor hours are expected to increase as transactions grow, with no significant efficiencies identified yet [60]