Good day, ladies and gentlemen, and thank you for standing by. Welcome to the El Pollo Loco First Quarter 2018 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the lines will be open for your questions following the presentation. Please note that this conference is being recorded today, May 3, 2018. On the call today we have Bernard Acoca, President and Chief Executive Officer of El Pollo Loco; and Larry Roberts, Chief Financial Officer. And now, I would like to turn the conference over to Larry Roberts.

Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2018 earnings release. If not, it can be found at www.elpolloloco.com in the Investor Relations section. Before we begin our formal remarks, I need to remind everyone that our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We expect to file our 10-Q for the first quarter of 2018 within the next few days and we encourage you to review that document at your earliest convenience. During today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in our earnings release. It's now my pleasure to turn the call over to President and Chief Executive Officer, Bernard Acoca.

Thanks, Larry. Good afternoon, everyone, and thank you for joining us today. I'm so excited to be here on my first El Pollo Loco earnings call. And I look forward to sharing our journey with you. I've now been at El Pollo Loco for seven-plus weeks. And while I'm still immersing myself in the business, I wanted to take this opportunity to share a few of my observations as well as my thoughts on opportunity areas we need to focus on immediately. When evaluating joining the company, I was first struck with just how special the El Pollo Loco brand is. I instantly fell in love with our signature product, our citrus-marinated chicken, which is freshly prepared right in front of the customer on an open-flame grill. Between the time it takes to marinate and the time it spends on the grill, each chicken takes almost an hour-and-a-half to cook. We simply don't take shortcuts with our chicken, making our product an absolutely delicious, truly differentiated, handcrafted and high quality product. While other may make claims, we believe that few of our competitors freshly prepare by hand, the amount of food we do every day in our restaurant. Another point of strength is our Los Angeles and Southern California roots, where we have developed a deep cult like connection with our loyal fan-base. From an operations perspective, I have also been impressed with store-level performance in our core markets, which continues to be very strong as is reflective of the overall quality and commitment of our people. Over the last 50-plus days, I have spent a significant amount of time meeting with each of our teams here at our support center, franchises, as well as with many operators in the field. And I'm very enthusiastic about the quality of our…

Thanks, Bernard. Before I go over the first quarter financial results, I want to briefly touch on our store base. In the first quarter, we opened two new company-operated restaurants, one in Sacramento and one in Dallas. Franchisees opened three new locations, one in Salt Lake City, one in Sacramento and one in Lafayette, Louisiana. As discussed during our last call, we closed two restaurants during the quarter, one in Dallas and the other in Houston. Additionally, we've closed two more restaurants in Texas, during the second quarter, one in each market. Our total store count in Houston, Dallas currently stand at 13 and 10, respectively. During the quarter, franchisees completed 10 vision remodels. We remain on track to open six to eight company-operated restaurants along with six to eight franchised restaurants this year and expect to complete 20 company and 30 franchise remodels. Now onto the results. For the first quarter ended March 28, 2018, total revenue excluding franchise advertising fee revenue increased 0.9% to $100.7 million, compared to $99.8 million in the first quarter of 2017, this was driven by an increasing company-operated restaurant sales. Including $5.1 million advertising revenue related to franchisee advertising fund contributions, required as a part of new accounting guidance implementation, total revenue increased 6% to $105.8 million. Company-operated restaurant sales rose 1.2% in the quarter, to $94.6 million from $93.4 million in the first quarter of last year. This increase in company-operated restaurant sales was driven by the contribution from 18 new restaurants opened during and subsequent to the first quarter of 2017, partially offset by four restaurant closures and a 2% decline in company-operated comparable restaurant sales. The decrease in company-operated comparable restaurant sales was comprised of a 1.7% decrease in transactions and a 0.3% decrease in average check. Franchise revenue decreased…

At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Matthew DiFrisco, Guggenheim Securities. Please proceed with your question.

Thank you. I know it might be a little bit early but, Bernard, I guess, could you talk a little bit about some of the potential marketing strategies or at least the cadence of the pace of when we might see different marketing strategies or significant difference in waiting or something of that nature? How that might change over the next couple of quarters or over the next couple of years? What sort of a cadence and pace we should expect?

Well, I think I would categorize them in two buckets. And per my opening remarks, I think we're very, very focused in the near term in terms of optimizing our marketing calendar and our marketing message to regain momentum in the back-half of the year. So I think what you can expect to see there is us taking the hard look and revisiting our marketing calendar, our advertising and how we're allocating our media weight to best optimize those things to have maximum impact for the balance of the year. Concurrently, we're taking a hard look at our brand architecture to ensure that we are clarifying and differentiating what our brand stands for and really leveraging what our key differentiators are in the marketplace. So in the short-term, I think you could expect to see some incremental changes to what we're doing in the back half of the calendar year with more to come medium to longer term as we start to further differentiate and clarify what our brand stands for.

Excellent. Okay. Thank you.

As a reminder, we are now conducting a question-and-answer session. [Operator Instructions] Our next question comes from Mary McNellis, Robert W. Baird & Company. Please proceed with your question.

Good afternoon. Thanks for taking the question. Bernard, you noted an opportunity in your remarks about focusing on continually delivering a good guest experience. So I was wondering if you could talk a little bit how operations improvements might play a role in this strategy going forward and what your consumer feedback scores or what your initial experience has told you about what might need to improve there.

Sure. Well, I would say, first off, that the culture that we had at the company is something that I have been very, very impressed by coming into the company. There is a word here that I've heard repeated quite often, both in this building, at our support center and then our restaurants, and that's family. And that's evidenced by the very long tenure we have in many, many of our employees both here at the support center and in our restaurants. I think it's something that's somewhat of an anomaly in the QSR business, for the restaurant business in general I should say. That is a very strong foundation, off of which to build a very dynamic culture, which really focuses on our employees, unleashes their potential and frees them up to do the right things on behalf of our customers. So culture and really investing in our people and growing our talent is going to be of paramount focus for us in the coming weeks and months ahead. To answer your question more specifically, we are working with our operations team and looking to see what we need to do to deliver a superior customer experience. I think if we take a look at lot of the metrics that we have in our markets today, we're pleased with a lot of the customer KPIs that we measure. But we see an opportunity to further elevate them and we'll be looking to do so through a variety of different initiatives over the coming weeks and months.

Thank you. That's helpful perspective. And then with the strategy going forward expected to include greater focus on communicating the differentiated factors of the brand, do you think at this stage that there is a step-up in the marketing spend needed to execute that plan or do you think of it as more of a reallocation of the spend?

Right now, I see it as more of a reallocation of the spend in making sure that we are spending what is in our budgets as efficiently as possible right now, and then secondly, ensuring that the creative that we developed to communicate that or to leverage that spend is as impactful and is compelling and as relevant as possible. So I don't see it as being an increase in the spend, no.

Okay. Thank you very much. That's it for me.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Bernard Acoca for closing remarks.

Well, thank you. I appreciate. Like I said earlier, I'm very much looking forward to sharing with you in the coming weeks and months ahead the journey that we're on. I'm extremely excited to be here. I see tremendous opportunity in taking El Pollo Loco to new heights. And looking forward to sharing with you our progress as we make some headway with some of the initiatives I referenced on today's call. We look forward to talking to you soon. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.