The following is a summary of the El Pollo Loco Holdings, Inc. (LOCO) Q3 2024 Earnings Call Transcript:
Financial Performance:
El Pollo Loco reported a Q3 2024 total revenue of $120.4 million, unchanged from Q3 2023.
Company-operated restaurant revenue decreased 1.5% to $101.2 million, impacted by a $5.3 million decrease from refranchised restaurants, somewhat offset by a 2.8% increase in comparable restaurant sales.
Franchise revenue grew 10.5% to $11.3 million, driven by 2.7% increase in franchise comparable restaurant sales and three new franchise openings.Restaurant contribution margin improved to 16.7%, up from 14.4% in the previous year.
GAAP net income was $6.2 million, or $0.21 per diluted share.
Business Progress:
El Pollo Loco is committed to becoming a national fire-grilled chicken brand with plans to modernize and a strong emphasis on innovative menu items.
The brand has focused on a five-pillar strategy that includes: craveable products, hospitality mindset, digital-first approach, winning unit economics, and driving unit growth.
Significant investments in a more affordable and iconic restaurant prototype aiming at reducing new unit build costs and driving long-term growth.
Continuous development and remodeling plans include an anticipated 50% of the total system over the next four years.
Opportunities:
The brand's transition to a more digital-first customer interaction, including exclusive offers through the Loco Rewards app.
Using current economic pressures as an opportunity to innovate and add new value options like $5 Hoya Bowl and Taco Tuesday promotions.
Expansion efforts are geared toward both national growth and adaptations to existing locations via remodeling and new units that are cost-reduced and brand-consistent.
Risks:
Current economic pressures and competitive landscape necessitate deeper focus on value offerings to keep pace with customer expectations for affordable dining options.
Noted variability in same-store sales, with a recent decrease in Q4 2024, underscores potential vulnerability to economic and competitive fluctuations.
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