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| Statement |
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| We made real progress across those focus areas in the first quarter compared to the fourth quarter of last year reflected in the following key metrics: drive-thru speed of service times in the first quarter improved by approximately 15% and compared to the 2022 average |
| In summary, we had a strong first quarter with continued measurable progress across all key areas of focus |
| Our efforts to build traffic gained momentum over the quarter as we generated positive comparable transaction growth of 1% and continued our strong comparable restaurant sales momentum with an increase of 9.7% |
| We also grew both restaurant level and total company profit and margins and made meaningful progress on our key strategic priorities |
| We were particularly pleased with the acceleration of our monthly positive comparable transaction growth throughout the quarter to 1.9% in March with positive quarterly comparable transactions in all of our key South Florida markets |
| That should see improvement in Q2 and then our ongoing initiative should see continued improvement through the balance of the year |
| We believe the growth initiatives we shared previously, including increased staffing levels, thoughtful pricing and successful promotions combined with improved operations execution contributed to four consecutive months of positive year-over-year traffic trends through April for the first time in over five years |
| In closing, we demonstrated strong sales and transaction growth as well as ongoing margin improvement in the first quarter, which we expect to continue as we build on the momentum of our strategic growth initiatives |
| We expect margins to continue to improve above first quarter 2023 for the balance of the year and are targeting restaurant level operating profit margins in 2023 of 18% on a run rate basis through the combination of continuing transaction growth and additional pricing action, barring any unforeseen changes in our cost structure and operating environment |
| As we mentioned in prior quarters, our commitment to operations leadership development is contributing to higher leadership retention levels compared to 2022, and we believe that greater leadership stability and effectiveness was a catalyst for faster speed of service and higher guest satisfaction scores in the first quarter versus the fourth quarter |
| Our pricing, innovation and promotion strategies are contributing to revenue growth momentum |
| Regarding investment performance, our refresh/remodel program continues to generate a consistent sales lift in comparison to Pollo Tropical local market unit restaurant sales trends |
| We expect to generate positive operating cash flows and increase our balance – cash balance through the balance of the year through traffic growth and margin improvement |
| Margin improvement was most significant in March after a 5% price increase |
| First quarter promotion results were encouraging with improved speed of service and higher sales per promoted item in the first quarter versus the fourth quarter of 2022 and continued check accretion versus non-promoted items |
| We were pleased with our margin growth in the quarter compared to 2022, as well as our 50 basis point improvement over the fourth quarter 2022 |
| The most encouraging news on our sales trend is clearly our continued improvement in comparable transaction trends, which were positive in the first quarter versus 2022 and continued through April |
| We are clearly seeing that our coordinated efforts to balance menu innovation, promotional activity and analytic-based pricing is helping to build revenue and win back traffic |
| We were very excited to see strong comparable restaurant sales growth in the first quarter of 9.7% versus 2022, which included a 1% increase in comparable transactions |
| Overall, we're pleased with our financial results for the quarter with growing sales and transactions while also improving margins |
| As a result, we feel extremely confident about our prospects and our ability to unlock the great potential this brand clearly has and look forward to accelerating our positive traction during the balance of the year |
| For the third consecutive quarter, we generated year-over-year growth in restaurant-level operating profit, a non-GAAP financial measure, driven by our comparable restaurant sales growth and margin enhancement actions |
| In conclusion, we entered the second quarter with positive traffic momentum and improving margins, and our team is focused and aligned on a shorter list of high-impact growth opportunities |
| We have already seen the positive impact of our consolidation of consumer insights, digital and marketing resources into a more focused and streamlined marketing organization |
| Additionally, margin run rates increased meaningfully in March compared to the beginning of the first quarter following our 5% price increase and we expect to see continued margin growth toward our targeted restaurant-level operating profit margin of 18% or greater through transaction growth and ongoing margin improvement initiatives |
| Overall, we were pleased with our progress in the first quarter traffic and margin growth both of which we expect to accelerate as we fully implement our sales growth and operational excellence initiatives |
| As noted, stability of our restaurant team members is a driver of improved execution and guest satisfaction |
| One, building operations excellence; two, creating a great guest experience across all channels; three, enhancing the Pollo Tropical brand; and four, developing great teams |
| As we more closely align marketing strategy and execution to the goal of growing profitable traffic, we expect the marketing function to be a key contributor to accelerating growth going forward |
| First quarter 2023 restaurant-level operating margins of 16.7% increased above both the fourth quarter of last year and the first quarter of 2022 by 50 and 60 basis points, respectively |
| Statement |
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| Hourly turnover in the first quarter reached the lowest level since before 2019, with turnover down 11% compared to the 2022 quarterly average and first quarter 2023 management turnover was well below the first quarter of 2022 |
| And as a percentage of total revenues decreased 12.8% in the first quarter of 2023 from 12.9% in the first quarter of 2022 |
| First quarter 2023 net loss was $1.9 million or $0.08 per diluted share |
| The first quarter 2023 loss from operations was $2.1 million and 2% of restaurant sales compared to a loss from operations in the first quarter of 2022 of $1.4 million and 1.5% of restaurant sales |
| Loss from operations was $2.1 million or 2% of restaurant sales in the first quarter of 2023, compared to a loss from operations of $1.4 million or 1.5% of restaurant sales in the first quarter of 2022 |
| That compares to the first quarter of 2022 net loss of $1.4 million or $0.05 per diluted share |
| Regarding first quarter trends and key expense categories, cost of sales as a percentage of restaurant sales in the first quarter of 2023 decreased to 31.6% compared to 32.3% in 2022, primarily due to the impact of menu price increases and higher restaurant sales partially offset by a negative impact of sales mix |
| Other restaurant operating expenses as a percentage of restaurant sales decreased in the first quarter compared to 2022, due primarily to the impact of higher restaurant sales on utility costs and delivery fee expense partially offset by higher property and casualty insurance costs |
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