El Pollo Loco 2015 Annual Report Download - page 45

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Table of Contents
increase customer frequency, attract new customers, and improve per-person spend. We believe that we are well-positioned for future growth,
with a developed corporate infrastructure capable of supporting a future restaurant base that is greater than our existing one. Additionally, we
believe that we have an opportunity to optimize costs and enhance our profitability as we benefit from economies of scale. These growth rates
are not guaranteed.
Key Performance Indicators
To evaluate the performance of our business, we utilize a variety of financial and performance measures. These key measures include company-
operated restaurant revenue, comparable restaurant sales, company-operated average unit volumes, restaurant contribution, restaurant
contribution margin, new restaurant openings, EBITDA, and Adjusted EBITDA. In fiscal 2014, our restaurants generated company-operated
restaurant revenue of $322.5 million and system-wide sales of $723.2 million, and system comparable sales increased 7.0%, consisting of
company-operated restaurant comparable sales growth of 5.8% and franchised comparable sales growth of 8.0%. The company-operated
comparable sales increase consisted of 2.5% transaction growth and 3.3% check growth. In fiscal 2014, for company-operated restaurants, our
annual AUV was $1.9 million, restaurant contribution margin was 21.9%, and Adjusted EBITDA was $62.9 million.
Company-Operated Restaurant Revenue
Company-operated restaurant revenue consists of sales of food and beverages in company-operated restaurants net of promotional allowances,
employee meals, and other discounts. Company-operated restaurant revenue in any period is directly influenced by the number of operating
weeks in such period, the number of open restaurants, and comparable restaurant sales.
Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower
in the first and fourth quarters due to reduced January and December traffic and higher in the second and third quarters. As a result of
seasonality, our quarterly and annual results of operations and key performance indicators such as company restaurant revenue and comparable
restaurant sales may fluctuate.
Comparable Restaurant Sales
We closely monitor company, franchise, and total system comparable restaurant sales. Comparable restaurant sales reflect the change in year-
over-year sales for the comparable company, franchise, and total system restaurant base. We define our comparable restaurant base to include
those restaurants open for 15 months or longer. As of December 31, 2014, December 25, 2013, and December 26, 2012, there were 160, 165,
and 165 restaurants, respectively, in our comparable company-operated restaurant base. As of December 31, 2014, December 25, 2013, and
December 26, 2012, there were 237, 227, and 229 restaurants, respectively, in our comparable franchised restaurant base. This measure
highlights the performance of existing restaurants as the impact of new restaurant openings is excluded. Comparable restaurant sales growth can
be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix
and/or higher prices resulting from new products or price increases.
Company-Operated Average Unit Volumes
We measure company-operated AUVs on both a weekly and an annual basis. Weekly AUVs consist of comparable restaurant sales over a seven-
day period from Thursday to Wednesday. Annual AUVs are calculated using the following methodology: First, we divide our total net sales for
all company-operated restaurants for the fiscal year by the total number of restaurant operating weeks during the same period. Second, we
annualize that average weekly per-restaurant sales figure by multiplying it by 52. An operating week is defined as a restaurant open for business
over a seven-day period from Thursday to Wednesday. This measurement allows management to assess changes in consumer spending patterns
at our restaurants and the overall performance of our restaurant base.
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