News
High unemployment continues impact on El Pollo Loco
May 16, 2010
EPL Intermediate Inc., parent company of El Pollo Loco Inc., has reported its systemwide same-store sales were down 6.7 percent for the first quarter ended March 31 even as the introduction of its new steak line is driving trial.
El Pollo Loco's operating revenue for the quarter was down 3.7 percent to $68.0 million, compared to $70.6 million in the same period last year. The decrease in operating revenue was primarily attributed to the decline in same-store sales, which continue to be negatively impacted by high unemployment in its core markets and increased frugality among restaurant consumers.
The company's net loss grew by 77 percent to $5.6 million vs. $1.3 million in the same period last year.
"Despite the difficult economy, the January launch of our flame-grilled Carne Asada style Sirloin steak struck a responsive chord with consumers, and we generated impressive trial of our steak entrees," said Stephen E. Carley, president and CEO of El Pollo Loco in a news release. "For the first quarter, steak represented approximately 25 percent of our sales in the Mexican entrée category, which mainly excludes our family meals. We also drove family meal purchases and additional trial of our flame-grilled steak in the first quarter with a free Steak & 3-Cheese Quesadilla with the purchase of a 9- or 14-piece Family Feast chicken meal promotion."
Commenting on the remainder of 2010, Carley said, "In the months ahead we plan to maintain the delicate balance between providing value and protecting average check by introducing flavorful new products that leverage our flame-grilling expertise, focusing on our Loco Value Menu and continuing to provide value with compelling family meal offers."
El Pollo Loco expects to open fewer stores in 2010 with franchisees continuing to have difficulty securing financing, the company reported. Several franchisees have delayed or reduced the number of new restaurants they plan to open due to the impact of the economic crisis. No new restaurants opened in the quarter, and three restaurants closed during the period, including one company and one franchise restaurant in the Chicago area and one franchise restaurant in Yuma, Ariz.
El Pollo Loco's store total was at 412 as of March 31, including 172 company-owned locations.
"We plan to open two company stores in 2010 to conserve capital and expect our franchisees to open three to four restaurants this year," Carley said. "Restaurants scheduled to open in 2010 will be located in areas where El Pollo Loco already has a presence."
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