##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 26, 2011
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission file number 333-116310
 REAL MEX RESTAURANTS, INC.
  Delaware
    
    13-4012902(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5660 Katella Avenue, Suite 100
Cypress, CA 90630
 (562)-346-1200
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
    
    Smaller Reporting Company o
 o þ




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##### 



Real Mex Restaurants, Inc.
 Index
 PART I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    4Consolidated Balance Sheets
    
    
    4Consolidated Statements of Operations
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 3. Defaults Upon Senior Securities
    
    
    37Item 4. (Removed and Reserved)
    
    
    37Item 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    38SIGNATURE
    
    
    39Exhibit 3.1Exhibit 3.2Exhibit 3.3Exhibit 3.4Exhibit 3.5Exhibit 3.6Exhibit 3.7Exhibit 3.8Exhibit 3.9Exhibit 3.10Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
 This report includes forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). Forward looking statements are those that do
not relate solely to historical fact. They include, but are not limited to, any statement that may
predict, forecast, indicate or imply future results, performance, achievements or events. They may
contain words such as believe, anticipate, expect, estimate, intend, project, plan,
will, should, may, or could or words or phrases of similar meaning. They may relate to,
among other things: our liquidity and capital resources; legal proceedings and regulatory matters
involving our Company; food-borne illness incidents; increases in the cost of ingredients; our
dependence upon frequent deliveries of food and other supplies; our vulnerability to changes in
consumer preferences and economic conditions; our ability to compete successfully with other casual
dining restaurants; our ability to expand; and anticipated growth in the restaurant industry and
our markets.
 These forward looking statements reflect our current views with respect to future events and
are based on assumptions and subject to risks and uncertainties, including, but not limited to,
economic, competitive, governmental and technological factors outside of our control, that may
cause actual results to differ materially from trends, plans or expectations set forth in the
forward looking statements. These risks and uncertainties may include these factors and the risks
and uncertainties described elsewhere in this report and other filings with the Securities and
Exchange Commission, including the Item 1A. Risk Factors section of our annual report on Form
10-K for the year ended December 26, 2010. Given these risks and uncertainties, we urge you to read
this report completely and with the understanding that actual future results may be materially
different from what we plan or expect. All of the forward-looking statements made in this Form 10-Q
are qualified by these cautionary statements and we cannot assure you that the actual results or
developments anticipated by our Company will be realized or, even if substantially realized, that
they will have the expected consequences to or effects on our Company or our business or
operations. In addition, these forward-looking statements present our estimates and assumptions
only as of the date of this report. Except for our ongoing obligation to disclose material
information as required by federal securities laws, we do not intend to update you concerning any
future revisions to any forward looking statements to reflect events or circumstances occurring
after the date of this report.
 Unless otherwise provided in this report, references to we, us, our and Company refer
to Real Mex Restaurants, Inc. and its consolidated subsidiaries.
  3




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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 Real Mex Restaurants, Inc.
 
 Consolidated Balance Sheets

 (unaudited)
 (in thousands, except for share data)
 June 26,
    
    
    December 26,2011
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,311
    
    
    $
    3,359Trade receivables, net
    
    
    8,671
    
    
    
    8,295Other receivables
    
    
    577
    
    
    
    621Inventories, net
    
    
    12,146
    
    
    
    11,618Prepaid expenses
    
    
    3,430
    
    
    
    2,877Current portion of favorable lease asset, net
    
    
    3,352
    
    
    
    3,357Other current assets
    
    
    229
    
    
    
    248Total current assets
    
    
    30,716
    
    
    
    30,375Property and equipment, net
    
    
    65,977
    
    
    
    72,730Goodwill
    
    
    46,000
    
    
    
    113,721Trademarks and other intangible assets
    
    
    38,500
    
    
    
    42,100Deferred charges
    
    
    3,472
    
    
    
    4,710Favorable lease asset, less current portion, net
    
    
    9,982
    
    
    
    11,655Other assets
    
    
    6,253
    
    
    
