El Pollo Loco 2015 Annual Report Download - page 60

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Table of Contents
Food and Paper Costs
Food and paper costs increased $8.2 million in fiscal 2013, consisting of a $7.5 million increase in food costs and a $0.7 million increase in
paper costs. The increase in food and paper costs was primarily due to higher revenue and higher product costs related to chicken and packaging.
Food and paper costs as a percentage of total revenue were 31.8% in fiscal 2013 compared to 31.1% in fiscal 2012. The percentage increase
resulted primarily from food cost inflation and increases in packaging costs, partially offset by menu price increases.
Labor and Related Expenses
Payroll and benefit expenses increased $2.3 million in fiscal 2013, primarily due to increased labor costs resulting from higher sales and
additional labor needs arising from the opening of two new restaurants in fiscal 2013 and four new restaurants in fiscal 2012. This increase was
partially offset by decreased labor needs relating to three restaurants that closed in fiscal 2013, and by a $0.3 million decrease in group health
insurance expense due to lower year-over-year medical claims. Payroll and benefit expenses as a percentage of total revenue were 25.7% in
fiscal 2013, compared to 26.7% in fiscal 2012. This decrease was primarily due an increase in revenue, the relatively fixed nature of labor costs,
and the decrease in group health insurance expense noted above.
Occupancy and Other Operating Expenses
Occupancy and other operating expenses increased $1.5 million in fiscal 2013, primarily due to an increase in operating expenses, resulting
primarily from a $0.8 million increase in operating supply costs and credit and debit card processing fees primarily due to higher sales and a
higher percentage of credit card transactions, a $0.7 million increase in advertising costs primarily due to higher company-operated restaurant
revenue, and a $0.4 million increase in occupancy expense primarily due to the new restaurants that opened in fiscal 2013 and 2012. These
increases were partially offset by decreases in utilities, primarily due to lower natural gas costs, and repairs and maintenance costs. Occupancy
and other operating expenses as a percentage of total revenue were 21.5% in fiscal 2013, compared to 22.4% in fiscal 2012. This decrease was
primarily due to higher restaurant revenue, partially offset by the higher expenses discussed above.
General and Administrative Expenses
General and administrative expenses increased $1.1 million in fiscal 2013, primarily due to a $0.6 million increase in legal fees due to an
increase in litigation activity, a $0.4 million increase in payroll expense primarily due to the upgrade of various administrative positions to
higher salary levels, and higher severance costs due to the departure of one of our senior managers. These increases were partially offset by a
decrease in group health insurance primarily due to a decrease in claims. General and administrative expense as a percentage of total revenue
was 8.1% in fiscal 2013, compared to 8.3% in fiscal 2012. This decrease was primarily due to higher total revenue, partially offset by the
increase in general and administrative expenses discussed above.
Franchise Expenses
Franchise expense increased by $0.2 million in fiscal 2013, primarily due to higher lease expense resulting from increased rents tied to
percentage of sales calculations.
Depreciation and Amortization
Depreciation and amortization increased $0.7 million in fiscal 2013, primarily due to the increase in the number of new restaurants and
additional equipment related to our remodeling program, partially offset by the closure of three company-operated restaurants in fiscal 2013.
Depreciation and amortization as a percentage of total revenue was 3.2% for both fiscal 2013 and 2012.
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