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El Pollo Loco Holdings, Inc. LOCO reported preliminary comparable restaurant sales for fiscal fourth quarter ended Dec 30, 2020. Following the announcement, shares of the company fell 3.2% during afterhours trading session on Jan 12.
Preliminary Comparable Sales
El Pollo Loco’s operations during fiscal fourth quarter were negatively impacted by surge in COVID-19 cases particularly in Los Angeles.
During the quarter, system-wide comparable restaurant sales dropped 0.2% year over year against growth of 3.9% reported in the prior-year quarter. Also, company-operated comparable restaurant sales declined 3% year over year against growth of 4.3% in the prior-year quarter. Meanwhile, franchise restaurants moved up 1.8% year over year compared with 3.6% growth in the prior-year quarter.
In this regard, Bernard Acoca, president and chief executive officer of El Pollo Loco, stated, “As with much of the restaurant industry, during November and December many of our employees and customers have been impacted by the ongoing and increased spread of COVID-19, particularly in Los Angeles and the surrounding areas in which nearly 60% of our system restaurants are located.”
Delivery Sales a Major Growth Driver
El Pollo Loco’s delivery and digital sales have more than doubled from its pre-COVID-19 levels. In fiscal fourth quarter, delivery and digital sales increased 6% and 10% year over year, respectively.
Owing to the government-mandated closures of dining rooms, the company continues to operate on take-away, mobile pick-up and delivery basis. As a result, sales from drive thru have contributed 70% to total sales compared with 40% in early 2020.
In the past three months, shares of El Pollo Loco have gained 15.4% compared with the industry’s 4.6% growth.
During the fiscal fourth quarter, the company incurred approximately $2.5 million in COVID-related expenses.
Although the virus has triggered a catastrophe in terms of lives lost and financial impact, El Pollo Loco is resilient enough to navigate through these uncertain times.
Considering the company’s comparable restaurant sales performance, fiscal fourth-quarter revenues are anticipated in the range of $109.5-$110.5 million.
Zacks Rank & Key Picks
El Pollo Loco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space are Jack in the Box Inc. JACK, Arcos Dorados Holdings Inc. ARCO and Yum! Brands, Inc. YUM, each carrying a Zacks Rank #2 (Buy).
Jack in the Box has a three-five year earnings per share growth rate of 10.6%.
2021 earnings for Arcos Dorados and Yum! Brands are expected to rise 127.3% and 12.1%, respectively.
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