El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2016 Earnings Conference Call - Final Transcript

Mar 09, 2017 • 05:00 pm ET


El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and thank you for standing by. Welcome to the El Pollo Loco fourth-quarter 2016 earnings conference call. (Operator Instructions). Please note that this conference is being recorded today March 9, 2017. On this call today we have Steve Sather, President and Chief Executive Officer of El Pollo Loco, and Larry Roberts, Chief Financial Officer. I would now like to turn the conference over to Larry Roberts.

Larry Roberts

Thank you, Operator, and good afternoon. By now everyone should have access to our fourth-quarter 2016 earnings release. If not, it can be found at www.elpolloloco.com in the Investor Relations section. (Forward-Looking Cautionary Statements).

With that, I'd like to turn the call over to Steve Sather.

Steve Sather

Thanks, Larry, and good afternoon, everyone. We appreciate your joining us on the call today. Fourth-quarter results included revenue growth of 7.2% and pro forma net income of $0.12 per share. System-wide comparable-store sales decreased 1.3% during the quarter, including a 60 basis point decrease at Company-operated restaurants and a 1.9% decrease at franchise restaurants. In line with what we've heard from many of our peers, comparable-store sales growth slowed through the fourth quarter and the softness has persisted this year.

The softness is at least partially due to the heavy rains that we've had here in Southern California this winter, the impact of which we estimate to be 1% to 1.5% thus far in the first quarter. While we're not satisfied with these results, we remain committed to enhancing our value equation, which is comprised of great food, excellent service and a warm and inviting atmosphere, all at a good price.

A major focus in 2017 is to clearly communicate our differentiation from other QSR and fast casual concepts, as well as to enhance convenience and loyalty. At El Pollo Loco, our differentiation starts with the food and our heritage. More specifically, it starts with our authentic signature flame-grilled, citrus-marinated chicken, which is crafted by our talented grill masters in our open kitchen, or as I like to call it, the theater of chicken. Our grill masters, many of whom have been with the Company for 20-plus years, are the key to producing our differentiated, cravable, Mexican inspired menu, which is why we highlighted one of our best and our most recent ad campaign.

Pedro Lopez mastered the art of grilling our signature chicken at our original Alvarado Street location, where he dedicated himself to serving guests for the past 32 years. Stories like Pedro's are at the heart of our new ad campaign, the Road to Authenticity, created with our new partner Vitro. The creative campaign, which we launched in January, will evolve over time to highlight our differentiated brand story, the work that goes on in preparing our food, the relative healthiness of our offerings and the authentic influence of our hometown, Los Angeles.

Our focus on driving convenience and loyalty began in the fourth quarter as we rolled out our mobile ordering system, providing yet another convenient way for guests