Hello, everyone. My name is Jake Bartlett. I'm the Restaurants Analyst at Truist Securities. I'm joined up on the stage here by El Pollo Loco CEO Liz Williams and CFO Ira Fils. For those of you who don't know them, Liz has been with El Pollo Loco since March of 2024. Previously served as CEO of Outfox Hospitality in various leadership roles at Yum! Brands for a decade before that. Ira joined El Pollo Loco in 2022, and prior to that had been the long-term CFO of Habit Burger before the company was acquired by Yum!. And And also, for those of you who don't know, El Pollo Loco is a Mexican-inspired grilled chicken quick-service restaurant company, predominantly on the West Coast. Loco has 500 restaurants, and 65% of them are franchised. So, Liz, I'm going to start out with this is about your two-year anniversary. You've been with Loco for about two years. A lot of progress has. You've made a lot of progress in that time in what you've described as a brand turnaround. So first, I want to ask what you've accomplished on that brand turnaround and then what you have left to do. Yes. So we've accomplished a lot. And first of all, thank you for having us here today. It's great to see so many people. So it started really with the brand turnaround in terms of our Let's Get Loco campaign. So we launched that a little over a year ago, which really told people the story of our food and our quality. A lot of restaurants don't actually cook in the restaurants anymore. We do. And so at the heart of our campaign, it was showing consumers all the fresh ingredients and everything we do for grilled chicken made fast and easy. We also got that out to a consumer set that was a little bit younger. So historically, we hadn't spoken to a younger consumer. We've done that as we've also refreshed our menu with innovation and also bringing value to the menu, doing that with things like burritos, burrito bowls, salads, while also nurturing our chicken on the bone. That has been a big effort. We also have taken a lot of focus in improving our business model, our economics. Our margin improvement has been notable. We're very proud to be back in the 17%, trying to approach that 18% restaurant-level margins, and then as we continue to get back to growth. New unit growth this year. We rounded out the year with nine units by the end of the year, and our 10th opening literally today. It got held up by the gas company. To open 10 units after many years of really no or low growth gets us back growing again. So we've been busy, but we still have a lot to do. Yeah, sounds like it. I want to ask first about the macro environment, the environment in which you're operating. And that's flavored by the fact that you're on the West Coast, which is a little bit different dynamic. So there's been, I think, some particular pressure. So the question is whether you've seen any improvements, whether maybe perhaps the consumer is getting a little more pressured here, and then also how you feel that El Pollo Loco is positioned for that macro environment. Yes. So the environment, it's no secret. It's been challenging. It continues to be challenging. The consumer is under a lot of pressure. And I think we've all seen it in 16 different ways. We feel that we're very well positioned. We sit at the intersection of quick service and fast casual. We're very affordable. And affordable doesn't have to mean low price. So I look at affordability, what you get for what you pay, and value is what you get for what you pay. And if you think of our burrito bowls, which is what we had been marketing for the last couple of months, that's a $12-$13 item. But when you peg that to some in the competition that are $15-$16 for double portion of chicken, double portion of guacamole, that's a really rich eat. And so as we roll into salads, you can get a fabulous fresh salad today for $12, a Mexican Caesar salad that's new, or our Bacon Ranch. Those compared to some of the salads up at $16, that's a great value. We also are doing a lot more in terms of discounting. And where we're doing discounting is very targeted. We're doing it through our app. This year, we saw our loyalty grow, and we saw that loyalty user was coming to us about 6% more frequently than they were in the past. And many times they were doing that because there was such a good deal. So we leaned in, as many have, to best deals are in the app this year and started to show that. It's really, long story short, trying to find that balance, delicate balance between driving value, but also maintaining our check and transactions. I guess it's kind of like walking and chewing gum with both of them. Great. And you mentioned the Pollo Salads, the double salads that you've just launched. What else in 2026 are you excited about? And how is the 2026 marketing and menu innovation plan different than it's been in the past? It is a lot richer than it's been in the past in terms of just having options and having really a pipeline that finally, I think, talks to many different user groups. And so many different consumers. When I think about this year, we kicked off the year with these salads. We always do well with salads in January. Shocker. People want to eat a little more healthy in January. So we've got a great option for them. We also have this year a play that gets us into chicken tenders. And I know we're grilled chicken. People love us for grilled chicken. But they also love us for quality