El Pollo Loco (LOCO) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue rose to $119.2M, up 2.6% year-over-year, but net income fell 7.3% to $5.5M as system-wide comparable restaurant sales declined 0.6%.

• Company-operated comps rose 0.6% while franchised comps fell 1.3%; average check size increased 4.6%, but transactions dropped 3.8%.

• Labor and occupancy costs increased due to California minimum wage hikes and inflation, partially offset by menu price increases and productivity gains.

• 499 restaurants were open at quarter-end, with two new franchise openings and one franchise acquisition.

• Leadership remains confident in long-term growth, focusing on brand relaunch, menu innovation, and operational improvements.

Financial highlights

• Company-operated restaurant revenue increased 1.2% to $98.4M; franchise revenue rose 16.2% to $13.2M, mainly due to IT pass-through revenue and new franchise openings.

• Restaurant contribution margin declined to 16.0% from 17.6% a year ago, impacted by labor inflation and higher operating costs.

• Adjusted EBITDA was $13.9M, down from $15.7M in the prior year.

• GAAP net income was $5.5M ($0.19/share), down from $5.9M ($0.19/share) in Q1 2024; adjusted net income was $5.5M ($0.19/share) vs. $6.8M ($0.22/share) last year.

• Cash flow from operations was $4.7M, down from $11.2M in Q1 2024, mainly due to working capital changes and lower profitability.

Outlook and guidance

• Plans to open 10–11 new system-wide restaurants in 2025, mostly franchised, with capital spending of $30M–$34M and G&A expenses of $48M–$51M.

• Restaurant contribution margin expected in the 17.25%–17.75% range for 2025.

• Menu price increases expected to be about 3% in Q2, and 2% in Q3 and Q4; wage inflation expected at 4%–5% for the year.

• Expect sequential acceleration in comp trends in Q3 and Q4, driven by brand relaunch and new menu items.

• 60–70 restaurant remodels planned for 2025 and continued national expansion.