    6,154Total assets
    
    $
    200,900
    
    
    $
    281,445Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    15,145
    
    
    $
    18,745Accrued self-insurance reserves
    
    
    9,962
    
    
    
    13,212Accrued compensation and benefits
    
    
    12,139
    
    
    
    12,091Accrued interest
    
    
    10,362
    
    
    
    10,188Other accrued liabilities
    
    
    9,417
    
    
    
    10,146Current portion of long-term debt
    
    
    169,234
    
    
    
    507Current portion of capital lease obligations
    
    
    257
    
    
    
    269Total current liabilities
    
    
    226,516
    
    
    
    65,158Long-term debt, less current portion
    
    
    307
    
    
    
    160,693Capital lease obligations, less current portion
    
    
    385
    
    
    
    514Deferred tax liabilities
    
    
    19,522
    
    
    
    19,522Unfavorable lease liability, less current portion, net
    
    
    5,152
    
    
    
    5,870Other liabilities
    
    
    3,234
    
    
    
    2,211Total liabilities
    
    
    255,116
    
    
    
    253,968Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity (deficit):Common stock, $.001 par value, 1,000 shares
authorized, issued and outstanding at June 26,
2011 and December 26, 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    45,245
    
    
    
    45,260Accumulated deficit
    
    
    (99,461
    )
    
    
    (17,783
    )Total stockholders equity (deficit)
    
    
    (54,216
    )
    
    
    27,477Total liabilities and stockholders equity (deficit)
    
    $
    200,900
    
    
    $
    281,445
   4




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Statements of Operations

(unaudited)
 (in thousands)
 Three Months Ended
    
    
    Six Months EndedSuccessor
    
    
    Predecessor
    
    
    Successor
    
    
    PredecessorJune 26,
    
    
    June 27,
    
    
    June 26,
    
    
    June 27,2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Restaurant revenues
    
    $
    116,451
    
    
    $
    119,282
    
    
    $
    222,565
    
    
    $
    229,417Manufacturing and distribution revenues
    
    
    9,864
    
    
    
    9,428
    
    
    
    19,248
    
    
    
    18,875Franchise and other revenues
    
    
    865
    
    
    
    927
    
    
    
    1,600
    
    
    
    1,764Total revenues
    
    
    127,180
    
    
    
    129,637
    
    
    
    243,413
    
    
    
    250,056Costs and expenses:Restaurant costsCost of sales
    
    
    27,981
    
    
    
    28,854
    
    
    
    53,878
    
    
    
    55,597Labor
    
    
    41,772
    
    
    
    41,429
    
    
    
    79,694
    
    
    
    82,153Direct operating and occupancy expense
    
    
    33,234
    
    
    
    32,627
    
    
    
    64,404
    
    
    
    64,799Total restaurant costs
    
    
    102,987
    
    
    
    102,910
    
    
    
    197,976
    
    
    
    202,549Manufacturing and distribution costs
    
    
    9,353
    
    
    
    7,997
    
    
    
    17,690
    
    
    
    14,833General and administrative expense
    
    
    6,322
    
    
    
    5,485
    
    
    
    12,826
    
    
    
    11,078Depreciation and amortization
    
    
    5,516
    
    
    
    6,401
    
    
    
    11,037
    
    
    
    12,715Impairment of goodwill and intangible assets
    
    
    71,321
    
    
    
    
    
    
    
    71,321
    
    
    
    Total costs and expenses
    
    
    195,499
    
    
    
    122,793
    
    
    
    310,850
    
    
    
    241,175Operating (loss) income
    
    
    (68,319
    )
    
    
    6,844
    
    
    
    (67,437
    )
    
    
    8,881Other income (expense):Interest expense
    
    
    (7,062
    )
    
    
    (7,643
    )
    
    
    (14,081
    )
    
    
    (15,306
    )Other (expense) income, net
    
    
    (65
    )
    
    
    
    
    
    
    (116
    )
    
    
    116Total other expense, net
    
    
    (7,127
    )
    
    
    (7,643
    )
    
