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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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(Amendment No. 1)



Form 10-Q/A



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2004



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------------



For the transition period from
 to



Commission File No. 333-115486



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El Pollo Loco, Inc.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 33-0377527                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



3333 Michelson
Drive, Suite 550

Irvine, California 92612

(Address of principal executive offices)



Registrants telephone number, including area code:

(949) 399-2000



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x



As of August 16, 2004, the registrant had 100 shares of its common stock,
$.01 par value, outstanding.



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EXPLANATORY NOTE



We are filing this Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, as filed with
the Securities and Exchange Commission on August 16, 2004, solely to furnish Exhibit 32.1, which contains the certifications required by Section 906 of the Sarbanes-Oxley Act of 2002. As required by Rule 12b-15 of the Exchange Act, certifications of
our Chief Executive Officer and Chief Financial Officer are attached as Exhibits 31.1 and 31.2. All other information contained in this amended Form 10-Q is unchanged and speaks only as of August 16, 2004, the filing date of the original Form 10-Q.



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TABLE OF CONTENTS



|     |  |                                                                                       |  |     
|---- |  | ------------------------------------------------------------------------------------- |  | ----
|Item |  |                                                                                       |  | Page
|     |  | PART I                                                                                |  |     
|     |  |                                                                                      
|1.   |  | Financial Statements                                                                  |  | 4   
|     |  |                                                                                      
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14  
|     |  |                                                                                      
|3.   |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 24  
|     |  |                                                                                      
|4.   |  | Controls and Procedures                                                               |  | 25  
|     |  |                                                                                      
|     |  | PART II                                                                               |  |     
|     |  |                                                                                      
|6.   |  | Exhibits and Reports on Form 8-K                                                      |  | 26  



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FORWARD-LOOKING STATEMENTS



Certain statements contained within this report constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. 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, could or words or phrases of similar meaning.



These forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Also, 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.



Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include our substantial
level of indebtedness, food-borne-illness incidents, increases in the cost of chicken, our dependence upon frequent deliveries of food and other supplies, our vulnerability to changes in consumer preferences and economic conditions, our sensitivity
to events and conditions in the greater Los Angeles area, our ability to compete successfully with other quick service and fast casual restaurants, our ability to expand into new markets, our reliance in part on our franchisees, our ability to
support our expanding franchise system and litigation we face in connection with our operations. Actual results may differ materially due to these risks and uncertainties and those described in our Amendment No. 3 to Registration Statement on Form
S-4 (File No. 333-115486) as filed with the Securities and Exchange Commission on August 11, 2004.



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PART I



|Item 1. | Financial Statements
|------- | --------------------



EL POLLO LOCO, INC.

(A Wholly Owned Subsidiary of EPL, Intermediate, Inc.)



CONDENSED BALANCE SHEETS

(UNAUDITED)

(In thousands)



|                                          |  |                  |         |              |   |        
|----------------------------------------- |  | ---------------- | ------- | ------------ | - | -------
|                                          |  | December 31,2003 |         | June 30,2004
|ASSETS                                    |  |                  |         |              |   |        
|CURRENT ASSETS:                           |  |                  |         |              |   |        
|Cash and cash equivalents                 |  | $                | 5,353   |              | $ | 1,717  
|Notes and accounts receivablenet         |  |                  | 2,588   |              |   | 2,735  
|Inventories                               |  |                  | 1,225   |              |   | 1,085  
|Prepaid expenses and other current assets |  |                  | 2,562   |              |   | 2,964  
|Income taxes receivable                   |  |                  | 709     |              |   | 709    
|Deferred income taxes                     |  |                  | 2,893   |              |   | 2,893  
|                                          |  |                  |         |              |   |        
|Total current assets                      |  |                  | 15,330  |              |   | 12,103 
|                                          |  |                  |         |              |   |        
|PROPERTY OWNEDNet                        |  |                  | 59,397  |              |   | 61,732 
|                                          |  |                  |         |              |   |        
|PROPERTY HELD UNDER CAPITAL LEASESNet    |  |                  | 5,907   |              |   | 6,139  
|                                          |  |                  |         |              |   |        
|GOODWILL                                  |  |                  | 37,898  |              |   | 39,028 
|DOMESTIC TRADEMARKS                       |  |                  | 19,800  |              |   | 19,800 
|OTHER INTANGIBLE ASSETS                   |  |                  | 25,852  |              |   | 24,563 
|OTHER ASSETS                              |  |                  | 679     |              |   | 668    
|                                          |  |                  |         |              |   |        
|TOTAL ASSETS                              |  | $                | 164,863 |              | $ | 164,033
|                                          |  |                  |         |              |   |        





See accompanying notes to condensed financial statements.



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EL POLLO LOCO, INC.

(A Wholly Owned Subsidiary of EPL, Intermediate, Inc.)



CONDENSED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data)