chicken. And we think we can bring quality to the chicken tender game and do it in a way that has this kind of sweet, spicy, we're calling spicy flavor profile. You can also get it original if you can't handle the spice. But the thing that we think is also going to make us unique is our sauces. So we're known for flavor through sauces. And so we have a Pollo Loco Sauce with these tenders that is awesome. So I'm excited. You can hear the excitement about these tenders, which will launch later this year. We also are doing more with quesadillas. We're working on chicken sandwiches. It's pretty crazy to think we don't have a chicken sandwich. And I know last year I was up here talking about chicken sandwiches. We've tested a lot. We're excited to get in the game here. And then we'll continue on with our salad profile as well. So just a lot. There's beverages. I could talk for a while about getting into the coffee game. We've got horchata. We've served horchata in our restaurants for years. So we should be the ones doing a horchata coffee. We have that in test today. Some of our aguas frescas. I could go on and on. We have a great culinary team. Great. Maybe if you could, building on that, your approach to marketing this year? You've launched a new campaign. In the past, you've changed the number of marketing windows you've had. How is 2026 going to look like compared to what you've done in the past? And how is your marketing plan going to be different? Yes. Because we have such a rich pantry of innovation, we feel comfortable that we can do six marketing campaigns this year. Also, I should mention our operators. Our operations team is awesome and just getting stronger and stronger. And we spent a lot this last year investing in them, most notably with our learning management system. So we relaunched LMS, is the abbreviation for it, so that we can train better when we bring out new innovation. So I feel confident that we can. We're at this point where we can take it from five to six. And what we're hearing from consumers is they want the variety, especially in a market like we are in today. They want variety. They also want value. So how do we do this multi-layered calendar where we have some things that manage check, some menu items that balance value? And it really takes, we think, six to be able to do that. I also didn't mention a lot of the innovation I just talked about was more of the handheld innovation. So whether it's a salad or a burrito or quesadilla or a sandwich, the other innovation is our core innovation on bone-in chicken. So we're bringing back Mango Habanero. We've got a barbecue flavor profile. So it's a lot, but it's figuring out. I keep going back to figuring out how to manage both transactions and check. Got it. And sticking to some of the sales drivers, I wanted to just dig into what else is driving sales. So obviously the macro, potentially headwinds, but what you're doing to offset that. So one is digital. Digital has been a big focus. Operations have also been a focus. So maybe if you can dig into both of those drivers and any others that I'm missing. Certainly. With digital this year, we put extra focus, like I mentioned, on our loyalty program. I think this had been something that had just been underutilized for us. And what we heard from consumers was they wanted deals. And rather than just go and discount our menu, we thought that we could do this very strategically and surgically somewhat doing it in the app. And so we did things that, in addition to the BOGOs that you see, also some of the challenges. So frequency challenges were something we did. We also had a nice intersection this year, and we rebuilt our social team and our digital team to do this intersection of using our social channels together with loyalty. So an example of that, in the holiday season, we had Chicken in the Kitchen. So I know you guys all know Elf on the Shelf. Ours was Chicken in the Kitchen. He came out for 12 days during Christmas, and you could find his promotions in our app, but we also had some really clever social posts where he did some fun things, and he went viral on different media, and he might be coming back next year. We also did a lot with delivery aggregators this year. As you can imagine, there were some consumer headwinds where some consumers were staying home more. Delivery was more important this year, and quite frankly, we weren't getting our fair share of delivery. Again, we hadn't really focused on it, so this year, we really upped some of the deals and some of the placements with aggregators. On the operations side, I would just say this has been the year of just incredible focus with operations. As we go into this year that we're sitting in, really focusing even more together with our operators on things like standards, speed, and customer service. Depending on which restaurant you go to, I've seen the consistency in those three really being variable. Our goal is how do you go to our restaurants, have an incredible experience, an incredible service, and it's done consistently with speed and accuracy. We have some improvement to do there. Great. Building on operations, in the last year and I think a couple of years, you've expanded your restaurant-level margins pretty impressively given the uneven same-store sales. So the question is, that's been driven by both COGS and labor supply chain. If you can dig into what are the main drivers of the improvements