El Pollo Loco Holdings Inc

Previous wording

El Pollo Loco is a differentiated and growing restaurant concept that specializes in fire-grilling citrus-marinated chicken and operates in the limited-service restaurant segment. We strive to offer food that integrates the culinary traditions of Mexico with the healthier lifestyle.” Our distinctive menu features our signature product--citrus-marinated fire-grilled chicken--and a variety of Mexican and LA-inspired entrees that we create from our chicken. We serve individual and family-sized chicken meals, a variety of Mexican and LA-inspired entrees, and sides, and, throughout the year, on a limited-time basis, additional proteins like beef and shrimp. Our entrees include favorites such as our Chicken Avocado Burrito, Pollo Fit entrees, chicken tostada salads, and Pollo Bowls. Our famous Creamy Cilantro dressings and salsas are

Current wording

El Pollo Loco is a differentiated and growing restaurant concept that specializes in fire-grilling citrus-marinated chicken and operates in the limited-service restaurant segment. We strive to offer food that integrates the culinary traditions of Mexico with the healthier lifestyle. Our distinctive menu features our signature product--citrus-marinated fire-grilled chicken--and a variety of Mexican and LA-inspired entrees that we create from our chicken. We serve individual and family-sized chicken meals, a variety of Mexican and LA-inspired entrees, and sides, and, throughout the year, on a

Previous wording

prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience. We believe that our distinctive menu with better for you and more affordable alternatives appeals to consumers across a wide variety of socio-economic backgrounds and drives our balanced composition of sales throughout the day (our “day-part mix”), including at lunch and dinner.

Current wording

limited-time basis, additional proteins like beef and shrimp. Our entrees include favorites such as our Chicken Avocado Burrito, Pollo Fit entrees, chicken tostada salads, and Pollo Bowls. Our famous Creamy Cilantro dressings and salsas are prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience. We believe that our distinctive menu with better for you and more affordable alternatives appeals to consumers across a wide variety of socio-economic backgrounds and drives our balanced composition of sales throughout the day (our “day-part mix”), including at lunch and dinner.

Previous wording

As of March 27, 2024, we had 495 locations in seven states. In fiscal 2023, we opened two new company-operated restaurants in Nevada, and our franchisees opened three new restaurants, one in California, one in Colorado and one in Utah. Additionally, during fiscal 2023, we completed the sale of 18 restaurants within California, Utah and Texas to existing franchisees. We plan to continue to expand our business, drive restaurant sales growth, and enhance our competitive positioning, by executing the following five key strategies:

Current wording

As of June 26, 2024, we had 495 locations in seven states. In fiscal 2023, we opened two new company-operated restaurants in Nevada, and our franchisees opened three new restaurants, one in California, one in Colorado and one in Utah. Additionally, we completed the sale of 18 restaurants within California, Utah and Texas to existing franchisees during fiscal 2023. For the twenty-six weeks ended June 26, 2024, our franchisees opened one new restaurant in California. Additionally, during the twenty-six weeks ended June 26, 2024, we completed the sale of one restaurant in California to existing franchisees. We plan to continue to expand our business, drive restaurant sales growth, and enhance our competitive positioning, by executing the following five key strategies:

Previous wording

For the thirteen weeks ended March 27, 2024, system-wide comparable restaurant sales increased by 5.1% from the comparable period in the prior year. For company-operated restaurants, comparable restaurant sales for the thirteen weeks ended March 27, 2024 increased by 3.8%. For company-operated restaurants, the quarter’s change in comparable restaurant sales consisted of a 2.5% increase in average check size and a 1.2% increase in transactions. For franchised restaurants, comparable restaurant sales increased 5.9% for the thirteen weeks ended March 27, 2024, respectively. Refer to Comparable Restaurant Sales definition in “Key Performance Indicators” section below.

