El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2019 Earnings Conference Call - Final Transcript

Mar 05, 2020 • 04:30 pm ET


El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2019 Earnings Conference Call - Final Transcript


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Bernard Acoca

our $5 value platform, the diversification of our media strategy, strengthening operations, and the ongoing success of our Transformation Agenda.

The fourth quarter was predominantly focused on our holiday promotion. The holidays are a season we believe we are uniquely qualified to be associated with and own at El Pollo Loco.

To achieve this, we approach this year's holiday promotion very differently from years past. Holiday 2019 was designed to create a seasonal experience for our customers as much as it was intended to deliver holiday relevant food they look forward to all year and love. For the first time ever, our restaurants turned red and we're enveloped in holiday-centric merchandising and packaging. Our menu-boards, cups, sides packaging, and point-of-sale materials all evoked the festive spirit of the holidays.

The music played in our restaurants was a curated list of both holiday classics and Latin favorites. And an array of six beautifully designed gift cards were produced to capitalize on the gifting season. And we complemented these physical gift cards with the same array of e-gift-cards, which we offered for the first time online. Against this backdrop, we were proud to bring back with the new innovative spin our beloved handmade chicken tamales, which we paired with different items in our unique holiday tamale bowl.

This year, we expanded our portfolio of seasonal favorites by introducing a pozole verde soup, a Mexican staple for the holidays, and our new signature Mexican hot chocolate made with Abuelita chocolate. We believe this comprehensive approach to the holidays made them even more special for our customers and employees alike, and we look forward to building upon this tradition in the years to come. As we look to transition our business away from overreliance on limited time offerings to investing in more evergreen platforms, we sustained our very successful $5 Fire-Grilled Combos value lineup, which we introduced at the beginning of September and continued to promote throughout Q4. Based on its strong mix and popular following, we have continued to make it available in our restaurants and will promote it for the duration of 2020.

Also, in September, we expanded our third-party marketplace delivery portfolio, by adding Uber Eats and Postmates, which contributed to positive transaction and sales during the fourth quarter. The addition of these third-party delivery providers and the execution of our bifurcated menu strategy where we focus on a curated delivery menu, emphasizing family meals and combos, drove systemwide delivery mix of approximately 3% in the quarter. Moreover, we recently added Grubhub to our portfolio, making it the fourth marketplace on which our customers can access our food for delivery. During the fourth quarter, we continued to make excellent progress against our operation strategy. Highlights included completing the implementation of our new automated inventory management system, the company-operated restaurants, as well as the systemwide rollout of our new streamlined operations manual, and our simplified chicken cooking process.

We are confident that these efforts to reduce back-of-house complexity will drive sales over