El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q3 2017 Earnings Conference Call Transcript

Nov 02, 2017 • 05:00 pm ET

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El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the El Pollo Loco's Third Quarter 2017 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the lines will be open for your questions following the presentation. Please note that this conference is being recorded today, November 2, 2017. On the call today, we have Steve Sather, President and Chief Executive Officer of El Pollo Loco; and Larry Roberts, Chief Financial Officer.

And now, I will turn the conference over to Larry Roberts. Please begin, sir.

Executive
Larry Roberts

Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2017 earnings release. If not, it can be found at www.elpolloloco.com in the Investor Relations section. (Forward-Looking Cautionary Statements) We expect to file our 10-Q for the third quarter of 2017 tomorrow and we'd encourage you to review that document at your earliest convenience. During today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliations to comparable GAAP measures are available in our earnings release.

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

Executive
Steve Sather

Thanks, Larry, and good afternoon, everyone, and thank you for joining us on the call today. Third quarter results included revenue growth of 5.6% and pro forma net income of $0.15 per share. While our comparable restaurant sales remained positive during the quarter, our earnings reflected the impact of increased labor costs system-wide, continued investments in our loyalty program, and ongoing challenges in our Texas markets. System-wide comparable store sales grew 1.7% during the quarter, including a 2.4% increase at franchised restaurants and a 0.9% increase at Company-operated restaurants. Sales growth slowed towards the end of the quarter and has remained soft thus far in Q4. Despite the softness, we remain confident that our efforts to highlight what we believe are our authentic differentiated brand and QSR+ positioning along with initiatives to leverage technology to improve the consumer experience, are the right strategies to drive long-term success of the brand.

During the quarter, our entree promotions were focused on Overstuffed Quesadillas, Taco Platters, and Burritos. Our Taco Platters performed particularly well, receiving strong customer feedback and addressing an area of opportunity on our menu. These craveable Taco Platters included the choice of Chicken Avocado Tacos, Chicken Bacon Cheddar Tacos, Avocado Tacos Al Carbon, or Shrimp Mango Tacos served with seasoned rice and slow-simmered pinto beans. We believe this differentiated offering, which highlighted our fresh ingredients and unique flavors, could become a permanent menu item in the future. Our unique Family Meal offering also continued to resonate with consumers offsetting some of the softness we saw in entrees. During the quarter, we kept the focus on the $20 price point, which helped drive our strongest Family Meal growth of the year,