    
    (14,197
    )
    
    
    (15,190
    )Loss before income tax (benefit) provision
    
    
    (75,446
    )
    
    
    (799
    )
    
    
    (81,634
    )
    
    
    (6,309
    )Income tax (benefit) provision
    
    
    
    
    
    
    (29
    )
    
    
    44
    
    
    
    (41
    )Net loss
    
    $
    (75,446
    )
    
    $
    (770
    )
    
    $
    (81,678
    )
    
    $
    (6,268
    )
   5




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Statements of Cash Flows

(unaudited)
 (in thousands)
 Successor
    
    
    PredecessorSix months
    
    
    Six monthsended
    
    
    endedJune 26,
    
    
    June 27,2011
    
    
    2010Operating activitiesNet loss
    
    $
    (81,678
    )
    
    $
    (6,268
    )Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:Depreciation
    
    
    10,082
    
    
    
    10,929Amortization of:Favorable lease asset and unfavorable lease liability, net
    
    
    955
    
    
    
    1,786Debt discount
    
    
    65
    
    
    
    1,857Deferred financing costs
    
    
    1,238
    
    
    
    1,244Impairment of goodwill and intangible assets
    
    
    71,321
    
    
    
    Loss on disposal of property and equipment
    
    
    14
    
    
    
    13Stock-based compensation expense
    
    
    (15
    )
    
    
    49Changes in operating assets and liabilities:Trade and other receivables
    
    
    (332
    )
    
    
    (154
    )Inventories
    
    
    (528
    )
    
    
    (885
    )Prepaid expenses and other current assets
    
    
    (534
    )
    
    
    434Other assets
    
    
    (100
    )
    
    
    66Accounts payable and accrued liabilities
    
    
    (4,363
    )
    
    
    205Other liabilities
    
    
    1,024
    
    
    
    814Net cash (used in) provided by operating activities
    
    
    (2,851
    )
    
    
    10,090Investing activitiesPurchases of property and equipment
    
    
    (3,727
    )
    
    
    (5,078
    )Net proceeds from disposal of property and equipment
    
    
    
    
    
    
    2Net cash used in investing activities
    
    
    (3,727
    )
    
    
    (5,076
    )Financing activitiesNet borrowings under revolving credit facility
    
    
    5,200
    
    
    
    Borrowing under long-term debt agreements
    
    
    1,411
    
    
    
    1,417Payments on long-term debt agreements and capital lease obligations
    
    
    (1,081
    )
    
    
    (1,312
    )Payments of financing costs
    
    
    
    
    
    
    (75
    )Net cash provided by financing activities
    
    
    5,530
    
    
    
    30Net (decrease) increase in cash and cash equivalents
    
    
    (1,048
    )
    
    
    5,044Cash and cash equivalents at beginning of period
    
    
    3,359
    
    
    
    3,317Cash and cash equivalents at end of period
    
    $
    2,311
    
    
    $
    8,361Supplemental disclosure of cash flow informationInterest paid
    
    $
    9,997
    
    
    $
    9,564Income taxes paid (refunded)
    
    $
    44
    
    
    $
    (41
    )Supplemental disclosure of noncash investing and financing activitiesIn-kind interest on senior unsecured credit facility added to principal
    
    $
    2,605
    
    
    $
    2,212
   6




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 Notes to Consolidated Financial Statements (unaudited)
 June 26, 2011
 (in thousands, except for share data)
 1. Basis of Presentation
 ® ® ®
     2. Liquidity
    7




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##### Table of Contents



3. Share Purchase  Successor
    Cash and cash equivalents
    
    $
    8,361Trade and other accounts receivable
    
    
    10,248Inventories
    
    
    11,719Other current assets
    
    
    3,131Property and equipment
    
    
    78,990Other assets
    
    
    12,182Trademarks and other intangibles
    
    
    43,200Favorable and unfavorable lease asset/liability, net
    
    
    8,415Goodwill
    
    
    113,989Total assets acquired
    
    
    290,235Accounts payable and accrued liabilities
    
    
    62,532Long-term debt
    
    
    160,249Deferred tax liability
    
    
    20,045Other liabilities
    
    
    2,213Total liabilities assumed
    
    
    245,039Net assets
    
    $
    45,196
  8




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##### Table of Contents



4. Goodwill and Other Intangible Assets
     June 26,
    
    
    December 26,2011
    
    
    2010Trademarks
    
    $
    35,000
    
    
    $
    37,000Franchise agreements
    
    
    3,500
    
    
    
