COSTA MESA Calif. El Pollo Loco Inc., parent company to the 413-unit grilled chicken chain, said it faces an uphill battle this year against continued erosion in customer traffic, which it blamed on increased unemployment and restaurant industry discounting.
Additional menu price increases may be used to protect El Pollo Loco’s margins, the company said this week. It already has taken price increases of 2 percent and 1.2 percent in January and October, respectively. The increases have helped to keep systemwide same-store sales positive, up 0.2 percent for 2008.
Still, the chain is fighting against a same-store traffic decline of 1.9 percent for 2008. It most recently has debuted less-expensive menu items, like the 69-cent Taco Al Carbon, and new advertising, including commercials featuring CEO Steve Carley heading a pseudo-political party, “The Dinner Party,” that puts change back into consumers’ pockets via meal deals.
“As we anticipated, 2009 is proving to be even more challenging with further contraction in the economy, a continuing slowdown in consumer spending, accelerating job losses, and the fiercest competition ever for consumers’ shrinking dollars,” Carley said in a statement.
El Pollo Loco said it would focus efforts in 2009 on designing a less costly restaurant prototype, developing new menu items and promoting value-centric offerings. It plans to open five corporate restaurants in 2009, while franchisees are expected to open seven locations.
For the year ended Dec. 31, the company recorded a net loss of $39.5 million, compared with a year-earlier net loss of $4.0 million. The company’s bottom line in 2008 included a goodwill impairment of $24.5 million and impairment against domestic trademarks of $17.6 million. The year also included a $10.7 million expense for the settlement of a legal battle over development rights with the El Pollo Loco operation in Mexico.
Fiscal 2008 total revenues rose 7.1 percent to $298.9 million, which was driven by the slightly positive same-store sales, as well as the opening of nine corporate locations and 21 franchised restaurants.
Contact Sarah E. Lockyer at [email protected].