|                                                                                         |  |                  |         |   |              |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | -
|                                                                                         |  | December 31,2003 |         |   | June 30,2004 |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                                 |  |                  |         |   |              |   |         |  
|CURRENT LIABILITIES:                                                                     |  |                  |         |   |              |   |         |  
|Current portion of notes payable to SunTrust Bank                                        |  | $                | 3,667   |   |              | $ | 3,667   |  
|Current portion of obligations under capital leases                                      |  |                  | 1,262   |   |              |   | 1,266   |  
|Current portion of other notes payable                                                   |  |                  | 1,222   |   |              |   | 1,022   |  
|Accounts payable                                                                         |  |                  | 8,779   |   |              |   | 7,812   |  
|Accrued salaries                                                                         |  |                  | 5,707   |   |              |   | 3,428   |  
|Accrued vacation                                                                         |  |                  | 1,285   |   |              |   | 1,340   |  
|Accrued insurance                                                                        |  |                  | 2,248   |   |              |   | 2,661   |  
|Income taxes payable                                                                     |  |                  |        |   |              |   | 862     |  
|Accrued interest                                                                         |  |                  | 409     |   |              |   | 598     |  
|Accrued advertising                                                                      |  |                  | 279     |   |              |   | 2,178   |  
|Other accrued expenses and current liabilities                                           |  |                  | 4,242   |   |              |   | 4,049   |  
|                                                                                         |  |                  |         |   |              |   |         |  
|Total current liabilities                                                                |  |                  | 29,100  |   |              |   | 28,883  |  
|                                                                                         |  |                  |         |   |              |   |         |  
|NONCURRENT LIABILITIES:                                                                  |  |                  |         |   |              |   |         |  
|Senior secured notes                                                                     |  |                  | 110,000 |   |              |   | 110,000 |  
|Notes Payable to SunTrust Bankless current portion                                      |  |                  | 7,333   |   |              |   | 5,500   |  
|Obligations under capital leasesless current portion                                    |  |                  | 7,922   |   |              |   | 8,212   |  
|Other notes payableless current portion                                                 |  |                  | 1,824   |   |              |   | 1,634   |  
|Deferred income taxes                                                                    |  |                  | 2,804   |   |              |   | 2,804   |  
|Other noncurrent liabilities                                                             |  |                  | 8,496   |   |              |   | 8,093   |  
|                                                                                         |  |                  |         |   |              |   |         |  
|Total noncurrent liabilities                                                             |  |                  | 138,379 |   |              |   | 136,243 |  
|                                                                                         |  |                  |         |   |              |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                            |  |                  |         |   |              |   |         |  
|STOCKHOLDERS DEFICIENCY:                                                                |  |                  |         |   |              |   |         |  
|Common stock, $.01 par value20,000 shares authorized, 100 shares issued and outstanding |  |                  |         |   |              |   |         |  
|Additional paid-in-capital                                                               |  |                  |        |   |              |   |        |  
|Accumulated other comprehensive income                                                   |  |                  |        |   |              |   |        |  
|Accumulated Deficit                                                                      |  |                  | (2,616  | ) |              |   | (1,093  | )
|                                                                                         |  |                  |         |   |              |   |         |  
|Total stockholders equity deficiency                                                    |  |                  | (2,616  | ) |              |   | (1,093  | )
|                                                                                         |  |                  |         |   |              |   |         |  
|TOTAL                                                                                    |  | $                | 164,863 |   |              | $ | 164,033 |  
|                                                                                         |  |                  |         |   |              |   |         |  



See accompanying notes
to condensed financial statements.



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EL POLLO LOCO, INC.

(A Wholly Owned Subsidiary of EPL, Intermediate, Inc.)



CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands)



|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | -- | ------ | ---- |  | - | ------ | - |  | - | -------
|                                                                                                                                                          |  | 13 Weeks EndedJune 30, |        |   | 26 Weeks EndedJune 30,
|                                                                                                                                                          |  | 2003                   |        |   | 2004                   |    |        | 2003 |  |   | 2004  
|OPERATING REVENUE:                                                                                                                                        |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|Restaurant revenue                                                                                                                                        |  | $                      | 47,000 |   |                        | $  | 52,150 |      |  | $ | 90,004 |   |  | $ | 102,604
|Franchise revenue                                                                                                                                         |  |                        | 3,290  |   |                        |    | 3,539  |      |  |   | 6,266  |   |  |   | 6,926  
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|Total operating revenue                                                                                                                                   |  |                        | 50,290 |   |                        |    | 55,689 |      |  |   | 96,270 |   |  |   | 109,530
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|OPERATING EXPENSES:                                                                                                                                       |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|Product cost                                                                                                                                              |  |                        | 14,068 |   |                        |    | 16,407 |      |  |   | 27,224 |   |  |   | 31,961 
|Payroll and benefits                                                                                                                                      |  |                        | 12,921 |   |                        |    | 14,020 |      |  |   | 25,536 |   |  |   | 28,027 
|Depreciation and amortization                                                                                                                             |  |                        | 3,096  |   |                        |    | 3,255  |      |  |   | 6,091  |   |  |   | 6,431  
|Other operating expenses                                                                                                                                  |  |                        | 14,331 |   |                        |    | 18,742 |      |  |   | 28,486 |   |  |   | 33,410 
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|Total operating expenses                                                                                                                                  |  |                        | 44,416 |   |                        |    | 52,424 |      |  |   | 87,337 |   |  |   | 99,829 
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|OPERATING INCOME                                                                                                                                          |  |                        | 5,874  |   |                        |    | 3,265  |      |  |   | 8,933  |   |  |   | 9,701  
|INTEREST EXPENSE                                                                                                                                          |  |                        | 1,512  |   |                        |    | 3,537  |      |  |   | 3,089  |   |  |   | 7,119  
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES                                                                                                           |  |                        | 4,362  |   |                        |    | (272   | )    |  |   | 5,844  |   |  |   | 2,583  
|PROVISION (BENEFIT) FOR INCOME TAXES                                                                                                                      |  |                        | 1,788  |   |                        |    | (111   | )    |  |   | 2,396  |   |  |   | 1,059  
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|NET INCOME (LOSS)                                                                                                                                         |  |                        | 2,574  |   |                        |    | (161   | )    |  |   | 3,448  |   |  |   | 1,523  
|OTHER COMPREHENSIVE LOSS:                                                                                                                                 |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|Unrealized net loss on valuation of interest rate swapnet of income taxes of $23 and $17 for the 13 weeks and 26 weeks ended June 30,
2003, respectively |  |                        | (25    | ) |                        |    |       |      |  |   | (34    | ) |  |   |       
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        
|COMPREHENSIVE INCOME (LOSS)                                                                                                                               |  | $                      | 2,549  |   |                        | ($ | 161    | )    |  | $ | 3,414  |   |  | $ | 1,523  
|                                                                                                                                                          |  |                        |        |   |                        |    |        |      |  |   |        |   |  |   |        





See accompanying notes to condensed financial statements.



