On August 1, 2024, El Pollo Loco Holdings Inc (LOCO, Financial) released its 8-K filing for the second quarter of 2024, showcasing a solid performance despite a slight decrease in company-operated restaurant revenue. El Pollo Loco Holdings Inc operates and franchises hundreds of fast-casual chicken restaurants in the United States, known for their iconic Fire-Grilled Chicken and value-focused menu.
Performance Highlights
El Pollo Loco Holdings Inc reported a net income of $7.6 million, or $0.25 per diluted share, surpassing the analyst estimate of $0.21 per share. This marks an improvement from the $7.1 million, or $0.20 per diluted share, reported in the same quarter last year. Adjusted net income was $7.8 million, or $0.26 per diluted share, compared to $8.0 million, or $0.23 per diluted share, in the second quarter of 2023.
Revenue and Sales Analysis
Company-operated restaurant revenue for Q2 2024 was $102.3 million, a slight decrease from $103.9 million in Q2 2023. This decline was primarily due to the sale of 19 company-operated restaurants to franchisees, which reduced revenue by $5.4 million. However, this was partially offset by $0.7 million in additional sales from new restaurants and a $3.1 million increase in comparable restaurant revenue, driven by an 8.8% increase in average check size despite a 5.2% decrease in transactions.
Franchise revenue increased by 15.1% to $11.7 million, attributed to a 5.3% increase in franchise comparable restaurant sales and the addition of four new franchise-operated restaurants.
Operational Efficiency and Margins
Income from operations rose to $12.3 million from $10.9 million in the previous year, with restaurant contribution improving to $19.1 million, or 18.6% of company-operated restaurant revenue, up from $17.6 million, or 16.9%, in Q2 2023. This improvement was largely due to higher menu prices and better operating efficiencies.
Liz Williams, Chief Executive Officer of El Pollo Loco Holdings Inc, stated, “I am proud of the solid performance we delivered in Q2, as demonstrated by 4.5% system-wide comparable restaurant sales growth and company-operated store margins of 18.6%, a 170 basis-point improvement. Our iconic Fire-Grilled Chicken, renewed focus in everyday value, and our consistent operations have clearly resonated with our guests and delivered exceptional results for the quarter. We are pleased with our results for the quarter, and believe that there is still significant potential for this beloved brand.”
Financial Metrics and Balance Sheet
General and administrative expenses increased to $11.8 million from $11.1 million, primarily due to higher labor-related costs. The company also reported a total debt of $87.0 million with $10.5 million in cash and cash equivalents as of June 26, 2024. During the quarter, El Pollo Loco repurchased 203,483 shares of its common stock for approximately $2.0 million, with $4.2 million remaining available for repurchase under the Share Repurchase Program.
Key Financial Data
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Company-operated restaurant revenue | $102.3 million | $103.9 million |
| Franchise revenue | $11.7 million | $10.1 million |
| Net income | $7.6 million | $7.1 million |
| Net income per diluted share | $0.25 | $0.20 |
| Adjusted net income per diluted share | $0.26 | $0.23 |
Analysis and Outlook
El Pollo Loco Holdings Inc's performance in Q2 2024 demonstrates resilience and operational efficiency, with notable improvements in comparable restaurant sales and margins. The company's strategic focus on menu pricing and operational efficiencies has yielded positive results, despite challenges such as decreased transactions and increased labor costs. The continued expansion of franchise operations and effective cost management are likely to support sustained growth.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from El Pollo Loco Holdings Inc for further details.
