El Pollo Loco(LOCO) - 2025 Q1 - Quarterly Report

Revenue and Sales Performance - For the thirteen weeks ended March 26, 2025, total revenue was $119.2 million, with company-operated restaurant revenue at$ 98.4 million and franchise revenue at $20.8 million[153][154]. - For the thirteen weeks ended March 26, 2025, total revenue increased by$ 3.0 million, or 2.6%, to $119.2 million compared to$ 116.2 million for the same period in 2024[179]. - Company-operated restaurant revenue rose by $1.2 million, or 1.2%, primarily due to a 4.6% increase in average check size, despite a 3.8% decrease in transactions[180]. - Franchise revenue increased by$ 1.8 million, or 16.2%, driven by the rollout of a new Point of Sale (POS) system and the opening of four franchise-operated restaurants[181]. - System-wide sales reached $269.453 million for the quarter ended March 26, 2025, compared to$ 267.890 million for the same period in 2024, indicating a growth of approximately 0.6%[201]. Restaurant Operations - As of March 26, 2025, the company operated 174 company-operated restaurants and 325 franchised restaurants, totaling 499 locations[156]. - The company plans to complete 60-70 restaurant remodels in fiscal 2025, with an average investment of $0.3 million to$ 0.4 million per restaurant[157]. - The company opened two new company-operated restaurants in Nevada and two new franchised restaurants in California and Texas during fiscal 2024[151]. - Comparable restaurant sales for franchised restaurants decreased by 1.3% for the thirteen weeks ended March 26, 2025[155]. - Comparable restaurant sales growth was not explicitly stated, but the company operated 484 comparable restaurants as of March 26, 2025, compared to 478 a year earlier, suggesting a slight increase in the number of comparable locations[203]. Costs and Expenses - Labor costs are expected to increase due to California's new minimum wage law, which raises the minimum wage for fast food workers to $20 per hour starting April 1, 2024[145]. - The company anticipates ongoing inflationary pressures affecting food, labor, and construction costs, which may impact financial results[148][149]. - Food and paper costs decreased by$ 0.9 million, or 3.4%, with costs as a percentage of company-operated restaurant revenue at 25.2%, down from 26.4% in the prior year[183]. - Labor and related expenses increased by $1.6 million, or 5.2%, with labor costs as a percentage of company-operated restaurant revenue rising to 32.7% from 31.5%[184][185]. - Occupancy and other operating expenses increased by$ 1.8 million, or 7.6%, with these costs as a percentage of company-operated restaurant revenue at 26.1%, up from 24.6%[186][187]. - General and administrative expenses decreased by $0.7 million, or 5.6%, resulting in a percentage of total revenue of 9.5%, down from 10.3%[188][189]. - Franchise expenses rose by$ 1.8 million, or 17.4%, primarily due to IT pass-through expenses related to the new POS system[191]. Financial Performance - Net income for the quarter was $5.5 million, down from$ 5.9 million in the prior year, reflecting a decrease of $431,000 or 7.3%[179]. - EBITDA for the thirteen weeks ended March 26, 2025, was reported at$ 12.859 million, down from $13.530 million for the same period in 2024, reflecting a decrease of approximately 5%[215]. - Adjusted EBITDA for the same period was$ 13.925 million, compared to $15.699 million in the prior year, representing a decline of about 11.3%[215]. - The effective tax rate for the quarter ended March 26, 2025, was 29.7%, up from 27.1% for the quarter ended March 27, 2024[196]. Cash Flow and Financing - Net cash provided by operating activities decreased by approximately$ 6.4 million to $4.735 million for the thirteen weeks ended March 26, 2025, compared to$ 11.163 million in the prior year[221]. - For the thirteen weeks ended March 26, 2025, net cash used in investing activities increased by $0.7 million compared to the prior year, primarily due to increased purchases of property and equipment related to restaurant remodeling[222]. - Net cash used in financing activities changed by$ 5.7 million from the prior year, with share repurchases totaling $1.8 million compared to$ 1.2 million in the previous year[225]. - As of March 26, 2025, the company had $73.0 million in outstanding borrowings under the 2022 Revolver, with$ 66.7 million in borrowing availability[230]. - The interest rate range under the 2022 Revolver was 5.65% to 7.75% for the thirteen weeks ended March 26, 2025, compared to 6.92% to 6.96% for the same period in the prior year[229]. Market Conditions and Risks - Inflation has impacted costs related to food, labor, and general administrative expenses, although the company has managed to offset some increases through menu price adjustments[238]. - The company is exposed to market price fluctuations in food product prices, particularly chicken, which can materially impact food and beverage costs[239]. - The company recognized one-time costs of approximately $0.6 million related to the restructuring of certain positions in the organization[224].