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EL POLLO LOCO, INC.

(A Wholly Owned Subsidiary of EPL, Intermediate, Inc.)



CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                                  |  |                         |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | -
|                                                                                  |  | 26 Weeks Ended June 30, |       
|                                                                                  |  | 2003                    |        |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                         |        |   |      |   |        |  
|Net income                                                                        |  | $                       | 3,448  |   |      | $ | 1,523  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |        |   |      |   |        |  
|Depreciation and amortization of property and intangible assets                   |  |                         | 6,091  |   |      |   | 6,431  |  
|Loss on disposal of assets                                                        |  |                         | 20     |   |      |   | 159    |  
|Amortization of deferred financing costs                                          |  |                         | 239    |   |      |   | 589    |  
|Changes in operating assets and liabilities:                                      |  |                         |        |   |      |   |        |  
|Notes and accounts receivablenet                                                 |  |                         | (242   | ) |      |   | (147   | )
|Inventories                                                                       |  |                         | (34    | ) |      |   | 140    |  
|Prepaid expenses and other current assets                                         |  |                         | (626   | ) |      |   | (402   | )
|Income taxes receivable/payable                                                   |  |                         | 1,162  |   |      |   | 862    |  
|Other assets                                                                      |  |                         | (131   | ) |      |   | 11     |  
|Accounts payable                                                                  |  |                         | 2,783  |   |      |   | 486    |  
|Accrued salaries and vacation                                                     |  |                         | 465    |   |      |   | (2,224 | )
|Accrued insurance                                                                 |  |                         | 1,053  |   |      |   | 413    |  
|Accrued interest                                                                  |  |                         | (288   | ) |      |   | 189    |  
|Accrued advertising                                                               |  |                         | 101    |   |      |   | 1,899  |  
|Other accrued expenses and current liabilities                                    |  |                         | 218    |   |      |   | (594   | )
|                                                                                  |  |                         |        |   |      |   |        |  
|Net cash provided by operating activities                                         |  |                         | 14,259 |   |      |   | 9,335  |  
|                                                                                  |  |                         |        |   |      |   |        |  
|CASH FLOW FROM INVESTING ACTIVITIES:                                              |  |                         |        |   |      |   |        |  
|Purchase of property                                                              |  |                         | (6,396 | ) |      |   | (8,717 | )
|                                                                                  |  |                         |        |   |      |   |        |  
|Net cash used in investing activities                                             |  |                         | (6,396 | ) |      |   | (8,717 | )
|                                                                                  |  |                         |        |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                         |        |   |      |   |        |  
|Payment of obligations under capital leases                                       |  |                         | (516   | ) |      |   | (599   | )
|Payments on notes payable                                                         |  |                         | (3,466 | ) |      |   | (2,224 | )
|Deferred financing costs                                                          |  |                         |       |   |      |   | (1,431 | )
|                                                                                  |  |                         |        |   |      |   |        |  
|Net cash used in financing activities                                             |  |                         | (3,982 | ) |      |   | (4,254 | )
|                                                                                  |  |                         |        |   |      |   |        |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  |  |                         | 3,881  |   |      |   | (3,636 | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    |  |                         | 2,895  |   |      |   | 5,353  |  
|                                                                                  |  |                         |        |   |      |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |  | $                       | 6,776  |   |      | $ | 1,717  |  
|                                                                                  |  |                         |        |   |      |   |        |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for: |  |                         |        |   |      |   |        |  
|Interest                                                                          |  | $                       | 2,007  |   |      | $ | 5,389  |  
|                                                                                  |  |                         |        |   |      |   |        |  
|Income taxes                                                                      |  | $                       | 1,236  |   |      | $ | 197    |  
|                                                                                  |  |                         |        |   |      |   |        |  





See accompanying notes to condensed financial statements.



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EL POLLO LOCO, INC.

(A Wholly Owned Subsidiary of EPL Intermediate, Inc.)



NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)



1.    Basis of Presentation



The accompanying condensed financial statements are unaudited. El Pollo Loco, Inc. (the Company) prepared these condensed financial statements in accordance with the Securities and Exchange
Commissions instructions for Quarterly Reports on Form 10-Q. In compliance with those instructions, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted.



The accompanying financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair presentation of its financial position and results
of operations for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year.



The accompanying condensed financial statements should be read in conjunction
with the Companys audited financial statements and related notes thereto included in the Companys Amendment No. 3 to Registration Statement on Form S-4 (File No. 333-115486) as filed with the Securities and Exchange Commission on August
11, 2004.



The Company uses a 52-, 53-week fiscal year ending
on the last Wednesday of the calendar year. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14
weeks of operations. Fiscal year 2003, which ended December 31, 2003, was a 53-week fiscal year. Fiscal year 2004, which will end December 29, is a 52-week fiscal year. For simplicity of presentation, the Company has described the 13 week and 26
week periods ended June 25, 2003 as June 30, 2003. The Wednesday nearest to June 30, 2004 coincided with June 30, 2004.



The Company is a wholly-owned subsidiary of EPL Intermediate, Inc. (EPLI), which is a wholly-owned subsidiary of EPL Holdings, Inc.
(Holdings).



2.    Sale and Acquisitions of
Restaurants



In April 2004, the Company acquired the
assets of two previously franchised restaurants (Cathedral City restaurants). The purchase price of $2.4 million consisted of cash and was accounted for using the purchase method of accounting in accordance with Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations. The Companys preliminary allocation of the purchase price to the fair value of the acquired assets is as follows: property, $1.3 million, and goodwill and other intangibles,
$1.1 million. Results of operations of the Cathedral City restaurants are included in the Companys financial statements beginning April 2004.



