El Pollo Loco Holdings, Inc. (Nasdaq: LOCO) today provided a business update and announced a series of actions the Company is taking to navigate the COVID-19 global pandemic. The primary goal of the Company’s actions is to ensure the safety of its employees, franchisees and customers while continuing to provide a valued service to its communities during these unprecedented times.
System-wide comparable restaurant sales for the first quarter ended March 25, 2020 decreased 1.5%. Through the end of February, system-wide and company-operated comparable restaurant sales increased 3.7% and 4.2%, respectively, and included positive transaction growth.
The vast majority of El Pollo Loco restaurants are operating on a take-away, mobile pick-up and delivery basis only, as well as maintaining drive-thru operations where available, in light of the government-mandated closures to our dining rooms. Off-premise dining has historically accounted for approximately 78% of sales, including about 45% through our drive thru windows and about 3% via delivery.
“El Pollo Loco remains a people-first company, and as such, the health, safety and wellbeing of our employees, franchisees, customers, and communities remains our top priority,” stated Bernard Acoca, President and Chief Executive Officer of El Pollo Loco. “We are committed to helping our people and partners take care of themselves, their families, and each other during these challenging times. For our franchisees, we are deferring 50% of their April royalties as well as 100% of their 2020 remodel and new build requirements. We are also establishing a support team to assist franchisees in accessing funds and benefits provided by the CARES Act legislation. For our employees, we continue to implement actions to help protect them from the coronavirus while working in our restaurants; we are providing extended sick leave benefits to employees impacted by COVID-19 and we have granted two weeks paid leave for employees who are 65 or older.”
Acoca continued, “Given the magnitude of the impact that the coronavirus has had on the economy to date, we have quickly shifted our marketing to highlight our free delivery, for however long is necessary program with Postmates; our Family Meals as a healthier and affordable option; and our meaningful value platform through our $5 Fire-Grilled Combos. Following these tactical shifts, we remain optimistic that we can grow sales from current levels. Furthermore, we are confident that the actions we are taking position us well for the economic recovery.”
Additional COVID-19 Commentary
- As a precautionary measure the Company has enhanced its existing cash position by fully drawing down its $150 million revolving credit facility, adding $34.5 million of cash to its balance sheet.
- The Company has temporarily suspended all but essential capital spending and share repurchase activity, reevaluated essential support center G&A, and fine-tuned its restaurant labor model based on dining room closures and lower sales volumes.
- To date, the Company has not experienced any significant supply chain issues.
- Given the uncertainty surrounding the depth and duration of the impact of COVID-19, the Company is withdrawing its guidance for fiscal 2020, issued on March 5, 2020. The Company plans to provide an update on its business and financial results on its First Quarter earnings call.
El Pollo Loco (Nasdaq:LOCO) is the nation’s leading fire-grilled chicken restaurant chain renowned for its masterfully citrus-marinated, fire-grilled chicken and handcrafted entrees using fresh ingredients inspired by Mexican recipes. With more than 480 company-owned and franchised restaurants in Arizona, California, Nevada, Texas, Utah and Louisiana, El Pollo Loco is expanding its presence in key markets through a combination of company and existing and new franchisee development. Visit us on our website at ElPolloLoco.com.
