El Pollo Loco 2016 Annual Report Download - page 12

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representation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sharedsuccesses,discussbestpractices,andsetthecourseforthefollowingyear.
Marketing and Advertising
Wepromoteourrestaurantsandproductsemphasizing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,digital,andprint,tobroadlydrivebrandawarenessandpurchasesofourfeaturedproducts.Weadvertise
onlocalbroadcastandcabletelevision.WecomplementthesemethodswithdirectmailandwithourMyLocoRewardse-mailmarketingprogram,whichallows
ustoreachmorethan300,000members.MyLocoRewardsisoure-clubprogram.Theprogramofferseverymemberwhojoinsacomplimentaryorderofour
handmadeguacamoleandchips.Weengagemembersviae-mailsfeaturingnewsofpromotionaloffers,memberrewards,andproductpreviews.Membersare
offeredcomplimentarytwo-piecemealsortostadasaladsduringtheirbirthdaymonths.MyLocoRewardsalsoallowsmemberstovoicetheiropinionsthrough
surveysthatprovideuswithinformationthathelpsusdefinefutureproductconcepts.Inaddition,weuseourdatabasetosurveyandsolicitnewproductideas.
Throughourpublicrelationsefforts,weengagenotablefoodeditorsandbloggersonarangeoftopicstohelppromoteourproducts.Inaddition,weengageinone-
on-oneconversationsusingaportfolioofsocialmediaplatforms,includingFacebook,Twitter,InstagramandYouTube.Wealsousesocialmediaasaresearchand
customerservicetool,andapplyinsightsgainedtofuturemarketingefforts.
WecreatedElPolloLocoCharities,anon-profitcharity,tosupportthecommunitiessurroundingourrestaurants.ElPolloLocoCharitieshasprovidedover10,000
mealsperyeartounderprivilegedfamilies,throughorganizationslikeSouthCountyFoodOutreach,HabitatforHumanity,Children’sInstitute,andCourt
AppointedSpecialAdvocates(“CASA”).
Purchasing and Distribution
Maintainingahighdegreeofqualityinourrestaurantsdependsinpartonourabilitytoacquirefreshingredients,andothernecessarysuppliesthatmeetour
specifications,fromreliablesuppliers.Weregularlyinspectourvendorstoensurethatproductspurchasedconformtoourstandardsandthatpricesofferedare
competitive.Wehaveaqualityassuranceteamthatperformscomprehensivesupplierauditsonafrequencyschedulebasedonthepotentialfoodsafetyriskfor
eachproduct.WecontractwithMBMCorporation(our“primarydistributor”),amajorfoodservicedistributor,forsubstantiallyallofourfoodandsupplies,
includingthepoultrythatourrestaurantsreceivefromsuppliers.Ourprimarydistributordeliverssuppliestomostofourrestaurantsthreetimesperweek.Our
distributorrelationshipwithourprimarydistributorhasbeeninplacesince1997.OurrestaurantsinTexasandUtahutilizeregionaldistributors.Ourfranchisees
arerequiredtouseourprimarydistributororanapprovedregionaldistributor,andfranchiseesmustpurchasefoodandsuppliesfromapprovedsuppliers.Inour
normalcourseofbusiness,weevaluatebidsfrommultiplesuppliersforvariousproducts.Poultryisourlargestproductcostitemandrepresentedapproximately
40%ofourtotalfoodandpapercostsforfiscal2015.Fluctuationsinsupplyandinpricecansignificantlyimpactourrestaurantserviceandprofitperformance.We
activelymanagecostvolatilityforpoultrybynegotiatingwithmultiplesuppliersandenteringintowhatwebelievearethemostfavorablecontracttermsgiven
existingmarketconditions.Inthepast,wehaveenteredintocontractsrangingfromtwomonthstothreeyears,dependingoncurrentandexpectedmarket
conditions.Wecurrentlysourcepoultryfromsixsuppliers,withtwoaccountingforapproximately75%ofourplannedpurchasesforfiscal2016.Wehavefixed
pricesfor100%ofourpoultrysupplythroughtheendof2016.
Intellectual Property
WehaveregisteredElPolloLoco®,PolloBowl®,TheCrazyChicken®,andcertainothernamesusedbyourrestaurantsastrademarksorservicemarkswith
theU.S.PatentandTrademarkOffice(the“PTO”),andElPolloLoco®inapproximately42foreigncountries.Ourcurrentbrandcampaign,CrazyYouCan
Taste™,hasalsobeenapprovedforregistrationwiththePTO.Inaddition,theElPolloLocologo,websitenameandaddress,andFacebook,Twitter,Instagram
andYouTubeaccountsareourintellectualproperty.Ourpolicyistopursueandmaintainregistrationofservicemarksandtrademarksinthosecountrieswhere
businessstrategyrequiresustodoso,andtoopposevigorouslyanyinfringementordilutionoftheservicemarksortrademarksinthosecountries.Wemaintainthe
recipeforourchickenmarinade,aswellascertainproprietarystandards,specifications,andoperatingprocedures,astradesecretsorasconfidentialproprietary
information.
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