    5,100$
    38,500
    
    
    $
    42,100
 5. Self Insurance
   9




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6. Long-Term Debt
  June 26,
    
    
    December 26,2011
    
    
    2010Senior Secured Notes due 2013
    
    $
    130,000
    
    
    $
    130,000Senior Secured Notes unamortized debt discount
    
    
    (195
    )
    
    
    (260
    )Senior Secured Revolving Credit Facility
    
    
    5,200
    
    
    
    Senior Unsecured Credit Facility
    
    
    33,205
    
    
    
    30,599Mortgage
    
    
    398
    
    
    
    440Other
    
    
    933
    
    
    
    421169,541
    
    
    
    161,200Less current portion
    
    
    (169,234
    )
    
    
    (507
    )$
    307
    
    
    $
    160,693
 Senior Secured Notes due 2013
      10




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Senior Secured Revolving Credit Facilities
      11




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Senior Unsecured Credit Facility
   Senior Unsecured Credit Facility  Holdco
 Mortgage.
  June 26,
    
    
    December 26,2011
    
    
    2010Senior Secured Notes due 2013
    
    
    14.00
    %
    
    
    14.00
    %Senior Secured Revolving Credit Facilities
    
    
    9.25
    %
    
    
    9.25
    %Senior Unsecured Credit Facility
    
    
    16.50
    %
    
    
    16.50
    %Mortgage
    
    
    9.28
    %
    
    
    9.28
    %Other
    
    
    3.14 to 3.20
    %
    
    
    3.20 to 4.70
    %
 7. Capitalization
 Common Stock
  Stock Option Plans
   12




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##### Table of Contents



WeightedAverageShares
    
    
    Exercise PriceOutstanding at December 26, 2010
    
    
    194
    
    
    $
    8,150Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    (116
    )
    
    
    8,150Outstanding at June 26, 2011
    
    
    78
    
    
    $
    8,150Vested and expected to vest at June 26, 2011
    
    
    78
    
    
    $
    8,150Exercisable at June 26, 2011
    
    
    64
    
    
    $
    8,150
  8. Fair Value of Financial Instruments
  9. Fair Value Measurement
      13




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##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3Assets:Property and equipment
    
    $
    
    
    
    $
    78,990
    
    
    $
    Liquor licenses
    
    
    
    
    
    
    5,082
    
    
    
    Goodwill
    
    
    
    
    
    
    
    
    
    
    113,989Trademarks and other
intangible assets
    
    
    
    
    
    
    
    
    
    
    43,200Favorable lease asset
    
    
    
    
    
    
    
    
    
    
    16,456Liabilities:Senior secured notes due 2013
    
    
    129,675
    
    
    
    
    
    
    
    Unfavorable lease liability
    
    
    
    
    
    
    
    
    
    
    8,041
 10. Related Party Transactions
     14




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations
contains forward looking statements within the meaning of the federal securities laws. See the
discussion under the heading Forward-Looking Statements elsewhere in this report.
 Overview
  ·
           15




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Critical Accounting Policies
   Results of Operations
   Three Months Ended
    
    
    Six Months EndedSuccessor
    
    
    Predecessor
    
    
    Successor
    
    
    PredecessorJune 26,
    
    
    June 27,
    
    
    June 26,
    
    
    June 27,2011
    
    
    2010
    
    
    2011
    
    
    2010Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Restaurant costs:Cost of sales
    
    
    22.0
    
    
    
    22.3
    
    
    
    22.1
    
    
    
    22.2Labor
    
    
    32.8
    
    
    