Current wording

For the thirteen and twenty-six weeks ended June 26, 2024, system-wide comparable restaurant sales increased by 4.5% and 4.8%, respectively, from the comparable period in the prior year. For company-operated restaurants, comparable restaurant sales for the thirteen and twenty-six weeks ended June 26, 2024 increased by 3.2% and 3.4%, respectively. For company-operated restaurants, the quarter’s change in comparable restaurant sales consisted of an 8.8% increase in average check size, partially offset by a 5.2% decrease in transactions, and the year-to-date change in comparable restaurant sales consisted of a 5.7% increase in average check size, partially offset by a 2.1% decrease in transactions. For franchised restaurants, comparable restaurant sales increased 5.3% and 5.6% for the thirteen and twenty-six weeks ended June 26, 2024, respectively. Refer to “Comparable Restaurant Sales” definition in the section titled “Key Performance Indicators” below.

Previous wording

Our restaurant counts at the beginning and end of each of the last three fiscal years and the thirteen weeks ended March 27, 2024, were as follows:

Current wording

Our restaurant counts at the beginning and end of each of the last three fiscal years and the twenty-six weeks ended June 26, 2024, were as follows:

Previous wording

During the thirteen weeks ended March 27, 2024, we completed three company-operated restaurant remodels and 11 franchise remodels. The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is $0.3 million to $0.4 million per restaurant.

Current wording

During the twenty-six weeks ended June 26, 2024, we completed five company-operated restaurant remodels and 28 franchise remodels. The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is $0.3 million to $0.4 million per restaurant.

Previous wording

In addition, customers can earn additional points and free entrées for a variety of engagement activities. As points are available for redemption past the quarter earned, a portion of the revenue associated with the earned points will be deferred until redemption or expiration. As of both March 27, 2024 and December 27, 2023, the revenue allocated to

Current wording

In addition, customers can earn additional points and free entrées for a variety of engagement activities. As points are available for redemption past the quarter earned, a portion of the revenue associated with the earned points will be deferred until redemption or expiration. As of June 26, 2024 and December 27, 2023, the revenue allocated to loyalty points that had not been redeemed was $0.8 million and $0.7 million, respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities. We had over 3.9 million loyalty program members as of June 26, 2024.

Previous wording

Labor and related expenses include wages, payroll taxes, workers’ compensation expense, benefits, and bonuses paid to our restaurant management teams. Like other expense items, we expect labor costs to grow proportionately as our restaurant revenue grows. Factors that influence labor costs include minimum wage and payroll tax legislation, state labor laws (which, in California, may include AB 1228), overtime, wage inflation, the frequency and severity of workers’ compensation claims, health care costs, and the performance of our restaurants.

Current wording

restaurant revenue grows. Factors that influence labor costs include minimum wage and payroll tax legislation, state labor laws (which, in California, may include AB 1228), overtime, wage inflation, the frequency and severity of workers’ compensation claims, health care costs, and the performance of our restaurants.

Previous wording

Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

Current wording

Loss (gain) on disposal of assets includes the loss or gain on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

Previous wording

Our operating results for the thirteen weeks ended March 27, 2024 and March 29, 2023 and expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, are compared in the tables below.

Current wording

Our operating results for the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023 are expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, and are compared in the tables below.

Previous wording

For the quarter ended March 27, 2024, company-operated restaurant revenue decreased $0.7 million, or 0.7%, from the comparable period in the prior year. The decrease in company-operated restaurant revenue was mainly due to a $5.0 million decrease in revenue primarily fromthe 18 company-operated restaurants sold by the Company to existing franchisees during the prior quartersand a $0.1 million decrease in revenue recognized for our loyalty points program. This company-operated restaurant revenue decrease was partially offset by $0.8 million of additional sales from restaurants opened during or after the first quarter of 2023 as well as an increase in company-operated comparable restaurant revenue of $3.5 million, or 3.8%. The company-operated comparable restaurant sales increase consisted of a 2.5% increase in average check size due to increases in menu prices and an approximately 1.2% increase in transactions.

