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El Pollo Loco CEO: We're fortunate we haven't had any hiring challenges

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Bernard Acoca, El Pollo Loco’s President and CEO, joins Yahoo Finance Live to break down the company's Q1 earnings, weigh in on the chicken shortage and outlook on the U.S. labor shortage amid the pandemic.

Video Transcript

JULIE HYMAN: Well, we just talked meat of the cow and plant-based variety. Let's talk poultry now. And El Pollo Loco, which just came out with its numbers as well, their comparable restaurant sales up 7.4%. And company-owned restaurant revenue increased by about 3.3%. Really interesting numbers here. Also the company rolling out a new Mother's Day initiative, which we're going to talk about in just a minute.

Bernard Acoca is with us. He's El Pollo Loco's president and CEO. First, let's talk about the numbers, Bernard. Thank you for being here. Interesting as well that you saw an increase in average check size, even though you saw a decline in transactions. So, first of all, just give us sort of your high level view on the quarter and where we are in the trajectory of reopening and recovery for you guys.

BERNARD ACOCA: Sure, so the quarter was interesting because we started out in January and February sluggish, simply due to the fact that COVID case counts in California, Southern California, where we have 80% of our restaurants, were very high. And then as the COVID situation started to abate throughout the month of March, our sales came roaring back.

So we reported yesterday that our system same store sales comp in the month of March was 26.1%. And it's gotten even stronger since then. We gave a line of sight into April. And we shared that our system comps right now-- well, reporting through April 28-- were 39.1%. So, as COVID starts to get more and more in our rearview mirror, we're more and more bullish and optimistic, certainly as the California economy opens up.

BRIAN SOZZI: Bernard, I can't think of anyone else who could give a better insight to this one. Is there a chicken shortage right now? Can you get all the supplies you need to keep your restaurants running?

BERNARD ACOCA: So chicken supply is tight. Everyone-- I don't know of any brand out there that's not trying to put out a chicken sandwich right now. So it is tight. And it's tight also because the labor market is tightening up quite substantially. And that's impacted a lot of the suppliers. Fortunately, for us, we've locked our chicken prices in for all of 2021. And although we see some tightness here and there, we've managed it quite effectively.

Chicken on the bone, which is primarily what we sell, has had less of an impact, given that that product is less labor intensive at the plants. But as you get into things like chicken breast and thigh meat that require more labor, those are the products that tend to see a little bit of tightness and sporadic outages. But we've been very, very fortunate in that we've managed it effectively.

MYLES UDLAND: And Bernard, you referenced some of the labor pressures that maybe your suppliers are having. What have you guys seen on the store level in terms of retaining or growing staff? Because we've certainly seen a lot of stories to that end of just competition for labor is really in a place it's never been for a lot of operators.

BERNARD ACOCA: Yes, certainly as the economy has heated up, labor has become a bigger and bigger challenge. We are fortunate in that we haven't seen it hit our restaurants universally across the system. But we have and are starting to see in spots some hiring challenges. And so we're redoubling our efforts to really staff up our restaurants with more and more people.

There's a possibility that if this continues to exacerbate in terms of how tight the labor market is, we might have to offer some additional incentives. We haven't had to go there yet, but we're keeping a watchful eye on where things are going. But we're certainly feeling the pressure. But the good news is not we're not feeling it across our system quite yet.

BRIAN SOZZI: Bernard, how many restaurants will you open-- new restaurants will you open over the next 18 months? I've got to say, I'm a big chicken fan here. I don't have your restaurants on the East Coast, or at least, where I'm in, in New York City.

BERNARD ACOCA: Well, we've been working hard over the past three years to get back to our stated goal by 2023 of getting to 5% annual new unit growth. And we are planning over the next three years to expand into new geographies where we currently don't have a presence, starting out on the Western part of the US, continuously growing out here. In 2021, we stated in our earnings call yesterday that, we'll open three to five company restaurants, four to six franchise restaurants. But when you'll see the growth really start to pick up, double in 20-- is in 2022. And then by 2023, as I mentioned, we hope to get back to that 5% unit growth, that annual growth rate that I just mentioned.

JULIE HYMAN: So, Bernard, as promised, I have a question for you away from the earnings news and the opening plans. And that has to do with this Mother's Day related or mothers related initiative that you have. Strong Like a Madre is what it's called. And you're offering $5,000 grants to 12 winners here, mothers, who either need a break or need some help in maybe switching careers. Why did you guys decide to do this? I mean, companies do all kinds of charitable stuff all the time. What prompted this particular program?

BERNARD ACOCA: Sure, so we all know that mothers always put themselves last. They sacrificed for the ones that they love. And that's never been more true than over the past 12 months during the COVID pandemic, where she's had to take on additional responsibilities like childcare or even that of a teacher, given that the kids are sequestered at home, not able to go to school. Perhaps she's even suffered job loss during this recent economic downturn. Maybe she's just simply had to put her dreams and aspirations on hold. So we wanted to offer a helping hand, which is why we created the Strong like a Madre program, which enables, as you said, 12 moms to be able to receive a $5,000 Madreship grant to get her back on track.