    32.0
    
    
    
    32.7
    
    
    
    32.9Direct operating and occupancy expense
    
    
    26.1
    
    
    
    25.2
    
    
    
    26.5
    
    
    
    25.9Total operating costs
    
    
    81.0
    
    
    
    79.4
    
    
    
    81.3
    
    
    
    81.0Manufacturing and distribution costs
    
    
    7.4
    
    
    
    6.2
    
    
    
    7.3
    
    
    
    5.9General and administrative expense
    
    
    5.0
    
    
    
    4.2
    
    
    
    5.3
    
    
    
    4.4Depreciation and amortization
    
    
    4.3
    
    
    
    4.9
    
    
    
    4.5
    
    
    
    5.1Impairment of goodwill and intangible assets
    
    
    56.1
    
    
    
    
    
    
    
    29.3
    
    
    
    Operating (loss) income
    
    
    (53.7
    )
    
    
    5.3
    
    
    
    (27.7
    )
    
    
    3.6Interest expense
    
    
    5.6
    
    
    
    5.9
    
    
    
    5.8
    
    
    
    6.1Loss before tax provision
    
    
    (59.3
    )
    
    
    (0.6
    )
    
    
    (33.5
    )
    
    
    (2.5
    )Net loss
    
    
    (59.3
    )
    
    
    (0.6
    )
    
    
    (33.6
    )
    
    
    (2.5
    )
  16




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Three Months Ended
    
    
    Six Months EndedSuccessor
    
    
    Predecessor
    
    
    Successor
    
    
    PredecessorJune 26,
    
    
    June 27,
    
    
    June 26,
    
    
    June 27,2011
    
    
    2010
    
    
    2011
    
    
    2010Restaurant revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Restaurant costs:Cost of sales
    
    
    23.9
    
    
    
    24.0
    
    
    
    24.0
    
    
    
    24.0Labor
    
    
    35.6
    
    
    
    34.5
    
    
    
    35.6
    
    
    
    35.5Direct operating and occupancy expense
    
    
    28.3
    
    
    
    27.1
    
    
    
    28.7
    
    
    
    28.0Total restaurant costs
    
    
    87.8
    
    
    
    85.6
    
    
    
    88.3
    
    
    
    87.6Manufacturing and distribution revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Manufacturing and distribution costs
    
    
    94.8
    
    
    
    84.8
    
    
    
    91.9
    
    
    
    78.6
 Three months ended June 26, 2011 compared to the three months ended June 27, 2010
 Total Revenues
 Restaurant Cost of Sales
 Restaurant Labor
 Restaurant Direct Operating and Occupancy Expense
 Manufacturing and Distribution Costs
 General and Administrative Expense
 Depreciation and Amortization
 Impairment of Goodwill and Intangible Assets.
  17




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Interest Expense
 Income tax provision.
 Six months ended June 26, 2011 compared to the six months ended June 27, 2010
 Total Revenues
 Restaurant Cost of Sales
 Restaurant Labor
 Restaurant Direct Operating and Occupancy Expense
 Manufacturing and Distribution Costs
 General and Administrative Expense
 Depreciation and Amortization
 Impairment of Goodwill and Intangible Assets.
  18




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Interest Expense
 Income tax provision.
 Liquidity and Capital Resources
     Working Capital and Cash Flows
   19




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##### Table of Contents



Operating Activities
 Investing Activities
  Financing Activities
 Debt and Other Obligations
       20




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Senior Secured Revolving Credit Facilities
     21




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##### Table of Contents



Senior Unsecured Credit Facility
   Senior Unsecured Credit Facility  Holdco
 Mortgage.
  June 26,
    
    
    December 26,2011
    
    
    2010Senior Secured Notes due 2013
    
    
    14.00
    %
    
    
    14.00
    %Senior Secured Revolving Credit Facilities
    
    
    9.25
    %
    
    
    9.25
    %Senior Unsecured Credit Facility
    
    
    16.50
    %
    
    
    16.50
    %Mortgage
    
    
    9.28
    %
    
    
    9.28
    %Other
    
    
    3.14 to 3.20
    %
    
    
    3.20 to 4.70
    %
 Capital Leases
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Inflation
   
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
     
 Item 4.
    
