Steve Carley will step down as president and chief executive of El Pollo Loco Inc. in September to take the job of chief executive at Red Robin Gourmet Burgers Inc.
The move culminates efforts by a Red Robin investor group that has been calling for a change in leadership at the Greenwood Village, Colo.-based casual burger chain. Carley, who also will be appointed to Red Robin’s board, will replace outgoing chief executive Dennis Mullen on Sept. 13.
Carley joined the Costa Mesa, Calif.-based El Pollo Loco as president and chief executive in April 2001. In a statement, El Pollo Loco said Carley “brought the brand an entrepreneurial spirit with a culture of discipline and aligned employees around clearly defined performance criteria.”
During his tenure, Carley grew El Pollo Loco from the 242 units in 2001 to more than 400 restaurants in 13 states, aiding franchising with the development of a new prototype that enabled more consistent operations.
Carley also helped the company navigate the change of ownership after former private-equity parent American Securities Capital Partners LP sold the chain to current majority owner Trimaran Capital Partners for $415 million in 2005.
At the 443-unit Red Robin, Carley said is he looking forward to continuing the chain's "growth and focus on delivering fun and memorable dining experiences in an exciting, high-energy, family-friendly atmosphere."
Carley will be replaced at El Pollo Loco by Steve Sather, the chain’s senior vice president of operations, who will serve as acting president and chief executive while the board searches for a permanent replacement. Chain spokeswoman Julie Weeks said Sather will be considered as a candidate for the job, and will also maintain his current position in the interim.
Sather joined El Pollo Loco in January 2006 as vice president of operations. Previously, he served as senior vice president of retail operations for Great Circle Family Foods LLC, the franchise operator of the Krispy Kreme Doughnuts brand in Southern California.
“Steve Sather’s passion for our brand, restaurant leadership experience and strategic acumen will provide El Pollo Loco strong and effective leadership,” Carley said in a statement. “I couldn’t be more pleased or supportive of Steve.”
Also on Thursday, El Pollo Loco’s parent company EPL Intermediate Inc. and Red Robin both reported second-quarter results indicating that the difficult macroeconomic climate is continuing to take a toll.
EPL Intermediate reported that it narrowed its net loss for the June 30-ended second quarter to $7.7 million, compared with a loss of $25.8 million for the year-ago second quarter. The improvement was attributed to tax changes, lower product costs and a decrease in legal settlements. However, the company’s revenue declined 2 percent to $71.2 million on a 4.9 percent drop in systemwide same-store sales.
“Our sales continue to be negatively impacted by the high rate of unemployment in our core markets and the increased frugality we continue to observe among consumers dining out," Carley said. We expect adverse economic conditions to continue through the second half of 2010 and possibly into 2011.”
At the end of the second quarter, the El Pollo Loco chain included 171 corporate restaurants and 241 franchised units.
For the second quarter ended July 11, Red Robin reported net income of $4.3 million, or 28 cents per share, compared with profit of $6.4 million, or 41 cents per share, for the same quarter a year ago.
Revenue remained flat at $201.3 million, and same-store sales at corporate locations dropped 1.2 percent — a sequential improvement over the 2.3 percent decrease in same-store sales reported in the first quarter of this year.
Though guest counts increased 0.9 percent during the quarter, the company said, the average check declined 2.1 percent, including the impact of limited-time price promotions during the quarter.
Lower restaurant sales in California and Arizona, in particular — two hard-hit markets where unemployment remains high — also significantly dragged down results, the company said.
Barring 72 restaurants in those markets, same-store sales would have been about 1.5 percent higher, or up about 0.3 percent, and guest counts would have been up 2.5 percent, the company said.
At the end of the second quarter, Red Robin had 309 corporate locations and 134 franchised locations.
For the year, Red Robin is projecting revenues of between $866 million and $873 million with earnings ranging from 90 cents to $1.10 per share. The projection is based on estimated same-store sales ranging from down 0.5 percent to up 0.5 percent.
The first four weeks of the third quarter showed improvement, the company said, with same-store sales at corporate restaurants up 1.4 percent and guest counts up 4.1 percent, which the company attributed to a week of television advertising during the four-week period.
Contact Lisa Jennings at [email protected].