El Pollo Loco (LOCO) Q3 Earnings call transcript Oct 31, 2024
AInvestFriday, Nov 1, 2024 8:31 am ET
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In its recent earnings call, El Pollo Loco, a leading fire-grilled chicken chain, showcased its resilience in the face of economic pressure and outlined strategic initiatives to drive growth. The company reported a 2.7% increase in system-wide comparable sales and a 16.7% expansion in restaurant-level margins for the third quarter of 2024.

Navigating Economic Challenges with Value and Innovation

During the call, CEO Elizabeth Williams highlighted the importance of catering to the economic pressure faced by consumers. In response, El Pollo Loco introduced the $5 Playa Bowl and Taco Tuesday promotions, which have received positive feedback and are expected to drive new trial and value messaging. The company is also focusing on improving its digital presence, with plans to complete its kiosk rollout by early Q1 2025.

Strategic Pillars for Future Success

El Pollo Loco is also implementing strategic pillars to strengthen its brand and drive growth. These include a focus on brand consistency, culinary innovation, digital transformation, improved unit economics, and unit growth. The company has unveiled a new iconic restaurant prototype, designed to reduce build costs and optimize cash-on-cash returns. El Pollo Loco aims to open at least 10 new restaurants by the end of 2025 and is exploring flexible formats, including freestanding drive-throughs and nontraditional locations.

Financial Health and Future Outlook

CFO Ira Fils provided a detailed financial update, highlighting the company's strong financial position. El Pollo Loco expects to end 2024 with a restaurant contribution margin of 16.75% to 17.25%, representing a 150 basis point year-over-year improvement. The company is also making significant strides in cost savings initiatives, with a dedicated team actively working on improving labor productivity and reducing controllable expenses.

Looking Ahead: Innovation and Growth

As El Pollo Loco approaches its 50th year in business, it is poised for modernization and growth. The company's strategic initiatives, coupled with its focus on innovation, value, and unit expansion, position it well for future success. With a strong foundation in place and a clear vision for the future, El Pollo Loco is confident in its ability to become the national fire-grilled chicken brand.

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