    Controls and Procedures
 Disclosure Controls and Procedures
  Changes In Internal Controls Over Financial Reporting
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PART II
OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  Risks Related to Our Company
 The U.S. economic crisis adversely impacted our business and financial results in fiscal 2010 and a
prolonged recession could materially affect us in the future.
   We are vulnerable to changes in consumer preferences and economic and other conditions that could
harm our business, financial condition, and results of operations and cash flows.
  Our business is highly sensitive to events and conditions in the State of California.
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Increases in the cost of ingredients could materially adversely affect our business, financial
condition, and results of operations and cash flows.
  Food-borne illness incidents could reduce our restaurant sales.
  We depend upon frequent deliveries of food and other supplies.
   There is intense competition in the restaurant industry.
  Negative publicity relating to one of our restaurants could reduce sales at some or all of our
other restaurants.
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Changes in employment laws may adversely affect our business.
  
    
    minimum wage;
    
    paid leaves of absence;
    
    provision to employees of mandatory health insurance;
    
    tax reporting; and
    
    revisions in the tax payment requirements for employees who receive gratuities.
 We may be subject to significant liability should the consumption of any of our specialty products
cause injury, illness or death.
  Wage and hour class action lawsuits may adversely affect our business.
  The current economic crisis could have a material adverse impact on our landlords or other tenants
in shopping centers in which we are located, which in turn could negatively affect our financial
results.
  Uninsured losses could occur.
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The failure to enforce and maintain our trademarks could materially adversely affect our ability to
establish and maintain brand awareness.
 ® ® ® ® ® ®
  We may be locked into long-term and non-cancelable leases and may be unable to renew leases at the
end of their terms.
  If we face labor shortages or increased labor costs, our growth and operating results could be
adversely affected.
   We face risks associated with government regulations.
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We face risks associated with environmental laws.
  
    
    govern activities or operations that may have adverse environmental effects, such
as discharges to air and water, as well as handling and disposal practices for solid and
hazardous wastes; and
 
    
    impose liability for the costs of cleaning up, and damage resulting from, sites of
past spills, disposals or other releases of hazardous materials.
  We depend on the services of key executives, whose loss could materially harm our business.
  Compliance with regulation of corporate governance and public disclosure will result in additional
expenses.
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The interests of the stockholders of the voting stock of our parent, RM Restaurant Holding Corp,
may conflict with the interests of the holders of our indebtedness.
  We have a material amount of goodwill and other indefinite lived intangible assets which, if
impaired, would result in a reduction in our net income.
  We may make acquisitions or enter into similar transactions
  Future changes in financial accounting standards may cause adverse unexpected operating results and
affect our reported results of operations.
  Risks Related to Our 14.0% Senior Secured Notes due January 1, 2013
 Our substantial level of indebtedness could adversely affect our financial condition and prevent us
from fulfilling our obligations under the notes.
  
    
    it may be more difficult for us to satisfy our financial obligations, including with respect to the notes;
    
    our ability to obtain additional financing for working capital, capital expenditures, acquisitions or
general corporate purposes may be impaired;
    
    we must use a substantial portion of our cash flow from operations to pay interest on the notes and our
other indebtedness as well as to fund excess cash flow offers on the notes, which will reduce the funds
available to use for operations and other purposes;
    
    all of the indebtedness outstanding under our senior secured credit facility will have a prior ranking
claim on substantially all of our assets, and all of the indebtedness outstanding under our other secured
debt (like equipment financing) will have a prior ranking claim on the underlying assets;
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
    
    our ability to fund a change of control offer may be limited;
    
    our ability to borrow additional funds may be limited;
    
    our high level of indebtedness could place us at a competitive disadvantage compared to those of our
competitors that may have proportionately less debt;
    
    our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate may be limited;
    
    we may be restricted from making strategic acquisitions or exploiting other business opportunities; and
    
    our high level of indebtedness makes us more vulnerable to economic downturns and adverse developments in
our business.
  Despite our current indebtedness level, we and our subsidiaries may still be able to incur
substantially more debt, which could exacerbate the risks associated with our substantial leverage.
  We are a holding company and, therefore, our ability to make payments under the notes and service
our other debt depends on cash flow from our subsidiaries.
  
