El Pollo Loco(US:LOCO)2020-03-06 03:50Financial Data and Key Metrics Changes - For Q4 2019, total revenue was $107.5 million, up from $106.3 million in Q4 2018, marking a slight increase [29] - Company-operated restaurant revenue increased to $94.8 million from $94.6 million, driven by a 4.3% growth in comparable restaurant sales [29] - GAAP net income for Q4 2019 was $3.5 million or $0.10 per diluted share, compared to a net loss of $23.4 million or $0.60 per diluted share in the prior year [35] Business Line Data and Key Metrics Changes - Franchise revenue increased by 11.4% to $7.2 million in Q4 2019, driven by a 3.6% increase in comparable restaurant sales and contributions from new franchised restaurants [30] - Company-operated comparable restaurant sales growth was attributed to a 2.5% increase in transactions and a 1.8% increase in average check [29] Market Data and Key Metrics Changes - System-wide comparable restaurant sales growth for Q4 2019 was 3.9%, marking the highest growth of the year and the sixth consecutive quarter of positive growth [6] - The company reported a two-year system comp of 8.3%, the best in four years [6] Company Strategy and Development Direction - The company aims to transition from limited-time offerings to more evergreen platforms, sustaining the $5 Fire-Grilled Combos value lineup throughout 2020 [10] - A focus on culinary innovation is emphasized, with plans to introduce healthier options and a robust product pipeline [16][18] - The company plans to expand its delivery capabilities and diversify its media strategy to reach more customers [19] Management's Comments on Operating Environment and Future Outlook - Management noted that guidance for 2020 does not include any impact from the coronavirus, and there has been no observed impact on sales or transactions as of the call date [41] - The company expects system-wide comparable restaurant sales growth of approximately 2% to 4% for 2020 [37] Other Important Information - The company plans to open 3 to 4 new company-operated restaurants and 5 to 8 franchised restaurants in 2020 [27] - General and administrative expenses decreased to $10.2 million, or 9.4% of total revenue, down from 11.7% in the prior year [32] Q&A Session Summary Question: Impact of coronavirus on guidance - Management stated that the guidance for 2020 does not include any impact from the coronavirus and has not seen any impact on sales or transactions [41] Question: Current momentum and weather impact - Management expressed confidence in current momentum, noting positive transactions and a weather impact of approximately 50 to 100 basis points last year [43] Question: Menu pricing and margin impact - Menu pricing in Q4 was around 3.7%, with a target of approximately 3.5% for 2020 [45] Question: Remodel plans and timeline - The company plans to remodel over 300 restaurants over the next several years, with a 60-40 split between company and franchise remodels expected [49] Question: Franchisee interest in new units - Management indicated strong interest from franchisees to build new stores, with plans to actively recruit new franchisees [60] Question: Unit growth goals - The goal remains to achieve 5% system unit growth, with a realistic timeline of 2 to 3 years to reach that target [63] Question: Average ticket and value dynamics - Management acknowledged a negative mix impact from the $5 Combo menu but expects this to improve as more premium offerings are introduced [71] Question: Delivery mix and incremental sales - Delivery mix increased to approximately 3% from slightly below 1% last year, with management believing a portion of this growth is incremental [74]