Sales for the fourth quarter decreased $3.4 million to $53 million, and same store sales in the quarter declined by 0.8%. The company attributed approximately $2.9 million of the revenue decrease in the fourth quarter to the shorter fiscal year in 2004, explaining that the chain's fiscal year is normally based on a 52-week schedule, which requires the inclusion of a catch-up week every six to seven years. As a result, El Pollo Loco's fiscal year had an extra week last year. For the year ended Dec. 29, nonetheless, sales increased $12.6 million to $219 million, and same-store sales increased 6%.
Along with reporting its results for the quarter and the year ended Dec. 29, the restaurant chain restated the financial results for previous years in connection with lease accounting changes directed by the Securities and Exchange Commission. The restatement adjustments are non-cash and had no impact on revenues or net operating cash flows, the company said.
Stephen E. Carley, president and CEO of El Pollo Loco, called 2004 "a tough year from a commodity cost standpoint, with higher prices on key commodities such as chicken, rice and beans." In light of conditions, Carley said, the company was pleased to produce positive same store results for the full year. "We did implement menu price increases that offset some but not all of the commodity cost increases," he said.
El Pollo Loco expects 2005 to be a reverse of 2004 from a same store sales standpoint, Carley commented, saying that the company expects to see the lowest comparable store sales in the first quarter because it will be up against high numbers from the previous year. In addition, "the impact of the near record rainfall in Southern California" will affect sales too, he said. Farther on in the year, however, "We expect our same store sales results to improve," Carley said. He added that the company has entered new chicken supply contracts that are important in assuring supplies in the chain's restaurants.
El Pollo Loco is accelerating its pace of franchise development, Carley said, noting that the company signed development agreements in 2004 totaling 18 restaurants that are scheduled to be built in future years. The company closed the fiscal year with 322 restaurants, located principally in California, with additional restaurants in Arizona, Nevada and Texas.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.