    
    their earnings;
    
    covenants contained in agreements to which we or our subsidiaries are or may become
subject, including our senior secured and unsecured credit facilities and the
notes;
    
    business and tax considerations; and
    
    applicable law, including laws regarding the payment of dividends and distributions.
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Our senior secured and unsecured credit facilities and the indenture for the notes impose
significant operating and financial restrictions, which may prevent us from pursuing certain
business opportunities and taking certain actions.
  
    
    incur additional indebtedness;
    
    repay indebtedness (including the notes) prior to stated maturities;
    
    pay dividends on, redeem or repurchase our stock or make other distributions;
    
    make acquisitions or investments;
    
    create or incur liens;
    
    transfer or sell certain assets or merge or consolidate with or into other companies;
    
    enter into certain transactions with affiliates;
    
    sell stock in our subsidiaries;
    
    restrict dividends, distributions or other payments from our subsidiaries; and
    
    otherwise conduct necessary corporate activities.
   Our failure to restructure our principal debt agreements could result in events of default under
such agreements.
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We may not be able to satisfy our obligations to holders of the notes upon a change of control or
in connection with an excess cash flow offer or asset sale offer.
    The notes will be structurally subordinated to indebtedness and other liabilities of any
non-guarantor subsidiaries.
  The proceeds from the sale of the collateral securing the notes may not be sufficient to pay all
amounts owed under the notes. The collateral securing the notes is subject to first priority liens,
and your right to receive payments on the notes will effectively be subordinated to payments under
the instruments governing our priority lien obligations, including our senior secured credit
facility, to the extent of the value of the assets securing that indebtedness.
   
    
    any agreement or contract the terms of which prohibit, or would be
breached by, the grant of a security interest therein to secure the
notes, if (i) the prohibition is legally enforceable and (ii) after
using commercially reasonable efforts, we have been unable to amend
the agreement or contract to remove the offending terms;
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
    
    money and letters of credit rights that are not supporting obligations;
    
    any deposit accounts that have been pledged to secure priority lien
obligations, if, after using commercially reasonable efforts, we have
been unable to obtain perfected liens on those accounts;
    
    any foreign intellectual property or automobiles, vehicles or the like
in which a security interest cannot be perfected by the filing of a
Uniform Commercial Code financing statement;
    
    any other assets in which a security interest cannot be perfected by
the filing of a Uniform Commercial Code financing statement, so long
as the aggregate fair market value of those assets is not more than
$1.0 million at any time;
    
    any leased real property;
    
    the voting stock of any foreign subsidiary in excess of 65% of the
outstanding voting stock of that foreign subsidiary; and
    
    while any priority lien obligations remain outstanding, any other
assets that have not been pledged to secure priority lien obligations,
so long as the aggregate fair market value of those assets is not more
than $500,000 at any time.
     Holders of notes will not control decisions regarding collateral.
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The ability of the trustee to foreclose on the collateral may be limited.
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Rights of the holders of the notes in the collateral may be adversely affected by the failure to
perfect security interests in certain collateral acquired in the future.
  Any future pledge of collateral might be avoidable in bankruptcy.
  Federal and state fraudulent transfer or conveyance laws permit a court to void the notes, the
security interests or the guarantees, and, if that occurs, you may not receive any payments on the
notes.
  
