El Pollo Loco Holdings Inc. is leaning into technology as it emerges from COVID-19 restrictions, especially in its home market of Los Angeles, the company said Thursday.
The Costa Mesa, Calif.-based quick-service brand has seen deep impact from the pandemic restrictions in Los Angeles, but it has continued to evolve the brand with technology, said Bernard Acoca, El Pollo Loco CEO and president, in a fourth-quarter earnings call.
Among El Pollo Loco’s newer digital offerings is a curbside pickup offering that taps into global-positioning systems through the brand’s smartphone app.
“Last September, we implemented GPS-enabled curbside pickup, which is now available at over 97% of our systemwide restaurants,” Acoca said. “This service enables our guests to conveniently place their order through our app, park in one of our dedicated curbside parking spaces, and have their orders delivered to their car with the restaurant being notified of their arrival through the GPS functionality.”
Curbside pickup wait times average 90 seconds at company-owned restaurants, he said.
“While still representing a small mix of our total sales, it is steadily growing, and we do expect curbside to continue to gain popularity as more customers download our app and take advantage of the convenience it offers,” Acoca said.
COVID-19 also increased the importance of the low-contact drive-thru, he said.
“We believe we have a massive opportunity to enhance the customer experience with improvements in both speed and accuracy,” he said, “During the fourth quarter of 2020, we successfully implemented a number of measures to improve speed of service at our drive-thru windows. These included more efficient labor deployment, readiness guidelines, prepacking side items and salsa, and better positioning of equipment.”
The company is also testing drive-thru-lane line-busting, he said.
“We are now testing order taking tablets that enable team members to take orders and payment from customers while they are in the drive-thru queue,” he said. “We are very excited about this test. And our goal is to significantly increase drive-thru capacity by cutting in half the time it takes for customers to place orders and pick them up at the drive-thru window.”
Another aspect of technology includes the brand’s loyalty program, Loco Rewards.
“We're very pleased with the progress we made in 2020 growing digital sales from 5% to 10% of total sales and growing the number of loyalty members nearly 40% to the current total of 2.3 million,” Acoca said.
Digital has reached 40% of El Pollo Loco’s total media spend, and Acoca said the three-year goal is for digital sales to hit 30% of El Pollo Loco’s total sales over the next three years
COVID-19 restrictions continued to impact sales in the fourth quarter, especial in Los Angeles and its surrounding areas, he said, especially in November and December as the region faced surges in the virus.
“This resulted in staffing shortages, forcing us to temporarily close and reduce hours of operations in a number of our restaurants,” Acoca said. “In addition, we believe that high unemployment in the L.A. area, which has been well above the national average, exacerbated the negative impact during the quarter.”
The first quarter of 2021 has seen a decline in California COVID-19 cases, he said, “allowing the majority of our restaurants in the state to open with regular hours and all modes of service with the exception of dining rooms. While we have reopened patios throughout California, dining rooms remain closed at this time in accordance with state regulations. However, a number of counties have begun to ease restrictions and it is expected that Los Angeles and Orange County will allow dining rooms to reopen to 25% capacity next week.”
The company has continued with plans for remodels into the “L.A. Mex” design, which has been completed at two units in California and one in Las Vegas, Nev.
“For 2021, we are planning to complete 55 remodels with a longer-term goal to complete over 300 remodels over the next four to five years,” Acoca said. “In terms of new builds, we are targeting six new restaurants with the L.A. Mex design in 2021.”
For the fourth quarter ended Dec. 31, El Pollo Loco’s net income rose 55.9% to $5.5 million, or 15 cents a share, from $3.5 million, or 10 cents a share, in the prior-year period. Revenues increased 2.6%, to $110.3 million, from $107.5 million in the same quarter last year.
Systemwide same-store sales slipped 0.2%, including a 3% decline for company-operated restaurants and a 1.8% increase for franchised restaurants. Systemwide same-store sales fell 2.1% in metropolitan Los Angeles and increased 3.3% in other markets.
El Pollo Loco has more than 475 company-owned and franchised restaurants in Arizona, California, Louisiana, Nevada, Texas and Utah.
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