Brand plans to remodel 300 restaurants over the next several years; health-focused and plant-based foods will grow at rapid clip, CEO says.
Holiday promotions, chicken tamales and adding more delivery options drove traffic and sales at El Pollo Loco, which is preparing to roll out a new prototype store at more than 300 restaurants.
The stores will showcase the brand’s new L.A. Mex marketing strategy, which debuted last year to emphasize the company’s focus on its Los Angeles roots.
“Work on our new restaurant of the future design continues to progress well and we are very excited by what it can do for our brand,” CEO Bernard Acoca said. “We expect to complete three or four new image remodels by mid-year. If all goes as expected, all new builds and remodels will use the new design starting the second half of this year.”
It couldn't happen soon enough.
While the brand gets high marks on customer service, the company suffers from low “environment” scores, he said.
Not getting remodels underway faster has “been holding the brand back a bit,” Acoca told investors during the company’s fourth quarter conference call Thursday afternoon.
Over the next several years, the brand plans to remodel more than 300 restaurants.
“The ability to remodel these stores over the course of the next few years will take that anchor off our necks if you will,” Acoca said, referring to the low environment scores.
For the quarter, the company posted a 3.9% increase in systemwide same store sales, marking the sixth consecutive quarter of growth for the Costa Mesa, Calif.-based quick service chain.
Same-store sales for company operated stores increased 4.3%, driven by a 1.8% increase in average check and a 2.5% increase in transactions.
“I'm proud of these results and even more so of the fact that the comp sales in the quarter were driven predominantly by traffic,” Acoca said.
The CEO said “momentum has continued into 2020” as consumers are responding favorably to the brand’s culinary innovation, expanded delivery options and the $5 value platform.
Like many other companies, El Pollo Loco has opted for casting a wider net when it comes to delivery operators.
The chain recently added a fourth provider, Grubhub, in recent weeks. The company and its franchisees also works with Postmates, Uber Eats and DoorDash. To protect margins, the brand also offers a curated delivery menu that emphasizes high-ticket premium items such as family meals and combo meals.
As for menu innovation, Acoca said the brand is going to focus more heavily on development of healthy foods and items that cater to popular diets such as the recently introduced keto taco, keto bowls and plant-based chicken tacos and burritos.
The “health-focused products” will be introduced “at a pretty rapid clip,” he said.
While it will still offer the popular $5 Fire-Grilled Combos, Acoca said going forward the brand is going to place less of an emphasis on value and one-trick limited time offers.
Total revenue for the quarter was $107.5 million, compared to $106.3 million. Net income was $3.5 million, or 10 cents per share, compared to net loss of $23.4 million, or 60 cents per share, in the prior year, same quarter. That period was impacted by a one-time charge of $36.3 million tied to class action settlements.
The company and its franchisees operate about 482 restaurants.
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