The following is a summary of the El Pollo Loco Holdings, Inc. (LOCO) Q2 2024 Earnings Call Transcript:
Financial Performance:
Total revenue for Q2 2024 slightly increased by 0.6% to $122.2 million from $121.5 million in Q2 2023.
Company-operated restaurant revenue decreased by 1.5% due to refranchising, but was partly offset by a 3.2% increase in company-operated comparable restaurant sales.
Restaurant contribution margin improved significantly to 18.6% from 16.9% last year, highlighting cost control and operational improvements.
Business Progress:
Launched new fire-grilled burritos with handmade guacamole aimed at enhancing value perception.
Introduced limited-time offer of double chopped salads with chicken and shrimp, following prior success.
Relaunched value promotions with a focus on affordability through kiosk rollouts, expected to be completed by end of the year.
Development of a new unit prototype with a reduced build cost of around $1.8 million to encourage franchise growth and modernize the brand image.
Opportunities:
System-wide comparable restaurant sales increased by 4.5%, indicating robust brand performance and customer acceptance.
Achieved positive feedback on newly launched products, indicating potential for sustained demand.
Risks:
Faced challenges due to macroeconomic conditions affecting the industry, leading to a strategic reduction in discounting and subsequent impact on traffic.
Anticipated uneven growth with 'hot and cold' cycles due to discontinuing old format discounting, adjusting to new product introductions and seasonal variations.
More details: El Pollo Loco IR
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