Current wording

Year-to-date, company-operated restaurant revenue decreased $2.3 million, or 1.1%, from the comparable period in the prior year. The decrease in company-operated restaurant revenue was mainly due to a $10.4 million decrease related tothe 19 company-operated restaurants sold by us to our existing franchisees during or subsequent to the first quarter of 2023 and a $0.1 million increase in revenue recognized for our loyalty points program. This company-operated restaurant revenue decrease was partially offset by $1.5 million of additional sales from restaurants opened during or after the first quarter of 2023 as well as an increase in company-operated comparable restaurant revenue of $6.6 million, or 3.4%. The company-operated comparable restaurant sales increase consisted of a 5.7% increase in average check size due to increases in menu prices, partially offset by a 2.1% decrease in transactions.

Previous wording

For the quarter ended March 27, 2024, franchise revenue increased $1.7 million, or 17.3%, from the comparable period in the prior year. This increase was primarily due toa franchise comparable restaurant sales increase of 5.9%, three franchise-operated restaurant openings and 18 company-operated restaurants sold by the Company to existing franchisees in each case, during the prior quarters.

Current wording

For the quarter ended June 26, 2024, franchise revenue increased $1.5 million, or 15.1%, from the comparable period in the prior year. This increase was primarily due toa franchise comparable restaurant sales increase of 5.3%, four franchise-operated restaurant openings and 19 company-operated restaurants sold by us to our existing franchisees in each case, during or subsequent to the second quarter of 2023.

Previous wording

For the quarter ended March 27, 2024, franchise advertising fee revenue increased $0.7 million, or 9.6%, from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, the quarter-to-date period fluctuations were due to the increases and decreases noted in franchise revenue above.

Current wording

For the quarter ended June 26, 2024, franchise advertising fee revenue increased $0.7 million, or 10.0%, from the comparable period in the prior year. Year-to-date, franchise advertising fee revenue increased $1.4 million, or 9.8%, from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, both the quarter and year-to-date period fluctuations were due to the increases and decreases noted in franchise revenue above.

Previous wording

For the quarter ended March 27, 2024, food and paper costs decreased $1.3 million, or 4.8%. The decrease in food and paper costs for the quarter resulted primarily due to a $1.5 million reduction related to the sale of 18 company-operated locations to franchisees, partially offset by commodity inflation. For the quarter, food and paper costs as a percentage of company-operated restaurant revenue were 26.4%, down from 27.5% in the comparable period of the prior year. The percentage decrease for the quarter was primarily dueto an increase in pricing, partially offset by commodity inflation.

Current wording

The decrease in food and paper costs for the quarter resulted primarily from a $1.5 million reduction related to the sale of 19 company-operated locations to franchisees, coupled with the decline in transactions referenced above, partially offset by commodity inflation. For the quarter, food and paper costs as a percentage of company-operated restaurant revenue were 25.2%, down from 27.4% in the comparable period of the prior year. Year-to-date, food and paper costs as a percentage of company-operated restaurant revenue were 25.7%, down from 27.4% in the comparable period of the prior year. The percentage decrease for both the quarter and year-to-date period was primarily dueto an increase in menu pricing and lower discounting, partially offset by commodity inflation.

Previous wording

For the quarter ended March 27, 2024, labor and related expenses decreased $1.0 million, or 3.0%, from the comparable period in the prior year. The decrease in labor and related expenses for the quarter was primarily due toa $2.0 reduction in labor related costs resulting from the 18 company-operated restaurants sold by the Company to existing franchisees during the prior quarters. The decrease in labor and related expenses for the quarter was partially offset by a $1.1 million increase primarily related to higher wage rates during fiscal 2024 and 2023 and other labor wage increases as a result of competitive pressure and legislated increases in the California minimum wage.

