COSTA MESA Calif. Coming off a fiscal 2009 that saw systemwide same-store sales go negative for the first time in 10 years, El Pollo Loco said it would concentrate this year on guest service and its differentiated grilled products, while refreshing older units and redesigning its restaurant prototype.
EPL Intermediate Inc., parent of El Pollo Loco Inc., the operator or franchisor of 415 flame-grilled chicken restaurants, reported a net loss of $52.3 million for the 52-week fiscal 2009 ended Dec. 30, compared with a loss of 39.5 million in fiscal 2008, which had 53 weeks.
For both 2009 and 2008, the net loss included impairment charges of $17.4 million and $42.1 million, respectively. In addition, EPL said its 2009 loss included an income tax expense of $15.6 million, compared with an income tax benefit of $12.1 million in 2008.
Operating revenue, which includes company restaurant sales and franchise activity income, declined 7.1 percent to $277.7 million in 2009. Systemwide same-store sales were down 8.3 percent for the year, versus a 0.2-percent increase in 2008, the company said.
"As we anticipated, 2009 was among the most challenging years in our 30-year history," Stephen E. Carley, EPL’s chief executive, said in a statement. "Further contraction in the economy and disproportionately high unemployment, underemployment and home foreclosure rates in our core markets, and in particular among Hispanics which are a key demographic for our brand, contributed to our first year of negative system-wide same-store sales in a decade."
He acknowledged that in 2009 “mainstay promotions that worked well in the past did not deliver the top-line results they once did.” But he noted that the chain’s Loco Dollar Menu “continued to work for us in delivering a value message to consumers.”
Carley outlined several initiatives EPL has planned for 2010 in order to drive sales and cut costs.
“Our focus in 2010 will continue to be on delivering exceptional guest service; refreshing our restaurants; designing a compelling and lower cost restaurant prototype to fuel growth in a variety of real estate formats; developing appealing new products for our citrus-marinated, flame-grilled chicken and steak; and introducing promotions that deliver the price-value equation consumers demand during challenging times,” he said.
El Pollo Loco ended 2009 with 172 company units and 243 franchised locations. It opened four company restaurants and eight franchised branches during that time, including the chain’s first restaurants in Missouri and New Jersey, while closing a single company store and nine franchised outlets.
“The company plans to open two stores in 2010 in an effort to conserve capital and expects its franchisees to open only three restaurants during the year due in part to the current economic crisis and the difficulty franchisees are having in obtaining financing,” EPL said in a statement.
On the bright side, Carley pointed to data from Sandelman & Associates that indicated that El Pollo Loco increased market share in its core Los Angeles market in 2009. He attributed the development to the chain’s flexibility in responding quickly to deteriorating economic conditions with new marketing programs and to its “Taste the Fire” campaign, which he contended successfully promoted El Pollo Loco’s superiority as the flame-grilled chicken leader on the heels of KFC’s 2009 grilled chicken launch.
The January introduction of citrus-marinated, flame-grilled sirloin steak to the chain’s signature chicken products “elevates our real grills and flame-grilling expertise as important and defining assets for our brand,” Carley said.
Contact Alan J. Liddle at [email protected].