3.    Stock-Based Compensation



The Company uses the intrinsic value method to account for employee stock options in accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees. Under APB Opinion No. 25, the Company does not recognize compensation expense related to employee stock options if the exercise price of the options is equal to or greater than the market price of the underlying stock on the date of
grant.



SFAS No. 123, Accounting for Stock-Based
Compensation, encourages, but does not require, the recognition of compensation expense for employee stock-based compensation arrangements using the minimum value



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method of accounting. The Company has elected the disclosure only alternative permitted by SFAS No. 123 and has disclosed pro forma net income
amounts using the minimum value method.



Had compensation
expense for the stock options in Holdings issued to and held by the Companys employees and one member of its board of directors been recognized based on the minimum value on the grant date under the methodology prescribed by SFAS No. 123, the
Companys net income for the periods ended June 30, 2003 and 2004 would have been impacted as shown in the following table (in thousands):



|                                                                                                                                           |  |                         |       |      |                         |      |      |  |      |       |  |   |      
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ----- | ---- | ----------------------- | ---- | ---- |  | ---- | ----- |  | - | -----
|                                                                                                                                           |  | 13 Weeks Ended,June 30, |       |      | 26 Weeks Ended,June 30,
|                                                                                                                                           |  | 2003                    |       | 2004 |                         |      | 2003 |  | 2004
|Net income (loss), as reported                                                                                                             |  | $                       | 2,574 |      | $                       | (161 | )    |  | $    | 3,448 |  | $ | 1,523
|Deduct:                                                                                                                                    |  |                         |       |      |                         |      |      |  |      |       |  |   |      
|Total stock based employee compensation expense determined under the minimum value based method for all awards, net of related tax
effects |  |                         | 32    |      |                         | 21   |      |  |      | 64    |  |   | 41   
|                                                                                                                                           |  |                         |       |      |                         |      |      |  |      |       |  |   |      
|Pro forma net income (loss)                                                                                                                |  | $                       | 2,542 |      | $                       | (182 | )    |  | $    | 3,384 |  | $ | 1,482
|                                                                                                                                           |  |                         |       |      |                         |      |      |  |      |       |  |   |      



The minimum value of
each option grant is estimated on the grant date using the following assumptions for the 26 weeks ended June 30, 2003 and 2004: risk-free interest rate of 2.84% and 4.35%, respectively; expected volatility of 0% for each period; an expected option
life of 7.7 and 7.3 years, respectively, for each period; and no expected dividends for each period.



4.    Senior Secured Notes Payable



On December 19, 2003, the Company issued $110.0 million aggregate principal amount of senior secured notes due 2009 (Senior Secured Notes) in a private offering. Interest accrues at 9.25% per annum and is
payable semi-annually in June and December. Principal is due December 18, 2009. The Company commenced an offer on August 12, 2004 to exchange the Senior Secured Notes for registered, publicly tradable notes that have substantially identical terms as
the Senior Secured Notes. The Senior Secured Notes are secured by a second-priority lien on substantially all of the Companys and EPLIs assets and a pledge from EPLI of all its outstanding stock of the Company. The Company may, at its
option, redeem some or all of the Senior Secured Notes prior to their maturity.



The Company incurred approximately $5.7 million of direct costs in connection with this offering. These costs have been capitalized and are included in other intangible assets as deferred financing costs in the
accompanying condensed balance sheets. Concurrent with the closing of the Senior Secured Notes, the Company amended its previously existing bank credit facility as described in Note 5.



The Company used $39.5 million of the proceeds from the Senior Secured Notes offering to reduce its previously existing bank
notes payable and used $70.0 million of the proceeds to pay a dividend to EPLI. EPLI applied the proceeds from the dividend to repurchase all of the outstanding shares of its preferred stock in an aggregate amount of $20.1 million and to make a
distribution to Holdings in the amount of $49.9 million, which Holdings subsequently distributed to its shareholders. In connection with that distribution, Holdings reduced the exercise price of outstanding common stock options in Holdings
previously issued to Company management and one member of the Companys Board of Directors (the Option Holders). In addition, the Company accrued in December 2003 and paid the Option Holders in January 2004 $1.9 million in bonuses.
The Company will make additional cash bonus payments to the Option Holders related to the revaluation of the stock options at various times through 2009 subject to their continued employment and other conditions; these payments are estimated to
aggregate approximately $1.1 million. The combined effect of the reduction in the exercise price of the options and the cash bonus payments is to restore the approximate economic position of the Option Holders to that existing immediately before the
dividend to the shareholders of Holdings.



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5.    SunTrust Bank Credit Facility



In connection with the Senior Secured Notes offering discussed in Note 4,
the Companys Credit Facility with SunTrust Bank was amended on December 19, 2003. The amended Credit Facility consists of a $15.0 million revolving loan (the Revolver) and an $11.0 million term loan (the Term Loan and
together with the Revolver, the Amended Credit Facility). The Revolver has a $10.0 million sub-limit for letters of credit and a $5.0 million sub-facility. The Revolver and Term Loan mature on December 31, 2006. Availability of credit
under the Revolver is governed by a borrowing base, determined as a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA), as defined in the agreement. The Amended Credit Facility is secured by a
first-priority pledge by Holdings of all of the outstanding stock of EPLI, a first priority pledge by EPLI of all of the Companys outstanding stock and a first priority security interest in substantially all the Companys tangible and
intangible assets. In addition, the Amended Credit Facility is guaranteed by EPLI and Holdings.



At December 31, 2003 and June 30, 2004, the Company had $11.0 million and $9.2 million, respectively, outstanding under the Term Loan. At December 31,
2003 and June 30, 2004, the Company did not have any borrowings outstanding under the Revolver, but did have $4.6 million and $5.7 million in outstanding letters of credit at December 31, 2003 and June 30, 2004, respectively. As of December 31, 2003
and June 30, 2004, the Company had $10.4 million and $9.3 million available for borrowing under the revolver, respectively.



