El Pollo Loco 2015 Annual Report Download - page 48

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Table of Contents
Highlights and Trends
Comparable Restaurant Sales
In fiscal 2014, 2013, and 2012, comparable restaurant sales system-wide increased 7.0%, 7.0%, and 9.9%, respectively. Comparable restaurant
sales growth reflects the change in year-over-year sales for the comparable restaurant base. A restaurant enters our comparable restaurant base
the first full week after its 15-month anniversary. System-wide comparable restaurant sales include restaurant sales at all comparable company-
operated restaurants and at all comparable franchised restaurants, as reported by franchisees. Comparable restaurant sales at company-operated
restaurants increased 5.8% in fiscal 2014, 5.3% in fiscal 2013, and 8.6% in fiscal 2012. In fiscal 2014, the increase in company-operated
comparable restaurant sales was primarily the result of an increase in average check size of 3.3% and an increase in traffic of 2.5%. In fiscal
2013, the increase in company-operated comparable restaurant sales was driven by an increase in average check size of 2.7% and by traffic
growth of 2.6%. In fiscal 2012, the increases in average check size and in transactions growth were 6.0% and 2.6%, respectively, for company-
operated restaurants in our comparable base. In fiscal 2014, 2013, and 2012, comparable restaurant sales at franchised restaurants increased
8.0%, 8.8%, and 11.0%, respectively.
Restaurant Development
Since 2011, we have focused on repositioning our brand, improving operational efficiency and brand awareness, strengthening our management
team, and refinancing our indebtedness in preparation for future growth. New restaurant development is expected to be a key driver of our
growth strategy. In fiscal 2014, we opened eleven company-operated restaurants, and our franchisees opened five new restaurants. From time to
time, we and our
44
(c) Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold
improvements or equipment.
(d) Includes costs related to impairment of long-lived assets and closing restaurants. In 2013, we reversed a portion of the close-store reserves
established in 2012, due to our subleasing, in 2013, of one of the reserved restaurants at a lower net cost than originally estimated.
(e) Includes costs associated with our debt refinancing transactions in December 2014 and October 2013 and the repayment of our 2013
Second Lien Term Loan with a portion of the proceeds of our IPO in July 2014.
(f) On September 24, 2014, we completed an agreement to sell six company-operated restaurants in the greater San Antonio area. This sale
resulted in cash proceeds of $5.4 million, a decrement to goodwill of $650,000 and a net gain of $2.7 million. These six restaurants will
now be franchised.
(g)
Includes costs related to our secondary offering of stock on November 25, 2014.
(h) On July 30, 2014, we entered into the TRA. This agreement calls for us to pay to our pre-IPO stockholders 85% of the savings in cash that
we realize in our taxes as a result of utilizing our net operating losses and other tax attributes attributable to preceding periods.
(i) Consists of the cost to obtain the tax credits recorded in the third and fourth quarters of 2014. $6.7 million of tax benefits were recorded to
tax provision in the third and fourth quarters.
(j) Pre-
opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new
restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used
during training, marketing costs, and other related pre-opening costs. These are generally incurred over the three to five months prior to
opening. Pre
-
opening costs also include occupancy costs incurred between the date of possession and the opening date for a restaurant.