News
El Pollo Loco 2009 loss widens
March 30, 2010
EPL Intermediate Inc., parent company of El Pollo Loco Inc., has reported the system's first negative same-store sales in a decade as the company's net loss widens for the year ended Dec. 30, 2009. Systemwide same-store sales for the year were down 8.2 percent, compared to a 0.2 percent increase last year, impacting operating revenue.
Total operating revenue for the year was down 7.1 percent at $277.7 million, compared to $298.9 million last year. Operating revenue includes sales at company-operated stores and franchise revenue.
Also contributing to the decrease in 2009 operating revenue was $4.5 million in company-operated restaurant revenue generated in the 53rd week of fiscal 2008. That did not occur in 2009 and decreased development fees attributed to fewer franchised restaurant openings in 2009, the company said in its earnings release. The decreases were partially offset by $3.5 million for eight new stores opened in 2008 and $2.8 million for four units opened in 2009.
The company's net loss widened by 32 percent to $52.3 million for the year, compared to a net loss of $39.5 million last year. For both 2009 and 2008, the net loss was impacted by impairment charges to intangible assets of $17.4 million and $42.1 million, respectively. The 2009 loss included an income tax expense of $15.6 million compared to an income tax benefit of $12.1 million in 2008.
"As we anticipated, 2009 was among the most challenging years in our 30-year history," Stephen E. Carley, president and CEO of El Pollo Loco Inc., said in a news release. "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. Continued frugality among consumers dining out also impacted us in 2009."
El Pollo Loco also found that its mainstay promotions that worked well in the past did not deliver the top-line results they once did, although the brand's Loco Dollar Menu did succeed in a value message to consumers, Carley said. The brand did make progress in market share despite its sales softness, according to 2009 Sandelman & Associates Quick-Track data.
That data shows that in the brand's core Los Angeles market, El Pollo Loco increased its market share of total QSR occasions. "This achievement is attributed to our flexibility in responding quickly to deteriorating economic conditions with new marketing programs and also to our Taste the Fire campaign, which successfully promoted El Pollo Loco's superiority as the flame-grilled chicken leader on the heels of KFC's 2009 grilled chicken launch," Carley said.
Company growth
El Pollo Loco continued its expansion in 2009 despite the difficult economy and opened 12 net restaurants, including five franchise openings and the chain's first restaurants in New Jersey and Missouri. The company refranchised four Atlanta area El Pollo Loco restaurants in September from its Atlanta franchise group, which closed its remaining five El Pollo Loco restaurants.
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. New stores opened in 2010 will be in areas where El Pollo Loco already has a presence.
"While the economy remains challenging, the learning we gleaned in 2009 has made us stronger and more resilient. We recently completed extensive research culminating in a refined brand positioning that is driving our strategic initiatives," Carley said. "The January introduction of citrus-marinated, flame-grilled Sirloin steak aligns well with this research, which elevates our real grills and flame-grilling expertise as important and defining assets for our brand."
In 2010 the company plans to:
- Deliver exceptional guest service
- Refresh its restaurants
- Design a compelling and lower cost restaurant prototype to fuel growth in a variety of real estate formats
- Develop appealing new products for its citrus-marinated, flame-grilled chicken and steak
- Introduce promotions that deliver the price-value equation consumers demand during challenging times
El Pollo Loco operates a restaurant system comprised of 172 company-operated and 243 franchised restaurants located primarily in California, with additional restaurants in Arizona, Colorado, Connecticut, Georgia, Illinois, Missouri, Nevada, New Jersey, Oregon, Texas, Utah and Virginia.
Related Media
Subscribe
Get the latest news and resources from QSR Web.