Current wording

For the quarter ended June 26, 2024, labor and related expenses increased $0.6 million, or 1.8%, from the comparable period in the prior year. The increase in labor and related expenses for the quarter was primarily due toa $3.9 million increase due to higher wage rates during fiscal 2024 and 2023 primarily as a result of legislative increases in the California state minimum wage, which became effective April 1, 2024, as well as a $0.4 million increase in worker’s compensation expense and vacation and sick pay. The increase in labor and related expenses for the quarter ended June 26, 2024 from the comparable period in the prior year was partially offset by a $1.9 million reduction in labor-related costs resulting from the 19 company-operated restaurants sold by us to our existing franchisees during or subsequent to the second quarter of 2023 as well as $1.9 million reduction related to improved labor efficiencies.

Previous wording

For the quarter ended March 27, 2024, labor and related expenses as a percentage of company-operated restaurant revenue were 31.5%, down from 32.2% in the comparable period in the prior year. The percentage change for the quarterwas driven by higher menu prices, partially offset by the cost increases highlighted above.

Current wording

For the quarter ended June 26, 2024, labor and related expenses as a percentage of company-operated restaurant revenue were 32.1%, up from 31.1% in the comparable period in the prior year. The percentage change for the quarterwas driven by the cost increases highlighted above, partially offset by higher menu prices. Year-to-date labor and related expenses as a percentage of company-operated restaurant revenue were 31.8%, up from 31.6% in the comparable period in the prior year primarily due to the cost increases highlighted above, partially offset by the increase in menu pricing and improved labor efficiencies.

Previous wording

For the quarter ended March 27, 2024, occupancy and other operating expenses decreased $1.0 million, or 4.1%, from the comparable period in the prior year. The decrease was primarily due to a $0.5 million decrease in occupancy costs, a $0.2 million decrease in utility costs and a $0.2 million decrease in repairs and maintenance costs primarily driven by the sale of 18 company-operated locations to existing franchisees, partially offset by the two new company restaurant openings and increases in other operating expenses.

Current wording

For the quarter ended June 26, 2024, occupancy and other operating expenses decreased $0.9 million, or 3.6%, from the comparable period in the prior year. The decrease was primarily due to a $0.7 million decrease in utilities, repairs and maintenance costs and other operating expense primarily driven by the sale of 19 company-operated locations to existing franchisee during or subsequent to the second quarter of 2023 and a $0.2 million decrease in other operating costs.

Previous wording

For the quarter ended March 27, 2024, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 24.6%, down from 25.4% in the comparable period in the prior year. The decrease resulted from the cost decreases highlighted above.

Current wording

For the quarter ended June 26, 2024, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 24.1%, down from 24.6% in the comparable period in the prior year. Year-to-date, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 24.3%, down from 25.0% in the comparable period of the prior year. Both the quarter and year-to-date period decreases resulted from the cost decreases highlighted above.

Previous wording

For the quarter ended March 27, 2024, general and administrative expenses increased $0.7 million, or 6.5%, from the comparable period in the prior year. The increase for the quarter was primarily due to a $0.5 million increase in restructuring costs related to certain positions in the organization and a $0.6 million increase in executive transition costs. The increase in general and administrative expenses for the quarter was offset by a $0.3 million decrease in legal fees.

Current wording

Year-to-date, general and administrative expenses increased $1.4 million, or 6.3%, from the comparable period in the prior year. The increase for the year-to-date period was due primarily to a $0.6 million increase in labor-related costs, primarily related to an increase in estimated management bonus expense, a $0.6 million increase in executive transition costs and a $0.2 million increase in other general and administrative expenses.

Previous wording

For the quarter ended March 27, 2024, general and administrative expenses as a percentage of total revenue were 10.3%, up from 9.8% in the comparable period of the prior year. The percentage increase for the quarterly period is primarily due to the cost increases noted above.

