Analysis:
Part 1: Performance Analysis
El Pollo Loco Holdings, Inc. is a differentiated and growing restaurant concept that specializes in fire-grilling citrus-marinated chicken and operates in the LSR segment. For the fiscal year ended December 28, 2022, the company reported that its comparable restaurant sales system-wide increased 5%, with comparable restaurant sales at company-operated restaurants increasing by 3% and by 7% at franchised restaurants. Although the company had incurred $3.3 million in COVID-19 related expenses in 2022, the impact had been reduced compared to 2021, which showed COVID-19 related expenses of $3.9 million, and in 2020, with $4.9 million. The company's distinctive menu with "better for you" and more affordable alternatives appeals to consumers across a wide variety of socio-economic backgrounds and drives a balanced composition of sales throughout the day, including lunch and dinner. The company's unique culture and strategies for accelerating development, building awareness, delivering exceptional service, and enhancing its competitive positioning bode well for future growth and profitability.
Part 2: Forward-looking Analysis
Looking ahead, the company plans to open four to six new company-operated and eight to twelve new franchised restaurants in 2023. The company also plans to increase comparable restaurant sales by increasing customer frequency, attracting new customers, and improving per-person spend. However, the ongoing COVID-19 pandemic or any future pandemic, epidemic or infectious disease outbreak, coupled with inflationary pressures, could disrupt the business and adversely affect the company's consolidated financial condition, liquidity, and future results of operations. Furthermore, labor costs could also be negatively impacted as a result of the recently signed FAST Act, which authorizes the creation of a council to set minimum standards for industry workers in California, including minimum wages, which could result in increased labor cost at the company's California restaurants, potentially impacting the profitability of its California restaurants. Therefore, the company needs to remain vigilant and adaptable to manage these challenges effectively and sustain growth and profitability in the long run.