El Pollo Loco(US:LOCO)2023-11-03 02:03Financial Data and Key Metrics Changes - Total revenue for Q3 2023 increased by 0.4% to $120.4 million compared to $119.9 million in Q3 2022 [19] - Company-operated restaurant revenue decreased by 0.5% to $102.7 million from $103.2 million in the same period last year [19] - GAAP net income for Q3 2023 was $9.2 million or $0.28 per diluted share, compared to $5 million or $0.14 per diluted share in the prior year [23] - Adjusted net income for the quarter was $6.4 million or $0.19 per diluted share, compared to $5 million or $0.14 per diluted share in Q3 2022 [23] Business Line Data and Key Metrics Changes - Franchise revenue increased by 7.5% to $10.3 million during Q3, driven by a 1.1% increase in franchise comparable restaurant sales and 7 new franchise restaurant openings [19] - Company-operated comparable restaurant sales increased by 0.3%, with a 1.3% increase in average check size offset by a 0.9% decrease in transactions [19] Market Data and Key Metrics Changes - System-wide comparable store sales increased by 3.2% in Q4 to date through October 25, consisting of a 2.1% increase in company-operated restaurants and a 3.9% increase in franchise restaurants [20] Company Strategy and Development Direction - The company aims to accelerate unit growth and expand into new markets to realize the potential of the El Pollo Loco brand [9] - The Board believes in focusing on the unique flame-grilled chicken offering while improving profitability through technology implementation [8] - The company is rolling out new technology such as kiosks and enhanced salsa processing equipment to improve efficiency and consistency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the restaurant industry and emphasized the need to leverage technology to offset expected cost increases from legislation changes [14] - The company is optimistic about the catering program, which has the potential to grow from approximately 1% to 5% of sales [13] Other Important Information - The company completed the sale of 17 company-operated restaurants to existing franchisees, resulting in cash proceeds of $7.5 million and a net gain of $4.9 million [23] - The company has a new share repurchase program authorized to purchase up to $20 million of common stock through March 28, 2025 [25] Q&A Session Summary Question: What needs to change for the company to grow? - The Board is focusing on accelerating growth and becoming a national brand, identifying untapped opportunities [28] - Management aims to strengthen relationships with franchisees and build infrastructure to support franchise growth [29] Question: What factors have held back growth? - The company is committing more resources to franchise growth and enhancing marketing efforts to attract new franchisees [31] Question: What contributed to the improvement in October? - The improvement was attributed to the introduction of new promotions and a timing mismatch in promotions during Q3 [35] Question: Can you provide details on the kiosk rollout? - The rollout is dependent on procuring cash machines, with an accelerated rollout expected to begin in January [39] Question: Is there traction in the catering program? - The catering program is seeing traction across various sectors, with significant orders fulfilled by multiple restaurants [41]