Current wording

For the quarter ended June 26, 2024, general and administrative expenses as a percentage of total revenue were 9.6%, up from 9.1% in the comparable period of the prior year. Year-to-date, general and administrative expenses as a percentage of total revenue were 9.9%, up from 9.5% in the comparable period of the prior year. The percentage increase for both the quarterly and year-to-date periods is primarily due to the cost increases discussed above.

Previous wording

Gain on Disposition of Restaurants

Current wording

Loss (Gain) on Disposition of Restaurants

Previous wording

consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements. We initially defer and subsequently recognize the franchise fees over the term of the franchise agreement. This sale resulted in cash proceeds of $0.2 million and a net gain on sale of restaurant of $0.1 million for the thirteen weeks ended March 29, 2023. Since the date of their sale, this restaurant is now included in the total number of franchised El Pollo Loco restaurants.

Current wording

During the thirteen and twenty-six weeks ended June 26, 2024, we completed the sale of one restaurant within California to an existing franchisee due to an expiring lease term on April 30, 2024. During the twenty-six weeks ended June 28, 2023, we completed the sale of one restaurant within California to an existing franchisee. We determined that these restaurant dispositions represent multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on its relative standalone selling price. Cash proceeds included upfront consideration for the sale of the restaurant and franchise fees. The cash consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements. We initially defer and subsequently recognize the franchise fees over the term of the franchise agreement. This sale resulted in cash proceeds of $0.1 million and $0.2 million, respectively, and a net loss on sale of restaurant of less than $0.1 million and a net gain on sale of restaurant of $0.1 million for the twenty-six weeks ended June 26, 2024 and June 28, 2023, respectively. Since the date of their sale, this restaurant is now included in the total number of franchised El Pollo Loco restaurants.

Previous wording

During the thirteen weeks ended March 27, 2024, we did not record any non-cash impairment charges. During the thirteen weeks ended March 29, 2023, we recorded non-cash impairment charges of less than$0.1 million, primarily related to the carrying value of the ROU assets of one restaurant in California. Given the inherent uncertainty in projecting results for newer restaurants in newer markets we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

Current wording

During the thirteen and twenty-six weeks ended June 26, 2024, we did not record any non-cash impairment charges. During the thirteen and twenty-six weeks ended June 28, 2023, we recorded non-cash impairment charges of less than$0.1 million, primarily related to the carrying value of the ROU assets of one restaurant in California. Given the inherent uncertainty in projecting results for newer restaurants in newer markets, we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

Previous wording

When a restaurant is closed, we will evaluate the ROU asset for impairment, based on anticipated sublease recoveries. The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense. Additionally, any property tax and CAM payments relating to closed restaurants are included within closed-store expense. During both the thirteen weeks ended March 27, 2024 and March 29, 2023, we recognized less than$0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

Current wording

When a restaurant is closed, we will evaluate the ROU asset for impairment, based on anticipated sublease recoveries. The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense. Additionally, any property tax and CAM payments relating to closed restaurants are included within closed-store expense. During both the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023, we recognized less than$0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

Previous wording

For the quarter ended March 27, 2024, interest expense, net, increased $0.6 million from the comparable period in the prior year. The increase in interest expense was primarily related to the higher outstanding balances on our 2022 Revolver (as defined below) as well as the higher interest rates in the fiscal 2024 periods versus the comparable periods in the prior year.

Current wording

For the quarter ended June 26, 2024, interest expense, net, increased $0.6 million from the comparable period in the prior year. For the year-to-date period, interest expense, net, increased $1.1 million from the comparable period in the prior year. Both the quarter and year-to-date period increase in interest expense was primarily related to the higher outstanding balances on our 2022 Revolver (as defined below) as well as the higher interest rates in the fiscal 2024 periods versus the comparable periods in the prior year.

