El Pollo Loco 2015 Annual Report Download - page 14

Download and view the complete annual report

Please find page 14 of the 2015 El Pollo Loco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Table of Contents
Franchise Program
Overview
We use a franchising strategy to increase new restaurant growth in certain markets, leveraging the ownership of entrepreneurs with specific local
market expertise, and requiring a relatively minimal capital commitment by us. As of December 31, 2014, there were a total of 243 franchised
restaurants. Franchisees range in size from single-restaurant operators to the largest franchisee, which owned 59 restaurants as of December 31,
2014. Our existing franchise base consists of many successful, longstanding, multi-unit restaurant operators. As of December 31, 2014,
approximately 80% of franchised restaurants were owned and operated by franchisees that had been with us for over 20 years.
We believe that the franchise revenue generated from our franchise base has historically served as an important source of stable and recurring
cash flows to us, and we accordingly plan to expand our base of franchised restaurants. In existing markets, we encourage growth from current
franchisees. In our expansion markets, we seek highly-qualified and experienced new franchisees for multi-unit development opportunities. We
seek franchisees of successful, non-competitive brands operating in our expansion markets. Through strategic networking and participation in
select franchise conferences, we aim to identify highly-qualified prospects. Additionally, we market our franchise opportunities with printed
brochures and a website franchising section.
Franchise Owner Support
We believe that creating a foundation of initial and on-going support is important for future success, both for our franchisees and for our brand.
Therefore, we have structured our corporate staff, programs, and communication systems to ensure that we are delivering high-
quality support to
our franchisees.
We have a mandatory training program that was designed to ensure that our franchise owners and their managers are equipped with the
knowledge and skills necessary for success. The program consists of hands-on training in the operation and management of an El Pollo Loco
restaurant. Training is conducted by a general training manager who has been certified by us for training. Instructional materials for the initial
training program include our operations manual, the SPECS crew-training system, wall charts, job aids, recipe books, product build cards,
management training materials, a ServSafe food safety book, videos, and other materials that we may create from time to time. Training must be
successfully completed before a trainee can be assigned to a restaurant as a manager.
We also provide numerous opportunities for communication and shared feedback between us and franchise owners. Currently, we hold a
franchise business update for all franchisees each month, which includes multi-functional Company representation and executive attendance.
Quarterly, we meet with our Franchise Leadership Team and Marketing Advisory Committee to share ideas and resolve issues. Annually, we
hold a conference for our franchisees, vendors, and company leaders, to celebrate our shared successes, discuss best practices, and set the course
for the following year.
Marketing and Advertising
We promote our restaurants and products through our “Crazy You Can Taste” advertising campaign. The campaign aims to deliver our message
of going to whatever lengths necessary to deliver fresh and healthier product offerings. The campaign emphasizes our points of differentiation,
from our fresh ingredients and scratch preparation, to the cooking of our citrus-marinated chicken on open fire grills in full view in our kitchens.
We use multiple marketing channels, including television, to broadly drive brand awareness and purchases of our featured products, every five
weeks. We advertise on local network and cable television in our primary markets, and utilize heavier cable schedules for some of our less-
developed markets. We complement these methods with direct mail and with our My Loco Rewards e-mail marketing program, which allows us
to reach more than
10