El Pollo Loco Holdings Inc. expects to install kiosks at company-operated restaurants by the end of summer and install other equipment to help labor, CEO Liz Williams said in a first-quarter earnings call.
The Costa Mesa, Calif.-based El Pollo Loco, which released earnings last week for the period ended March 27, has “an opportunity for simplification and to continue to focus on priority labor initiatives to drive speed and to make the team member jobs easier, which will also enhance customer service,” said Williams, who was named the company CEO in February.
“One example is the rollout of new equipment that will simplify the preparation of our freshly made salsa in the restaurant,” Williams said. “Another example is the rollout of kiosks that enable customers to order more efficiently. I am excited with the focus and investment we are making in these two and other productivity areas and look forward to sharing more in the future.”
Williams said the El Pollo Loco was on track to complete the kiosk rollout at all company-owned restaurants later this summer.
“Our franchise partners are actively deploying these units as well,” she said. “We are also exploring new digital technologies in the drive-thru that enhance the customer experience and further automate ordering.”
El Pollo Loco is also modernizing its store base with remodels, Williams said.
“In addition to welcoming our customers with an updated brand image, we are in the process of incorporating feedback from the recent remodels and further value-engineering before full rollout,” she said.
Williams added that El Pollo is updating its restaurant design with an eye toward reducing construction costs.
“Our current prototype cost about $2.2 million to build,” she said. “Simply put, that is too expensive to drive consistent, long-term franchise growth. To remedy this, we are currently in the process of working with multiple partners to value engineer and reduce the cost of our prototype, while also making sure the image of the restaurant conveys our future brand image.”
With a large number of units in California, El Pollo Loco said it was working to keep wage rates in line, especially given the increase in the state’s minimum wage on April 1.
“Labor inflation during the first quarter was a little over 4%,” said Ira Fils, El Pollo Loco’s chief financial officer, “and we expect wage inflation between 12% to 14% for the full year 2024, driven by the California minimum wage increase to $20 an hour for QSR restaurants.”
For the first quarter ended March 27, El Pollo Loco’s net income was $5.9 million, or 19 cents share, compared to $4.9 million, or 13 cents a share, in the prior-year period. Revenues increase to $116.2 million from $114.5 million in the same quarter last year.
Systemwide same-store sales increased 5.1% in the period.
El Pollo Loco has more than 490 company-owned and franchised restaurants in Arizona, California, Colorado, Louisiana, Nevada, Texas, and Utah.
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