Previous wording

On July 30, 2014, we entered into the income tax receivable agreement (the “TRA”). The TRA calls for us to pay to our pre-IPO stockholders 85% of the savings in cash that we realize in our taxes as a result of utilizing our net operating losses (“NOLs”) and other tax attributes attributable to preceding periods. For the thirteen weeks ended March 27, 2024, we did not record any income tax receivable agreement income or expense, and forthe thirteen weeks ended March 29, 2023 we recorded income tax receivable agreement income of$0.1 million.

Current wording

On July 30, 2014, we entered into the income tax receivable agreement (the “TRA”). The TRA calls for us to pay to our pre-IPO stockholders 85% of the savings in cash that we realize in our taxes as a result of utilizing our net operating losses (“NOLs”) and other tax attributes attributable to preceding periods. For the thirteen and twenty-six weeks ended June 26, 2024, we did not record any income tax receivable agreement income or expense, and forthe thirteen and twenty-six weeks ended June 28, 2023, we recorded income tax receivable agreement expense of $0.1 million and income tax receivable agreement income of less than$0.1 million, respectively.

Previous wording

For the quarter ended March 27, 2024, we recorded an income tax provision of $2.2 million, reflecting an estimated effective tax rate of 27.1%. For the quarter ended March 29, 2023, we recorded an income tax provision of $2.0 million, reflecting an estimated effective tax rate of approximately 28.4%.

Current wording

For the quarter ended June 26, 2024, we recorded an income tax provision of $3.2 million, reflecting an estimated effective tax rate of 29.3%. For the quarter ended June 28, 2023, we recorded an income tax provision of $2.7 million, reflecting an estimated effective tax rate of approximately 27.9%. For the year-to-date period ended June 26, 2024, we recorded an income tax provision of $5.4 million, reflecting an estimated effective tax rate of approximately 28.4%. For the year-to-date period ended June 28, 2023, we recorded an income tax provision of $4.7 million, reflecting an estimated effective tax rate of approximately 28.1%

Previous wording

The difference between the 21.0% statutory rate and our effective tax rate of 27.1% for thequarter ended March 27, 2024 is primarily a resultof state taxes, a non-deductible executive compensation, partially offset by a Work Opportunity Tax Credit benefit.

Current wording

The difference between the 21.0% statutory rate and our effective tax rate of 28.4% for theyear-to-date period ended June 26, 2024 is primarily a resultof state taxes, the impact of non-tax deductible executive compensation expense, a tax shortfall related to equity compensation deductible for tax as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by a Work Opportunity Tax Credit benefit.

Previous wording

consolidated statements of income is limited to company-operated restaurant revenue and franchise revenue from our franchisees. Accordingly, system-wide sales should not be considered in isolation or as a substitute for our results as reported under GAAP. Management believes that system-wide sales are an important figure for investors, because they are widely used in the restaurant industry, including by our management, to evaluate brand scale and market penetration.

Current wording

System-wide sales are neither required by, nor presented in accordance with GAAP. System-wide sales are the sum of company-operated restaurant revenue and sales from franchised restaurants. Our total revenue in our condensed consolidated statements of income is limited to company-operated restaurant revenue and franchise revenue from our franchisees. Accordingly, system-wide sales should not be considered in isolation or as a substitute for our results as reported under GAAP. Management believes that system-wide sales are an important figure for investors, because they are widely used in the restaurant industry, including by our management, to evaluate brand scale and market penetration. System-wide sales does not include the 10 licensed stores in the Philippines.

