El Pollo Loco (LOCO) Q2 2024 earnings summary

Executive summary

• System-wide comparable restaurant sales rose 4.5% year-over-year, driven by menu innovation, value focus, and operational consistency.

• Total revenue for Q2 2024 was $122.2 million, up 0.6% year-over-year; net income increased to $7.6 million ($0.25 per diluted share), an 8.2% rise from Q2 2023.

• Restaurant-level margins improved to 18.6%, up from 16.9% last year.

• Franchise revenue grew 15.1% in Q2, with 5.3% higher franchise comparable sales and four new franchise openings.

• Strategic pillars include brand leadership, hospitality, digital transformation, unit economics, and national expansion.

Financial highlights

• Company-operated restaurant revenue decreased 1.5% to $102.3 million, mainly due to refranchising of 19 locations, offset by a 3.2% increase in comparable sales.

• Franchise revenue increased 15.1% to $11.7 million, driven by higher franchise sales and restaurant conversions.

• GAAP net income was $7.6 million ($0.25 per diluted share), up from $7.1 million ($0.20) last year; adjusted net income was $7.8 million ($0.26 per share).

• Adjusted EBITDA for Q2 2024 was $17.2 million, up from $16.6 million in Q2 2023.

• Restaurant contribution margin improved to 18.6% in Q2 from 16.9% a year ago.

Outlook and guidance

• Restaurant contribution margin for 2024 expected at 16%-17%, up from prior 15.5%-16.5% guidance.

• Plans to open two new company-owned and four to five new franchised restaurants in 2024, with $24M-$26M in capital spending and G&A expenses of $45M-$47M (excluding one-time costs).

• Adjusted income tax rate anticipated at 27.5%-28%.

• Management expects continued inflationary pressures on food, labor, and operating costs, especially from California's minimum wage increase.

• Q3 2024 system-wide comparable sales up 1.9% through July 30; trends expected to normalize for the rest of Q3.