6.    EPL Intermediate, Inc. Senior Discount Notes



In March of 2004, EPLI sold $70.0 million in aggregate principal amount at maturity of 121⁄2% Senior Discount Notes due 2010 (the Intermediate
Notes). The Intermediate Notes are unsecured. EPLI realized gross proceeds of $39.0 million from the sale of the Intermediate Notes. After offering expenses of approximately $2.0 million, the net proceeds of approximately $37.0 million
were used to make a cash distribution to Holdings, which applied the proceeds to pay a cash dividend to its stockholders. In connection with this transaction, the Company incurred approximately $1.3 million in expenses in April 2004 related to the
revaluation of options it previously issued to Company management and one member of its Board of Directors to purchase shares of common stock of Holdings. The Company will make additional cash bonus payments to the Option Holders related to the
revaluation of the stock options at various times through 2009 subject to their continued employment and other conditions; these payments are estimated to aggregate approximately $1.0 million. The combined effect of the reduction in the exercise
price of the options and the cash bonus payments is to restore the approximate economic position of the Option Holders to that existing immediately before the dividend to the shareholders of Holdings.



Although the Company is not obligated to pay any of EPLIs obligations
related to the Intermediate Notes, EPLI is a holding company whose only material asset is the Companys outstanding common stock. Therefore, the principal source of the cash required to pay the obligations of EPLI is the cash that the Company
generates from its operations. No cash interest will accrue on the Intermediate Notes prior to March 15, 2009. Instead, the principal value of the Intermediate Notes will increase (representing accretion of original issue discount) from the date of
original issuance until but not including March 15, 2009 at a rate of 121⁄2% per annum compounded annually, so that the accreted value of the Intermediate Notes on March 15, 2009 will be equal to the full principal amount at maturity. Beginning
on March 15, 2009, cash interest will accrue on the Intermediate Notes at an annual rate of 121⁄2% per annum payable in arrears on March 15, 2010. Principal is also due March 15, 2010.



7.    Commitments and Contingencies



There are various claims and pending legal actions against or indirectly involving the Company, including claims asserted by
employees and other matters. It is the opinion of management, after considering a number of factors, including but not limited to the current status of litigation (including any settlement discussions), the views of retained counsel, the nature of
the litigation, the prior experience of the Company and the amounts that the Company has accrued for known contingencies, that the ultimate disposition of these matters will not materially affect the financial position or results of operations of
the Company.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



You should read the following discussion together with our condensed unaudited financial statements and related notes
thereto included elsewhere in this filing. This report contains certain forward-looking statements within the meaning of federal securities laws. See Forward-looking Statements above.



We use a 52-, 53-week fiscal year ending on the last Wednesday of the
calendar year. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations.
Approximately every six or seven years a 53-week fiscal year occurs. Fiscal year 2003, which ended December 31, 2003, was a 53-week fiscal year. Because fiscal year 2003 had 53 weeks as compared to a normal 52 weeks, we have included in this report
same-store sales comparisons for periods in 2003 compared to 2004 on a calendar month basis. Therefore, the second quarter fiscal year 2003 and 2004 same store sales comparisons compare weeks 15 through 27 of fiscal 2003 with weeks 14 through 26 of
fiscal 2004 because fiscal 2003 had 53 weeks as compared to a normal 52 weeks. Similarly, the first six months 2003 and 2004 same store sales comparison compare weeks 2 through 27 of fiscal 2003 with weeks 1 through 26 of fiscal 2004. Unless
otherwise indicated, all other comparisons under this heading between the second quarters and first six months of fiscal years 2003 and 2004 refer to the 13-week and 26-week periods ended June 30, 2003 and 2004, respectively. References to our
restaurant system mean both company-operated and franchised restaurants. Unless otherwise indicated, references to our restaurants or results or statistics attributable to one or more restaurants without expressly identifying them
as company-operated, franchise or the entire restaurant system mean our company-operated restaurants only.



Overview



El Pollo
Loco, Inc. (the Company, we, us and our) owns, operates and franchises quick service restaurants (QSR) specializing in marinated flame-grilled chicken. As of June 30, 2004, our restaurant
system had 317 restaurants, consisting of 139 company-operated and 178 franchised locations, located principally in California, with additional restaurants in Arizona, Nevada and Texas. In the second quarter of 2004, we opened one new
company-operated and two new franchise restaurants, we acquired two franchise restaurants, we closed one company store and a franchisee temporarily closed one store. Our typical restaurant is a freestanding building ranging from approximately 2,200
to 2,600 square feet with seating for approximately 60 customers and allowing drive-thru service.



Our total revenue is derived from two primary sources, company-operated restaurant revenue and franchise revenue, the latter of which is comprised
principally of franchise royalties, franchise fees and sublease rental income. For the 26 weeks ended June 30, 2004, same-store sales for restaurants systemwide increased 10.4% over the 26 weeks ended June 30, 2003. This six month result decreased
from the 13.1% same-store sales increase for restaurants systemwide in the first quarter of fiscal 2004. We expect that same-store sales will continue to be positive through the remainder of fiscal 2004, but that the rate of increase will continue
to moderate as we start comparing same-store sales to relatively strong comparable quarters from the previous year that were impacted by similar factors, including price increases.



The increase in company-operated restaurant revenue since 2001 is due to growth in new company-operated restaurants and to
increases in same-store sales, which includes price increases over this period. We expect to open four to eight company-operated restaurants per year over the next few years, which is consistent with our company-operated restaurant growth since
2001. Many factors can influence sales at all or specific restaurants, including increased competition, strength of marketing promotions, the restaurant managers operational execution and changes in local market conditions and demographics.



