El Pollo Loco 2016 Annual Report Download - page 36

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Item 6, “Selected Financial Data,” and our consolidated financial statements and the notes thereto
included elsewhere in this report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and
assumptions that could cause actual results to differ materially from management’s expectations. See “Forward-Looking Statements” and Item 1A, “Risk
Factors.” We assume no obligation to update any of these forward-looking statements.
Basis of Presentation
Weusea52-or53-weekfiscalyearendingonthelastWednesdayofeachcalendaryear.Fiscal2013,2014,and2015endedonDecember25,2013,December31,
2014andDecember30,2015,respectively.Ina52-weekfiscalyear,eachquarterincludes13weeksofoperations.Ina53-weekfiscalyear,thefirst,second,and
thirdquarterseachinclude13weeksofoperations,andthefourthquarterincludes14weeksofoperations.Approximatelyeverysixorsevenyearsa53-weekfiscal
yearoccurs.Fiscal2013and2015were52-weekfiscalyears.Fiscal2014wasa53-weekfiscalyear.53-weekyearsmaycauserevenues,expenses,andother
resultsofoperationstobehigherduetotheadditionalweekofoperations.Fiscalyearsareidentifiedinthisreportaccordingtothecalendaryearsinwhichthey
ended.Forexample,referencestofiscal2015refertothefiscalyearendedDecember30,2015.
Overview
ElPolloLocoisadifferentiatedandgrowingrestaurantconceptthatspecializesinfire-grillingcitrus-marinatedchickeninfrontofourcustomersandoperatesin
theLSRsegment.Webelievethatweofferthequalityoffoodanddiningexperiencetypicaloffastcasualrestaurantswhileprovidingthespeed,convenience,and
valuetypicaloftraditionalQSRs,acombinationthatwecall“QSR+”andthatprovidesavalue-orientedfastcasualdiningexperience.Ourdistinctivemenu
featuresoursignatureproduct—citrus-marinatedfire-grilledchicken—andavarietyofMexican-inspiredentreesthatwecreatefromourchicken.Weofferour
customershealthieralternativestotraditionalfoodonthego,servedbyourengagingteammembersinacolorful,bright,andcontemporaryrestaurantenvironment.
Weserveindividualandfamily-sizedchickenmeals,avarietyofMexican-inspiredentrees,sides,and,throughouttheyear,onalimited-timebasis,alternative
proteinslikeshrimp,carnitas,andbeef.OurentreesincludefavoritessuchasourChickenAvocadoBurrito,Under500Calorieentrees,UltimatePolloBowl,Baja
ShrimpTacos,andStuffedChickenAvocadoQuesadilla.Oursalsasanddressingsarepreparedfreshdaily,allowingourcustomerstocreatetheirfavoriteflavor
profilestoenhancetheirculinaryexperience.Ourdistinctivemenuwithhealthieralternativesappealstoconsumersacrossawidevarietyofsocio-economic
backgroundsanddrivesourbalancedday-partmix.
Growth Strategies and Outlook
Weplantocontinuetoexpandourbusiness,driverestaurantsalesgrowth,andenhanceourcompetitivepositioning,byexecutingonthefollowingstrategies:
·expandourrestaurantbase;
·increaseourcomparablerestaurantsales;and
·enhanceoperationsandleverageourinfrastructure.
AsofDecember30,2015,wehad433locationsinfivestates.Infiscal2014,weopened11newcompany-operatedandfivenewfranchisedrestaurants.Infiscal
2015,weopened14newcompany-operatedandfivenewfranchisedrestaurantsacrossArizona,California,andTexas.Overthelongterm,weplantogrowthe
numberofElPolloLocorestaurantsby8%to10%annually.Toincreasecomparablerestaurantsales,weplanto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2015,ourrestaurantsgeneratedcompany-operatedrestaurantrevenueof$332.0millionandsystem-widesalesof
$753.4million,andsystemcomparablesalesincreased2.2%,consistingofcompany-operatedrestaurantcomparablesalesgrowthof1.0%andfranchised
comparablesalesgrowthof
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