El Pollo Loco(LOCO)2025-05-01 20:30Financial Data and Key Metrics Changes - For Q1 2025, total revenue was 116.2 million in Q1 2024, representing a 1.7% increase [19] - Company-operated restaurant revenue increased by 1.2% to 5.5 million, or 5.9 million, or 13.2 million, driven by IT pass-through revenue related to a new point of sale system and new franchise openings [20] - Comparable restaurant sales decreased by 1.3% for franchise-operated restaurants [20] Market Data and Key Metrics Changes - System-wide comparable store sales decreased by 1.2% in Q2 to date, with a 0.1% decrease in company-operated restaurants and a 1.8% decrease in franchise restaurants [21] Company Strategy and Development Direction - The company is focused on a brand turnaround, emphasizing long-term sustainable growth without shortcuts [5] - Upcoming initiatives include a brand relaunch and menu innovations, such as the launch of Fresca wraps and salads, and quesadillas [6][8] - The company aims to open at least 10 new restaurants in 2025, marking the largest system-wide unit growth since 2022 [14][15] - Remodeling efforts are ongoing, with plans to remodel 60 to 70 restaurants in partnership with franchisees [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging consumer environment but remains confident in the brand's long-term potential [6] - The company expects sequential quarterly acceleration in comparable sales trends in Q3 and Q4, driven by the brand relaunch and new product launches [22] - Wage inflation is anticipated to be between 4% to 5% for the year, with Q1 experiencing a 12% increase [23][24] Other Important Information - The company has transitioned to a new distribution partner, which is expected to enhance margins and support future growth [14] - The restaurant contribution margin for Q1 was 16%, down from 17.6% in the previous year, primarily due to labor inflation and occupancy costs [24][25] - General and administrative expenses decreased to 9.5% of total revenue, aided by prior year restructuring costs [26] Q&A Session Summary Question: Expectations for Q2 same store sales - Management noted that consumer pullback is real and expects headwinds to continue into Q2, but is focused on brand relaunch and value innovation [32][33] Question: Impact of new product launches on comp trends - The Mango Habanero product drove initial trial, and upcoming launches of Fresca wraps and quesadillas are expected to attract different consumer segments [36][38] Question: Timing of kitchen equipment rollout and labor cost impact - Equipment rollout is ongoing, with expectations of improved labor efficiency as new systems are implemented [41] Question: Regional differences in consumer behavior - Management observed similar consumer pullback across markets, with particular pressure on the Hispanic consumer segment [50][51] Question: Menu pricing expectations for the year - The company expects menu price increases to be around 3% for the year, with variations across quarters [52] Question: Development pipeline momentum - Management expressed optimism about the development pipeline, with confidence in opening at least 10 new units this year and potential for more in the following year [59][60]