El Pollo Loco Holdings, Inc. Q4 FY2025 earnings call

CEO Liz Williams reported strong fourth quarter results, capping a transformative second year in brand turnaround. In 2025, strategic investments across five pillars led to sustained momentum. Menu innovation included permanent menu items like double chicken street corn and queso crunch burrito bowls, $29.99 Sam Feast, double pollo salad, Baja Double Tostadas, and protein menu. Marketing efforts included Let's Get Loco campaign, brand activations. Operational excellence was emphasized with OSAT scores outpacing QSR industry. Digital business gained momentum with app-based promotions. 2025 saw 9 new restaurant openings, including 500th restaurant in Colorado Springs. 2026 plans include 18 - 20 new restaurant openings, 25 - 35 company-operated and 30 - 40 franchise-operated remodels

For the fourth quarter ended December 31st, 2025, total revenue was $123.5 million. Company-operated restaurant revenue increased 7.1% to $102.4 million. Franchise revenue increased 15.5% to $13 million. Food and paper costs as a percentage of company restaurant sales decreased 70 basis points year over year to 24.4%. Labor and related expenses as a percentage of company restaurant sales decreased about 90 basis points year over year to 31.5%. Occupancy and other operating expenses as a percentage of company restaurant sales increased 80 basis points year over year to 26.6%. Restaurant contribution margin for the fourth quarter improved to 17.5%, compared to 16.7% in the year-ago period. For full year 2026, expect system-wide comparable store sales growth of 2% to 3%, opening of 3% to 4% company-operated restaurants and 15% to 16% franchised operated restaurants, capital spending between $37 million to $40 million, G&A expenses between $52 million to $54 million, adjusted EBITDA between $66 and $68 million, and an effective income tax rate of approximately 29%. Also, 2027 and 2028 guidance includes system-wide comparable restaurant growth in the low single digits, system-wide restaurant growth percent in the mid single digits, and adjusted EBITDA growth percent in the high single digits

System-wide comparable store sales growth of 2% to 3% in 2026; opening of 3% to 4% company-operated restaurants and 15% to 16% franchised operated restaurants; capital spending between $37 million to $40 million; G&A expenses between $52 million to $54 million; adjusted EBITDA between $66 and $68 million; effective income tax rate of approximately 29%. For 2027 and 2028, system-wide comparable restaurant growth in the low single digits, system-wide restaurant growth percent in the mid single digits, and adjusted EBITDA growth percent in the high single digits

Q: Jake Bartlett asked about consumer demand and marketing of menu innovation.

A: Consumer still looks for great food at great value; thoughtfully pacing and sequencing with testing is key for marketing.

Q: Todd Brooks asked about mix of growth with existing franchisees vs new and confidence in multi-year guidance.

A: Mix of existing and new franchise partners with corporate growth; confident due to turnaround, strong team, and proven formulas.

Q: Jeremy Hamblin asked about difference in traffic between company-operated and franchised locations and corporate innovation drive.

A: Multiple factors cause traffic difference; ops services team, culinary team, and culinary kitchen support innovation.

Q: Andy Barish asked about consumer reaction to Middle East stuff and safe store sales composition.

A: No notable consumer reaction to Middle East stuff; pricing similar to last year, goal to drive traffic positive.

Q: Tanya Anderson asked about opening cadence and COGS initiatives.

A: Openings not as backloaded, 8 stores under construction; focus on supplier prep to drive margin.

Q: Matt Curtis asked about new markets and initial sales volumes.

A: New markets like Washington and New Mexico have strong initial sales, supported by training and local marketing