Franchise revenue consists of royalties, initial franchise
fees and franchise rental income. Royalties average 4% of the franchisees net sales. We believe that new franchise restaurant growth will increase as we sign development agreements with experienced franchisees in new and existing markets. We
currently have the



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approvals necessary to market to both new and existing franchisees in all states except Virginia. In fiscal year 2003, we entered into area development
agreements that, beginning in the fourth quarter of 2004 but primarily in fiscal years 2005, 2006 and 2007, will result in area development fees being recognized when the related restaurants open. We sublease facilities to certain franchisees and
the sublease rent is included in our franchise revenue. This revenue exceeds rent payments made under the leases that are included in franchise expense. Since we do not expect to lease or sublease new properties to our franchisees as we expand our
franchise restaurants, we expect the portion of franchise revenue attributable to franchise rental income to decrease over time.



Product cost includes food and paper costs. This expense is our largest single expense, is subject to increase or decrease based on commodity cost
changes, and depends in part on the success of controls we have in place to manage product cost in the restaurants. In February 2004, our contracts with our chicken suppliers expired. We entered into new one-year contracts that expire in February
2005 with our current suppliers that increased the price that we pay for chicken. We estimate that the higher contract prices will increase our product cost by over $1.5 million for fiscal year 2004. In anticipation of increased chicken prices, we
implemented menu price increases averaging 1.0% in January 2004. In addition, based on current market conditions, we believe that the cost of chicken could increase again when these one-year contracts expire.



Payroll and benefits make up the next largest single expense. Payroll and
benefits have been and remain subject to inflation, including salaries due to minimum wage increases and expenses for health insurance and workers compensation insurance. Workers compensation insurance costs are subject to a number of
factors, and although the state of California recently passed legislation designed to reduce workers compensation insurance expense to employers, we cannot predict whether such legislation will actually reduce our workers compensation
insurance expense. We have continued to see a reduction in the number of workers compensation claims due to employee safety initiatives that we began implementing in fiscal year 2003.



Restaurant other operating expense includes occupancy, advertising and other
costs such as utilities, repair and maintenance, janitorial and cleaning and operating supplies.



Franchise expense consists primarily of rent expense that we pay to landlords associated with leases under restaurants we are subleasing to franchisees.
Franchise expense usually fluctuates primarily as subleases expire and to some degree based on rents that are tied to a percentage of sales calculation. Since we do not expect to lease or sublease new properties to our franchisees as we expand our
franchise restaurants, we expect franchise expense as a percentage of franchise revenue to decrease over time. Expansion of our franchise operations does not require us to incur material additional capital expenditures.



In December of 2003, we offered and sold $110.0 million in aggregate
principal amount of 91⁄4% Senior Secured Notes due 2009 (the Senior Secured Notes). We used the gross proceeds from the sale of such notes, along with cash on hand, to reduce our outstanding bank debt by $39.5 million, to make a cash
distribution to our parent, EPL Intermediate, Inc., in the amount of $70.0 million and to pay transaction-related fees and expenses of $5.7 million. EPL Intermediate, Inc. applied the proceeds received from us to repurchase all of the outstanding
shares of its preferred stock in an aggregate amount of $20.1 million and to make a distribution to its parent, EPL Holdings, Inc., in the amount of $49.9 million. EPL Holdings, Inc. applied the proceeds received from EPL Intermediate,
Inc. to make a dividend on its outstanding common stock. In connection with the sale of the Senior Secured Notes, we amended our senior credit agreement, which now provides for an $11.0 million term loan facility and a $15.0 million revolving
credit facility (which was undrawn as of June 30, 2004, except for $5.7 million in outstanding letters of credit).



In March of 2004, our parent, EPL Intermediate, Inc., offered and sold $70 million in aggregate principal amount at maturity of 121⁄2% Senior Discount
Notes due 2010 (the Intermediate Notes). The net proceeds of the offering, after deducting expenses, were approximately $37 million, which EPL Intermediate, Inc. used to make a cash dividend to EPL Holdings, Inc. EPL Holdings, Inc. used
the proceeds received from EPL Intermediate, Inc. to make a dividend on its outstanding common stock. Although we are not obligated to pay any



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of EPL Intermediate, Inc.s obligations, EPL Intermediate, Inc. is a holding company whose only material asset is our outstanding common stock.
Therefore, the principal source of the cash required to pay the obligations of EPL Intermediate, Inc. is the cash that we generate from our operations.



General and administrative expense has increased and is expected to continue to increase as a result of the sale of the Senior Secured Notes and the
Intermediate Notes and the requirement to exchange both notes for registered notes under the Securities Act of 1933, as amended. We have incurred and will incur additional expenses due to rating agency fees, higher directors and officers insurance,
compliance with laws relating to corporate governance and public disclosure, and to the revaluation of common stock options of EPL Holdings, Inc. as a result of these two transactions. In addition, in the first half of fiscal year 2004, we began to
incur additional costs associated with developing disclosure controls and procedures and implementing the level of internal controls required for a company with registered securities. We expect these costs to increase in future periods. General and
administrative expense has increased as a result of the new bonus arrangements that we implemented in connection with the sale of the Senior Secured Notes and the Intermediate Notes.



