El Pollo Loco(US:LOCO)2025-03-06 23:59Financial 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 190 basis point improvement year-over-year [40] Business Line Data and Key Metrics Changes - Franchise revenue increased by 2.5% to $11.2 million during Q4, supported by four new franchise openings [37] - Average check size increased by 9%, while transactions decreased by approximately 6.8% during Q4 [37] - The company expects restaurant contribution margin for 2025 to be in the range of 17.25% to 17.75% [40] Market Data and Key Metrics Changes - System-wide comparable same-store sales increased by 0.6% from January to February 2025, with a 2.3% increase in company-operated restaurants and a 0.4% decrease in franchise restaurants [37] - Food and paper costs as a percentage of company restaurant sales decreased by 180 basis points year-over-year to 25.1% due to higher menu pricing [38] 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 [11][34] - A new advertising campaign is set to launch, emphasizing the quality and value of the food offerings [13][19] - The company plans to open 10 new restaurants in 2025, primarily outside California, and is leveraging restaurant closures in the industry to convert locations to El Pollo Loco [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the brand's growth potential, citing a strong foundation established in 2024 and a robust product calendar for 2025 [31][34] - The company is addressing operational consistency and customer satisfaction as key focuses for 2025, with a new customer feedback system in place [22][34] - Management highlighted the importance of culinary innovation and value pairing in driving customer engagement and sales growth [18][32] 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 $71 million in debt and $2.5 million in cash as of December 25, 2024, and repurchased approximately 104,000 shares for about $1.3 million [44] Q&A Session Summary Question: Can you provide insights on the remodels and their impact on same-store sales? - Management noted excitement about the remodel program and positive consumer reactions, but specific data on sales lift from remodels is still being gathered [50][52] Question: What is the status of the franchisee pipeline and activity? - Management reported increased interest from franchise partners, with more meetings and discussions occurring as the brand shows growth in same-store sales and margins [53][56] Question: What factors are contributing to margin expansion? - Management highlighted improvements in supply chain efficiency and labor productivity as key drivers for margin expansion [60][62] Question: Can you clarify the build costs for the new restaurant prototype? - Management indicated that while the goal is to keep costs around $1.8 million, actual costs may vary based on location and market conditions [68][70] Question: What is the impact of the L.A. wildfires on operations? - Management confirmed no significant sales impact from the wildfires, as all team members were safe and only minor disruptions occurred [75] Question: How is the reception of the new Mango Habanero flavor? - Management reported that the new flavor is driving trial among both existing and new customers, contributing to a positive mix shift [78][82]