Investing.com -- Shares in El Pollo Loco Holdings Inc (O:LOCO) tumbled more than 8% on Thursday evening after its chief executive officer admitted that the Hispanic fast-food chain restaurant needs to come up with more creative ways to revive its relationship with customers following disappointing results last quarter.
During El Pollo Loco's third quarter, which ended in late September, the company increased revenue by 2.7% to $88.8 million on a year-over-year basis. It came as comparable restaurant sales grew by 0.6%, as revenue among comparable franchise restaurants jumped by 1.1%.
In terms of earnings, net profits fell sharply from $25.8 million or 0.70 per share to $4.7 million or 0.12 per share, slightly below analysts' expectations. For the quarter, analysts forecasted sales of $90.4 million on per share earnings of 0.15. Labor and related expenses ticked up from 24.9 to 25.1%, while Depreciation and Amortization rose slightly from 3.4 to 3.7%.
"Our third quarter results included our 17th consecutive quarter of system-wide comparable restaurant sales growth as well as pro forma net income growth of over 40%. We are taking actions to reengage our value conscious customers and have several current initiatives to enhance the overall experience of our customers," El Pollo Loco CEO Steve Sather said in a statement. "Through these actions, we will ensure that we deliver on the core elements of our QSR+ brand promise."
Also on Thursday, the disappointing quarterly earnings prompted the company to downgrade its guidance for fiscal year 2015. El Pollo Loco now anticipates system-wide comparable restaurant sales growth of 1.7%, down from previous estimates of 3%. It also expects adjusted EBITDA between $64 and $66 million, down from prior forecasts of $65 to $67 million. El Pollo Loco also anticipates opening 13 to 15 new company-owned restaurants, below prior estimates of 16 this year.
Sather remains optimistic about his company's outlook in spite of the downbeat results.
"Our new restaurant pipeline is strong and growing stronger, and we continue to be excited about the long runway of growth that we believe is ahead of us in both new and existing markets," Sather added. "Customers love our food, and we look forward to bringing our delicious Fire-Grilled Chicken and authentic Mexican inspired entrees to consumers across the country."
El Pollo Loco shares plummeted 1.01 or 8.77% to $10.51 in after-hours.