Results of Operations



Our operating results for the 13 weeks ended June 30, 2003 and 2004 are expressed as a percentage of restaurant revenue below:



|                                     |  |                         |   |  |       |  
|------------------------------------ |  | ----------------------- | - |  | ----- | -
|                                     |  | 13 Weeks Ended June 30, |  
|                                     |  | 2003                    |   |  | 2004  |  
|Income Statement Data:               |  |                         |   |  |       |  
|Restaurant revenue                   |  | 100.0                   | % |  | 100.0 | %
|Product cost                         |  | 29.9                    |   |  | 31.5  |  
|Payroll and benefits                 |  | 27.5                    |   |  | 26.9  |  
|Depreciation and amortization        |  | 6.6                     |   |  | 6.2   |  
|Other operating expenses             |  | 30.5                    |   |  | 35.9  |  
|Operating income                     |  | 12.5                    |   |  | 6.3   |  
|Interest expense                     |  | 3.2                     |   |  | 6.8   |  
|Income before income taxes           |  | 9.3                     |   |  | (0.5  | )
|Net income (loss)                    |  | 5.5                     |   |  | (0.3  | )
|Supplementary Income Statement Data: |  |                         |   |  |       |  
|Restaurant other operating expense   |  | 20.1                    |   |  | 21.0  |  
|Franchise expense                    |  | 1.7                     |   |  | 2.0   |  
|General and administrative expense   |  | 8.7                     |   |  | 12.9  |  
|                                     |  |                         |   |  |       |  
|Total other operating expenses       |  | 30.5                    |   |  | 35.9  |  
|                                     |  |                         |   |  |       |  



13 Weeks Ended
June 30, 2004 Compared to 13 Weeks Ended June 30, 2003



Restaurant revenue increased $5.2 million, or 11.0%, to $52.2 million for the 13 weeks ended June 30, 2004 from $47.0 million for the 13 weeks ended June 30, 2003. This increase was primarily due to an additional $3.3 million in restaurant
revenue resulting from a 7.1% increase in company-operated same-store sales for the 2004 period from the 2003 period. The same store sales increase was primarily due to a stronger economy, new product introductions and menu price increases averaging
1% in each of May 2003 and January 2004. Restaurants enter the comparable restaurant base for same-store sales the first full week after that restaurants one-year anniversary. The increase in restaurant revenue was also due in part to $0.9
million in sales generated from two restaurants that opened in 2004 and two franchise restaurants that were acquired by the Company in 2004, combined with $1.4 million from four restaurants opened and one restaurant acquired from a franchisee in
fiscal 2003. Restaurant revenue was reduced $0.1 million by the closure of a restaurant in 2004 and $0.7 million by the sale to franchisees of two restaurants and the closure of one restaurant in fiscal 2003.



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Franchise revenue increased $0.2 million, or 7.6%, to $3.5 million for the 13 weeks ended June 30, 2004
from $3.3 million for the 13 weeks ended June 30, 2003. This increase is primarily due to an increase in royalties resulting from an 8.8% increase in franchise same-store sales.



Product cost increased $2.3 million, or 16.6%, to $16.4 million for the 13 weeks ended June 30, 2004 from $14.1 million for
the 13 weeks ended June 30, 2003. These costs as a percentage of restaurant revenue were 31.5% for the 2004 period compared to 29.9% for the 2003 period. This 1.6% increase resulted primarily from chicken prices increasing 1.1% as a percentage of
restaurant revenue as our new chicken contract took effect in March.



Payroll and benefit expenses increased $1.1 million, or 8.5%, to $14.0 million for the 13 weeks ended June 30, 2004 from $12.9 million for the 13 weeks ended June 30, 2003. The increase in these costs is due to $0.4 million resulting
from net five additional restaurants and $0.7 million resulting from additional hourly labor to support increased same-store sales. However, as a percentage of restaurant revenue, these costs decreased 0.6% to, 26.9% for the 2004 period from 27.5%
for the 2003 period. This decrease was due primarily to the positive impact same-store sales in the 2004 period had on labor costs as we added a lower percentage of labor to support incremental sales at existing restaurants.



Depreciation and amortization increased $0.2 million, or 5.1%, to $3.3
million for the 13 weeks ended June 30, 2004 compared to $3.1 million for the 13 weeks ended June 30, 2003. These costs as a percentage of restaurant revenue decreased 0.4% to 6.2% for the 2004 period compared to 6.6% for the 2003 period. This
percentage decrease is primarily due to the increased same-store sales as this expense is relatively fixed and does not fluctuate with changes in sales volumes.



Restaurant other operating expense, which includes utilities, repair and maintenance, advertising, property taxes, occupancy and other operating
expenses, increased $1.5 million, or 16.3%, to $10.9 million for the 13 weeks ended June 30, 2004 from $9.4 million for the 13 weeks ended June 30, 2003. These costs as a percentage of restaurant revenue increased 0.9% to 21.0% for the 2004 period
from 20.1% for the 2003 period. The increase in operating costs is due primarily to increased advertising expenses of $1.1 million, of which $0.8 million was spending above the planned annual rate of 4% of restaurant revenue. Our advertising
spending in the first quarter of 2004 was under the planned annual rate of 4% and each quarter individually may be above or below this planned annual rate, depending on the timing of marketing promotion and the relative weights and price of media
spending. We still expect to reach our planned 4% rate for fiscal 2004. The increase in operating costs from the prior year also includes a $0.3 million increase of the variable portion of operating expenses due to the higher same store sales in the
2004 period and $0.2 million due to higher occupancy costs.



Franchise expense consists primarily of rent expense that we pay to landlords associated with leases under restaurants we are subleasing to franchisees. This expense usually fluctuates primarily as subleases expire and to some degree based
on rents that are tied to a percentage of sales calculation. Franchise expense increased $0.2 million, or 25.7%, to $1.0 million for the 13 weeks ended June 30, 2004 compared to $0.8 million for the 13 weeks ended June 30, 2003 due to expenses
incurred to participate in certain Chicago food festivals to support our franchisees expansion into this market.



General and administrative expense increased $2.7 million, or 65.2%, to $6.8 million for the 13 weeks ended June 30, 2004 from $4.1 million for the 13
weeks ended June 30, 2003. The largest component of the increase is due to $1.6 million in expenses for bonuses paid and accrued for option holders related to the revaluation of stock options. In addition, legal fees increased $0.5 million for the
2004 period primarily related to a settlement of an outstanding claim involving the real estate lease for a former restaurant and increased legal fees related to this claim and the Companys dispute relating to rights to trademarks in Mexico.
General and administrative expense as a percentage of revenue was 12.9% and 8.7% for the thirteen weeks ended June 30, 2004 and 2003, respectively.