over the last couple of years, and then also as part of that, what kind of opportunities do we have going forward? No, great question. We're pretty proud of what we've done over the last couple of years in regards to our margin improvements, and it was really in a couple of different areas. From a COGS standpoint, we really evaluated everything that we were buying across our whole supply chain. We bid everything out, and we were able to drive a lot of efficiencies, excuse me, in what we were buying. And we saw that in the P&L. In addition to that, we also transitioned to a different distributor. On the labor side, we used a combination of technology and equipment to really help us be more efficient in the restaurants. We put a new labor scheduling system in that gave us the ability to schedule in 15-minute increments versus 30-minute increments so we could be more productive. We put chicken holding cabinets into the facility, which enabled us to hold our chicken throughout the day at a lot more quality. But we were also able to close down the grill at the end of the night and be a little more efficient from a labor standpoint. We put in-store ordering kiosks in, which took a lot of friction out of the ordering process for the guests and allowed us to then deploy that labor a little more evenly through the day. And we brought in new salsa processors that were easier to use and easier to clean for the team members. So a lot of things that we really did that helped us drive efficiencies both on the labor side as well as on the COGS side. And we think we're not done, though. We think, as we look out into 2026, we have some projects underway where we believe that we can take more prep out of the back of the house and really utilize our suppliers upstream to help bring these products into the back of the house a little more value-added, and take that complexity out of the back of the house and also add consistency to the operations and really improve the guest experience. Got it. And as you think about maybe if you could share your long-term targets on margins and whether those long-term targets require traffic to be positive from here, how dependent are they on traffic versus how dependent are they to your continued initiatives around efficiency? Yeah. So we're going to finish 2025 in the high 17% range. As we look out, our long-term targets have always been, we believe we can get this brand to the 18%-20% store-level margins. And so we're almost there. And when we think about whether we're on the 18% side or out of the 20% side, we feel confident we'll get into that above that 18% range. But to push forward up to closer to the 20% range, that will take some sales-driving initiatives as well. Okay. And then lastly on the margin side, how are you viewing the commodity markets right now and then also your ability to take menu price? And how do those play into your approach or your expectations for margins in the kind of intermediate term? Yeah. We're going to be very balanced about taking price as we look out into next year. As we thought about this year, we took around 3.5% price for the year, and we're going to be at levels consistent with that as we think about next year. If we think about our basket, we're going to have very moderate inflation next year. We've already booked 90%+ of our buys for next year. Our chicken buy is coming in very well, and if we think about labor, labor inflation will be very moderate next year as well, so all that combined enables us to take a very thoughtful approach and very moderate pricing when we look forward into next year. Great. And all that ladders up to your unit growth story, which is now accelerating. That's very exciting to see. I've been around the brand long enough to see some kind of false starts before. I think there were some false starts before I got introduced to the brand as well. So how should investors look at your current approach to development outside your core? What you're doing differently this time around that gives you confidence that you'll be more successful than in the past? Yeah, so you're absolutely right. This brand had too many false starts, and so then it became a question: can this be a national brand, and we think absolutely, and as we sit here today, being in eight states, pushing on nine states, we're ready to push across the country, so what has changed, and the biggest three things I pin it to is, first, we didn't really have clarity around standard systems, training. Hard to believe, but as we would open up new restaurants and new locations that just got further afield, we didn't have the infrastructure that trained people the right way and then the standards that really held it up for the test of time, and so you've seen this movie before where you launch really successfully and then people turn over and things fall apart. We have fixed that. We've brought in some very talented operators that have done this in many systems before, and we feel like we've got the right training systems, standards ready to go. The other piece is the economic model. We've all seen too many times where concepts don't have the right unit-level economics, and over time, they also fade. As Ira just mentioned, when you're pushing 18% margins, when you write the leases the right way, in many instances in the past, we wrote leases that were absolutely crazy that I don't think this set of leadership would sign, and so when you