Previous wording

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchised, and system-wide restaurants. A restaurant enters our comparable restaurant base the first full week after it has operated for fifteen months. Comparable restaurant sales exclude restaurants closed during the applicable period. At March 27, 2024 and March 29, 2023, there were 478 and 468 comparable restaurants, 168 and 181 company-operated restaurants and 310 and 287 franchised restaurants, respectively. Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded. Comparable restaurant sales growth can be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix and/or higher prices resulting from new products or price increases. Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly titled measures reported by other companies. Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Current wording

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchised, and system-wide restaurants. A restaurant enters our comparable restaurant base the first full week after it has operated for fifteen months. Comparable restaurant sales exclude restaurants closed during the applicable period. At June 26, 2024 and June 28, 2023, there were 482 and 470 comparable restaurants, 168 and 182 company-operated restaurants and 314 and 288 franchised restaurants, respectively. Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded. Comparable restaurant sales growth can be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix and/or higher prices resulting from new products or price increases. Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly titled measures reported by other companies. Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Previous wording

Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of our restaurants, and our calculations thereof may not be comparable to those reported by other companies. Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation, or superior to, or as substitutes for the analysis of our results as reported under GAAP. Management uses restaurant contribution and restaurant contribution margin as key metrics to evaluate the profitability of incremental sales

Current wording

Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of our restaurants, and our calculations thereof may not be comparable to those reported by other companies. Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation, or superior to, or as substitutes for the analysis of our results as reported under GAAP. Management uses restaurant contribution and restaurant contribution margin as key metrics to evaluate the profitability of incremental sales at our restaurants, to evaluate our restaurant performance across periods, and to evaluate our restaurant financial performance compared with our competitors. Management believes that restaurant contribution and restaurant contribution margin are important tools for investors, because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. Management further believes restaurant level

Previous wording

at our restaurants, to evaluate our restaurant performance across periods, and to evaluate our restaurant financial performance compared with our competitors. Management believes that restaurant contribution and restaurant contribution margin are important tools for investors, because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. Management further believes restaurant level operating is useful to investors to highlight trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures.

Current wording

operating is useful to investors to highlight trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures.

Previous wording

any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate EBITDA and Adjusted EBITDA. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Current wording

EBITDA and Adjusted EBITDA as presented in this report are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate EBITDA and Adjusted

Previous wording

During both the thirteen weeks ended March 27, 2024 and March 29, 2023, we recognized less than $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

Current wording

During both the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023, we recognized less than $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

Previous wording

For the thirteen weeks ended March 27, 2024, net cash from operating activities increased by approximately $7.3 million from the comparable period of the prior year. This change was due to favorable working capital fluctuations and higher profitability compared to the same period in the prior year.

Current wording

For the twenty-six weeks ended June 26, 2024, net cash from operating activities increased by approximately $6.3 million from the comparable period of the prior year. This change was due to favorable working capital fluctuations and higher profitability compared to the same period in the prior year.

Previous wording

For the thirteen weeks ended March 27, 2024, net cash used in investing activities decreased by $1.6 million from the comparable period of the prior year. This change was due to a decrease in purchase of property and equipment mostly related to restaurant remodeling during the thirteen weeks ended March 27, 2024 when compared to the prior quarter.

Current wording

For the twenty-six weeks ended June 26, 2024, net cash used in investing activities increased by $1.7 million from the comparable period of the prior year. This change was due to an increase in purchase of property and equipment mostly related to restaurant remodeling during the twenty-six weeks ended June 26, 2024 when compared to the prior quarter.

Previous wording

For the thirteen weeks ended March 27, 2024, net cash used in financing activities decreased by $8.6 million from the comparable period of the prior year. The change was due primarily to a decrease of $4.7 million in repurchases of common stock coupled with $4.0 million decrease in net pay downs on the 2022 Revolver during the thirteen weeks ended March 27, 2024 compared to the repurchases of common stock and net pay-downs during the thirteen weeks ended March 29, 2023.

Current wording

For the twenty-six weeks ended June 26, 2024, net cash used in financing activities changed by $8.8 million from the comparable period of the prior year. The change was due primarily to a $3.0 million increase in net borrowings on the 2022 Revolver during the twenty-six weeks ended June 26, 2024 compared to the $6.0 million in net pay-downs during the twenty-six weeks ended June 28, 2023.

