El Pollo Loco(LOCO) - 2024 Q4 - Annual Report

Restaurant Operations - As of December 25, 2024, the company operated 498 locations across seven states, with two new company-operated restaurants opened in fiscal 2024[248]. - The company plans to open one to two new company-operated restaurants and eight to nine new franchised restaurants in 2025[249]. - The company completed eight company-operated restaurant remodels and 44 franchise remodels in fiscal 2024, with plans for 30-40 remodels in fiscal 2025[256]. - The company opened new restaurants during the reporting period, contributing to initial higher sales volumes before stabilizing[311]. - The company licensed 10 restaurants in the Philippines as of December 25, 2024, expanding its international presence[395]. Sales Performance - Comparable restaurant sales system-wide increased by 3.2% in fiscal 2024, compared to a decrease of 0.3% in fiscal 2023[250]. - For company-operated restaurants, comparable sales increased by 2.8% in fiscal 2024, driven by a 7.9% increase in average check size, partially offset by a 4.7% decrease in transactions[251]. - Comparable restaurant sales at franchised restaurants increased by 3.5% in fiscal 2024, following a decrease of 0.7% in fiscal 2023[252]. - Comparable restaurant sales growth included a 2.8% increase for company-operated restaurants and a 3.5% increase for franchised restaurants, driven by a 7.9% rise in average check size[299][305]. Financial Performance - Total revenue for fiscal 2024 was $473.0 million, compared to$468.7 million in fiscal 2023, indicating a slight increase[304]. - Net income for fiscal 2024 was $25.7 million, a slight increase of$130, or 0.5%, compared to $25.6 million in fiscal 2023[276]. - Basic net income per share rose to$0.86 from $0.75, indicating a growth of 14.7$45.6 million in fiscal 2024, compared to $41.0 million in fiscal 2023, alongside franchise advertising fee revenue of$31.2 million[304]. - The restaurant contribution for fiscal 2024 was $69.1 million, reflecting an increase from$61.9 million in fiscal 2023, with a contribution margin of 17.4%[310]. Cost Management - The company has experienced inflationary pressures affecting food, labor, and construction costs, which are anticipated to continue into fiscal 2025[244]. - Food and paper costs decreased by $7.5 million, or 7.0$0.1 million, or 0.1%, due to a $5.8 million reduction from sold restaurants, offset by a$12.3 million increase from higher wage rates[281]. - Occupancy and other operating expenses decreased by $2.1 million, or 2.1$19.1 million, with approximately $4.3 million spent on new restaurant development and$14.8 million on existing restaurant investments[341]. - The company expects to incur between $30.0 million and$34.0 million in total capital expenditures for 2025, with $3.0 million to$5.0 million for new restaurant construction[341]. Share Repurchase and Debt Management - In fiscal 2024, the company repurchased shares of common stock totaling $20.6 million, a decrease from$59.2 million in fiscal 2023[333]. - The company announced a share repurchase program authorized to repurchase up to $20 million of common stock, set to terminate on March 31, 2025[344]. - As of December 25, 2024, the company had outstanding borrowings of$71 million under the 2022 Revolver, with a margin of 1.5%[367]. - A 1% increase in the effective interest rate on the 2022 Revolver borrowings would result in a pre-tax interest expense increase of $0.7 million annually[367]. Compliance and Regulatory Factors - Labor and regulatory compliance costs are expected to increase due to California's AB 1228, which raises the minimum wage to$20 per hour starting April 1, 2024[243]. - The company was in compliance with financial covenants under the 2022 Credit Agreement as of December 25, 2024[340]. Cash Flow and Liquidity - In fiscal 2024, the company recorded net cash provided by operating activities of $46.8 million, an increase of$6.1 million compared to fiscal 2023[330]. - Cash and cash equivalents at the end of the period were $2,484 million, down from$7,288 million in 2023, marking a decrease of 65.9%[394]. - As of December 25, 2024, the company's total debt was $71.0 million, with available cash of$2.5 million to meet liquidity needs for the next twelve months[398]. Membership and Loyalty Programs - The Loco Rewards loyalty program had over 4.2 million members as of December 25, 2024, with $0.8 million in revenue allocated to unredeemed loyalty points[258]. - The performance obligation related to loyalty points is satisfied when points are redeemed or expire[430]. Miscellaneous - The company does not currently use financial instruments to hedge commodity price risks, which may impact operational results[370]. - The company had one supplier accounting for 19.7% of accounts payable as of December 25, 2024, and 15.1% as of December 27, 2023[406].