have the right economic model, a lot can happen, and one of the nice things about the development we're doing right now is we've taken cost out of the new unit so we can build it for a less expensive price. But also, and Chris was just up here talking about the second-generation sites they're finding at First Watch. We're finding a lot of those second-generation sites as well in the drive-through space. So many concepts that are closing are good fortune. And so that helps the unit economics as well. And then the last piece of it is the marketing. So in years past, we didn't have the right marketing and the positioning. And then also, if you think about it, 5, 10 years ago, social media was in a different place to really launch a brand, where today, we can name several brands that don't have really any presence. They open in a city and everyone knows about them because they've learned about them from TikTok or Instagram or Snapchat or some other form my kids are using and I don't know yet. So we think the combination of standards, the economic model, and then just better marketing are going to give us an advantage in doing this. Great. Maybe if you could expand on the unit economics part of all that. What you've been doing to improve the economics, what the ROI was in the past, what your current model is for new store returns? Yeah. We've done a lot of hard work on the unit economic model. As I talked about, we've got margins to the upper 17%. There was as low as 13%. We've driven that over the last couple of years. Build cost had grown for a standalone unit to $2.6 million. We've been able to bring that down to $2.2 million. And we think we have further efficiencies. We can drive that down to $2 million. That combined with our sales today on a standalone model gives us kind of a payback period of five to six years. As Liz talked about, what we're really excited about too, about half our pipeline is these second-generation sites, which we can build out for $1 million-$1.5 million. And at our volumes, that's a three to four-year payback. And even if the volumes are sub-$2 million, if they're $1.8 million-$2 million, that gets you in that four to five year payback, which is very attractive to growth for us to deploy capital as well as our franchise partners. And as we continue to move forward, we very much believe we can continue to drive that build cost down to $2 million, get those margins in that 18%-20% range. That will deliver that sub-five-year payback, 20%+ store-level cash-on-cash returns, which we believe are very compelling. Got it. And you've talked before about doubling your unit counts, the new units that you're opening in 2026 versus 2025. It will be impressive to see and encouraging to see. Can you talk about where those stores are opening and then also who is opening the stores, whether it's existing franchisees, whether you're bringing in new franchisees to the system at this point? Any more color there would be helpful. Yeah. So it's a mix of all of the above. So as I mentioned, this year 10, we've said for, or I guess that was 2025. For 2026, we've said we will double that. And when I look out at our pipeline as we sit here today, half of that pipeline is already under construction. So whether it's in permitting or construction, with the remainder of that being very close behind in terms of architectural drawing or in final lease negotiations. So feeling good about that pipeline. Many of those restaurants will be outside of California, a few in California. But when I look out, we've got Idaho, Washington, Colorado. We've got some in Texas. And then the mix of existing franchise partners and then a few new franchise partners, always looking to grow the set of franchise partners with capable partners. We're finding many that are in other systems that want to add chicken to their portfolio. So always taking those calls as well. We're also using company capital this year, which is we're reigniting our company muscle to grow again. We run about 30% of the restaurants today. So we should be contributing to that growth. And we have the balance sheet and the capital to do it. And with the returns Ira just mentioned, there's a lot of excitement to get after that. So we're developing in Texas and in Colorado, as well as our California. What do you do with your free cash flow? Any kind of approach to the balance sheet? Yeah. First and foremost, we're looking to use our cash because we do generate cash, and we're looking to use that cash to grow the business. Liz talked a lot about new store development. We believe we have opportunities to grow company stores in Denver, in Dallas, and some smatterings in California. And so now that returns are where they are, that's a great use of our capital. And then we're also going to use it just to drive the business in our existing restaurants. We have a remodel program that's underway, and we should be able to remodel 30-some-odd company store restaurants this year. We're seeing nice sales uplift when we do that. And then we also have some opportunities to take some capital and deploy it into our restaurants with some equipment to either help us with product innovation or with some cost efficiencies. So that's really where our focus is going to be as we think about where we're going to use our cash over the next year. Great. All right. We're going to leave it with that. I appreciate it. Thank you so much for joining us. Thank you.