Previous wording

The Company, as a guarantor, is a party to a credit agreement (the “2022 Credit Agreement”) among EPL, as borrower, Intermediate, as a guarantor, Bank of America, N.A., as administrative agent, swingline lender, and letter of credit issuer, the lenders party thereto, and the other parties thereto, which provides for a $150.0 million five-year senior secured revolving credit facility (the “2022 Revolver”). The 2022 Revolver, which is available pursuant to the 2022 Credit Agreement, includes a sub limit of $15.0 million for letters of credit and a sub limit of $15.0 million for swingline loans. The 2022 Revolver and 2022 Credit Agreement will mature on July 27, 2027. The obligations under the 2022 Credit Agreement and related loan documents are guaranteed by Holdings and Intermediate. The obligations of Holdings, EPL and Intermediate under the 2022 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.

Current wording

We, as a guarantor, are a party to a credit agreement (the “2022 Credit Agreement”) among EPL, as borrower, Intermediate, as a guarantor, Bank of America, N.A., as administrative agent, swingline lender, and letter of credit issuer, the lenders party thereto, and the other parties thereto, which provides for a $150.0 million five-year senior secured revolving credit facility (the “2022 Revolver”). The 2022 Revolver, which is available pursuant to the 2022 Credit Agreement, includes a sub limit of $15.0 million for letters of credit and a sub limit of $15.0 million for swingline loans. The 2022 Revolver and 2022 Credit Agreement will mature on July 27, 2027. The obligations under the 2022 Credit Agreement and related loan documents are guaranteed by Holdings and Intermediate. The obligations of Holdings, EPL and Intermediate under the 2022 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.

Previous wording

The special dividend announced by the Company’s Board of Directors on October 11, 2022 was permitted under the terms of 2022 Revolver pursuant to both subclause (iii)(d) and (iii)(e) of the following sentence. Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by our past or present officers, directors, or employees (or their estates) upon death, disability, or termination of employment, (ii) pay under its TRA, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $0.5 million in any 12 month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2022 Revolver.

Current wording

The special dividend announced by our Board of Directors on October 11, 2022 was permitted under the terms of 2022 Revolver pursuant to both subclause (iii)(d) and (iii)(e) of the following sentence. Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by our past or present officers, directors, or employees (or their estates) upon death, disability, or termination of employment, (ii) pay under its TRA, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $0.5 million in any 12 month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2022 Revolver.

Previous wording

Borrowings under the 2022 Credit Agreement (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either the secured overnight financing rate (“SOFR”) or a base rate, plus, for each rate, a margin determined in accordance with a lease-adjusted consolidated leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the published Bank of America prime rate, or (c)Term SOFR with a term of one-month SOFR plus 1.00%. For Term SOFR loans, the margin is in the range of 1.25% to 2.25%, and for base rate loans the margin is in a range of 0.25% to 1.25%. Borrowings under the 2022 Revolver may be repaid and reborrowed. The interest rate range under the 2022 Revolver was 6.92% to 6.96% for the thirteen weeks ended March 27, 2024 and 5.69% to 6.30% for the thirteen weeks ended March 29, 2023.

Current wording

Borrowings under the 2022 Credit Agreement (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either the secured overnight financing rate (“SOFR”) or a base rate, plus, for each rate, a margin determined in accordance with a lease-adjusted consolidated leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the published Bank of America prime rate, or (c)Term SOFR with a term of one-month SOFR plus 1.00%. For Term SOFR loans, the margin is in the range of 1.25% to 2.25%, and for base rate loans the margin is in a range of 0.25% to 1.25%. Borrowings under the 2022 Revolver may be repaid and reborrowed. The interest rate range under the 2022 Revolver was 6.67% and 6.96% and 6.67% to 6.94% for the thirteen and twenty-six weeks ended June 26, 2024, respectively, and 6.22% to 8.50% and 5.69% to 8.50% for the thirteen and twenty-six weeks ended June 28, 2023, respectively.