    
    incurred the indebtedness or granted the security interests
with the intent of hindering, delaying or defrauding
present or future creditors;
    
    received less than reasonably equivalent value or fair
consideration for incurring the indebtedness or granting
the security interests;
    
    were insolvent or rendered insolvent by reason of the
incurrence of the indebtedness or the grant of the security
interests;
    
    were left with inadequate capital to carry on business; or
    
    intended to incur, or did incur, or believed or reasonably
should have believed that we or our restricted subsidiaries
would incur, debts beyond our or our restricted
subsidiaries ability to repay as they matured or became
due,
  
    
    subordinate the notes, the guarantees or the security interests to our or
our guarantors presently existing or future indebtedness or any liens
securing such indebtedness;
    
    void the issuance of the notes, the guarantees or the security interests; or
    
    take other actions detrimental to holders of the notes, including avoiding
any payment by us pursuant to the notes or by the guarantors pursuant to
the guarantees and requiring the return of any such payment to a fund for
the benefit of our or our guarantors unpaid creditors.
   
    
    the sum of its debts, including contingent liabilities, was greater than the fair salable value of all its assets;
    
    the present fair salable value of its assets was less than the amount that would be required to pay its probable
liability on its existing debts and liabilities, including contingent liabilities, as they become absolute and
mature; or
    
    it could not (or believed that it could not, or intended not to) pay its debts as they become due.
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
    
    what standard a court would apply in order to determine
whether we or our guarantors were insolvent as of the date
we or our guarantors issued the notes or the guarantees or
granted the security interests, as applicable, or that
regardless of the method of valuation, a court would
determine that we or our guarantors were insolvent on that
date; or
    
    whether a court would not determine that the notes, the
guarantees or the security interests constituted fraudulent
transfers on another ground.
 Because the notes were issued with original issue discount, the interest payable in a bankruptcy
case could be reduced, including by deduction of amounts of unmatured interest at the time of
bankruptcy filing.
  Because the notes were issued with original issue discount, U.S. holders of the notes generally
must include interest in income in advance of the receipt of cash attributable to such income.
  There is no established trading market for the notes, and an active trading market may not develop
for the notes. Therefore, a holder of the notes may not be able to sell the notes readily or at all
or at or above the price that such holder paid.
  
    
    our operating performance and financial condition;
    
    prevailing interest rates;
    
    the interest of securities dealers in making a market for them; and
    
    the market for similar securities.
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Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    (Removed and Reserved)
  
 Item 5.
    
    Other Information
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Item 6.
    
    Exhibits
 Exhibit No.
    
    Description3.1*
    
    
    Amendment to Bylaws of RM Restaurant Holding Corp., dated October 26, 20103.2*
    
    
    Amendment to Articles of Incorporation of Real Mex Foods, Inc., dated June 16, 20113.3*
    
    
    Amendment to Articles of Incorporation of ALA Design, Inc., dated June 16, 20113.4*
    
    
    Amendment to Bylaws of Acapulco Restaurant of Ventura, Inc., dated June 16, 20113.5*
    
    
    Amendment to Bylaws of Acapulco Restaurant of Westwood, Inc., dated June 16, 20113.6*
    
    
    Amendment to Bylaws of Murray Pacific, dated June 16, 20113.7*
    
    
    Amendment to Bylaws of TARV, Inc., dated June 16, 20113.8*
    
    
    Amendment to Bylaws of ALA Design, Inc., dated June 16, 20113.9*
    
    
    Amendment to Bylaws of Acapulco Restaurant of Downey, Inc., dated June 16, 20113.10*
    
    
    Amendment to Bylaws of Acapulco Restaurant of Moreno Valley, Inc., dated June 16, 201131.1*
    
    
    Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934 of the Chief Executive Officer.31.2*
    
    
    Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934 of the Chief Financial Officer.32.1*
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.32.2*
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
 *
    
    Filed herewith
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SIGNATURE
  REAL MEX RESTAURANTS, INC.Dated: August 15, 2011
    By:
    /s/ David GoronkinDavid GoronkinPresident, Chief Executive
Officer and Chairman

(Principal Executive Officer)Dated: August 15, 2011
    By:
    /s/ Richard P. DutkiewiczRichard P. DutkiewiczChief Financial Officer

(Principal Financial Officer
and Accounting Officer)  39