El Pollo Loco Holdings Inc (LOCO) Reports Mixed Fourth Quarter 2023 Results Amid Operational Changes
Company-operated restaurant revenue: Decreased to $94.0 million in Q4 2023 from $99.6 million in Q4 2022.
Franchise revenue: Increased by 17.0% to $11.0 million in Q4 2023.
Net income: Dropped to $4.4 million in Q4 2023 from $6.5 million in Q4 2022.
Adjusted net income: Remained stable at $0.16 per diluted share in both Q4 2023 and Q4 2022.
Share repurchase program: Authorized up to $20.0 million, with $7.4 million remaining after recent repurchases.
New CEO appointment: Elizabeth Williams to take the helm on March 11, 2024.
Debt and liquidity: Outstanding debt balance of $84.0 million with $7.3 million in cash and cash equivalents as of December 27, 2023.
On March 7, 2024, El Pollo Loco Holdings Inc (NASDAQ:LOCO) released its 8-K filing, detailing the financial outcomes for the 13-week period ending December 27, 2023. The company, known for its fast-casual chicken restaurants, faced a challenging quarter with a mix of revenue decreases in company-operated restaurants and increases in franchise revenue.
Financial Performance and Strategic Shifts
El Pollo Loco's company-operated restaurant revenue saw a decline, primarily due to the sale of 18 company-operated restaurants to existing franchisees and a slight decrease in comparable restaurant revenue. However, this was partially offset by an increase in sales from restaurants opened in prior quarters. Franchise revenue growth was attributed to the additional revenue from the sold restaurants and the opening of five new locations, along with a 1.6% increase in franchise comparable restaurant sales.
Despite the revenue shifts, the company's restaurant contribution margin improved slightly due to higher menu prices and better operating efficiencies. However, general and administrative expenses rose, primarily due to increased executive transition costs and other administrative expenses.
Net Income and Share Repurchase Program
Net income for the quarter decreased to $4.4 million, or $0.14 per diluted share, compared to $6.5 million, or $0.18 per diluted share, in the same quarter of the previous year. Adjusted net income was stable at $0.16 per diluted share for both periods. The company also announced a share repurchase program, with $7.4 million worth of common stock still available for repurchase as of the end of the quarter.
Leadership and Debt Position
El Pollo Loco announced the appointment of Elizabeth Williams as the new CEO, succeeding Maria Hollandsworth, who will continue as President and COO. The company's debt position showed an outstanding balance of $84.0 million, with a cash reserve of $7.3 million.
Looking Forward
El Pollo Loco's outlook for the remainder of 2024 includes a focus on menu innovations, marketing initiatives, and operational excellence to leverage the brand's unique offerings. The company's financial health and strategic initiatives suggest a commitment to growth and profitability in the competitive fast-casual industry.
For a detailed breakdown of El Pollo Loco's financials and management commentary, investors and interested parties can access the full earnings report and conference call via the company's investor relations website.
Explore the complete 8-K earnings release (here) from El Pollo Loco Holdings Inc for further details.
This article first appeared on GuruFocus.
