El Pollo Loco (LOCO) Reports Q4 Business Update, Comps Decline

·3 min read

El Pollo Loco Holdings, Inc. LOCO reported preliminary comparable restaurant sales for fiscal fourth quarter ended Dec 30, 2020. Following the announcement, shares of the company fell 3.2% during afterhours trading session on Jan 12.

Preliminary Comparable Sales

El Pollo Loco’s operations during fiscal fourth quarter were negatively impacted by surge in COVID-19 cases particularly in Los Angeles.

During the quarter, system-wide comparable restaurant sales dropped 0.2% year over year against growth of 3.9% reported in the prior-year quarter. Also, company-operated comparable restaurant sales declined 3% year over year against growth of 4.3% in the prior-year quarter. Meanwhile, franchise restaurants moved up 1.8% year over year compared with 3.6% growth in the prior-year quarter.

In this regard, Bernard Acoca, president and chief executive officer of El Pollo Loco, stated, “As with much of the restaurant industry, during November and December many of our employees and customers have been impacted by the ongoing and increased spread of COVID-19, particularly in Los Angeles and the surrounding areas in which nearly 60% of our system restaurants are located.”

Delivery Sales a Major Growth Driver

El Pollo Loco’s delivery and digital sales have more than doubled from its pre-COVID-19 levels. In fiscal fourth quarter, delivery and digital sales increased 6% and 10% year over year, respectively.

Owing to the government-mandated closures of dining rooms, the company continues to operate on take-away, mobile pick-up and delivery basis. As a result, sales from drive thru have contributed 70% to total sales compared with 40% in early 2020.

In the past three months, shares of El Pollo Loco have gained 15.4% compared with the industry’s 4.6% growth.

Other Updates

During the fiscal fourth quarter, the company incurred approximately $2.5 million in COVID-related expenses.

Although the virus has triggered a catastrophe in terms of lives lost and financial impact, El Pollo Loco is resilient enough to navigate through these uncertain times.

Considering the company’s comparable restaurant sales performance, fiscal fourth-quarter revenues are anticipated in the range of $109.5-$110.5 million.

Zacks Rank & Key Picks

El Pollo Loco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Jack in the Box Inc. JACK, Arcos Dorados Holdings Inc. ARCO and Yum! Brands, Inc. YUM, each carrying a Zacks Rank #2 (Buy).

Jack in the Box has a three-five year earnings per share growth rate of 10.6%.

2021 earnings for Arcos Dorados and Yum! Brands are expected to rise 127.3% and 12.1%, respectively.

The Hottest Tech Mega-Trend of All                

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Jack In The Box Inc. (JACK) : Free Stock Analysis Report
 
Yum Brands, Inc. (YUM) : Free Stock Analysis Report
 
El Pollo Loco Holdings, Inc. (LOCO) : Free Stock Analysis Report
 
Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research