Interest expense, net of interest income, increased $2.0 million, or 134.0%, to $3.5 million for the 13 weeks ended June 30, 2004 from $1.5 million for
the 13 weeks ended June 30, 2003. This increase is due to $2.5 million



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in additional interest expense related to our issuance of the Senior Secured Notes in December 2003, partially offset by $0.6 million in reduced interest
expense due to lower outstanding balances on our term loan under our senior credit facility. Our average debt balances for the 2004 period increased to $131.6 million compared to $68.2 million for the 2003 period and our average interest rate
increased to 8.78% for the 2004 period compared to 3.49% for the 2003 period.



Our provision for income taxes consisted of income tax benefit of $(0.1) million and income tax expense of $1.8 million for the 13 weeks ended June 30, 2004 and 2003, respectively, or an effective tax rate of 41.0%
for both periods.



Net income (loss) as a percentage of
restaurant revenue decreased to (0.3)% for the 13 weeks ended June 30, 2004 compared to 5.5% for the 13 weeks ended June 30, 2003 primarily due to higher interest expense, the bonus expense incurred related to the revaluation of options, increased
advertising expenditures and increased legal fees.



Our
operating results for the 26 weeks ended June 30, 2003 and 2004 are expressed as a percentage of restaurant revenue below:



|                                     |  |                        |   |  |       |  
|------------------------------------ |  | ---------------------- | - |  | ----- | -
|                                     |  | 26 WeeksEnded June 30, |  
|                                     |  | 2003                   |   |  | 2004  |  
|Income Statement Data:               |  |                        |   |  |       |  
|Restaurant revenue                   |  | 100.0                  | % |  | 100.0 | %
|Product cost                         |  | 30.2                   |   |  | 31.1  |  
|Payroll and benefits                 |  | 28.4                   |   |  | 27.3  |  
|Depreciation and amortization        |  | 6.8                    |   |  | 6.3   |  
|Other operating expenses             |  | 31.6                   |   |  | 32.6  |  
|Operating income                     |  | 9.9                    |   |  | 9.5   |  
|Interest expense                     |  | 3.4                    |   |  | 6.9   |  
|Income before income taxes           |  | 6.5                    |   |  | 2.5   |  
|Net income                           |  | 3.8                    |   |  | 1.5   |  
|Supplementary Income Statement Data: |  |                        |   |  |       |  
|Restaurant other operating expense   |  | 20.6                   |   |  | 19.7  |  
|Franchise expense                    |  | 1.8                    |   |  | 1.8   |  
|General and administrative expense   |  | 9.2                    |   |  | 11.1  |  
|                                     |  |                        |   |  |       |  
|Total other operating expenses       |  | 31.6                   |   |  | 32.6  |  
|                                     |  |                        |   |  |       |  



26 Weeks Ended
June 30, 2004 Compared to 26 Weeks Ended June 30, 2003



Restaurant revenue increased $12.6 million, or 14.0%, to $102.6 million for the 26 weeks ended June 30, 2004 from $90.0 million for the 26 weeks ended June 30, 2003. This increase was primarily due to an additional $8.5 million in
restaurant revenue resulting from a 9.5% increase in company-operated same-store sales for the 2004 period from the 2003 period, which was primarily due to a stronger economy, new product introductions and menu price increases averaging 1% in each
of May 2003 and January 2004. The increase in restaurant revenue was also due in part to $1.3 million in sales generated from two restaurants we opened in 2004 and two franchise restaurants that we acquired in 2004 combined with $3.2 million from
four restaurants we opened and one restaurant we acquired from a franchisee in fiscal 2003. Restaurant revenue was reduced $0.1 million due to our closing a restaurant in 2004 and $1.4 million by our sale to franchisees of two restaurants and our
closing one restaurant in fiscal 2003.



Franchise revenue
increased $0.7 million, or 10.5%, to $6.9 million for the 26 weeks ended June 30, 2004 from $6.3 million for the 26 weeks ended June 30, 2003. This increase is primarily due to an increase in royalties resulting from an 11.1% increase in franchise
same-store sales.



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Product cost increased $4.7 million, or 17.4%, to $31.9 million for the 26 weeks ended June 30, 2004 from
$27.2 million for the 26 weeks ended June 30, 2003. These costs as a percentage of restaurant revenue increased 0.9% to 31.1% for the 2004 period from 30.2% for the 2003 period. This increase is primarily due to chicken prices increasing 0.7% as a
percentage of restaurant revenue as our new contract took effect in March.



Payroll and benefit expenses increased $2.5 million, or 9.8%, to $28.0 million for the 26 weeks ended June 30, 2004 from $25.5 million for the 26 weeks ended June 30, 2003. The increase in these costs is due to
$1.6 million resulting from additional hourly labor to support increased same-store sales and $0.9 million resulting from net five additional restaurants. However, as a percentage of restaurant revenue, these costs decreased 1.1% to, 27.3% for the
2004 period from 28.4% for the 2003 period. This decrease was due primarily to the positive impact same-store sales in the 2004 period had on labor costs as we added a lower percentage of labor to support incremental sales at existing restaurants.



Depreciation and amortization increased $0.3 million, or 5.6%,
to $6.4 million for the 26 weeks ended June 30, 2004 compared to $6.1 million for the 26 weeks ended June 30, 2003. These costs as a percentage of restaurant revenue decreased 0.5% to 6.3% for the 2004 period compared to 6.8% for the 2003 period.
This percentage decrease is primarily due to the increased same-store sales as this expense is relatively fixed and does not fluctuate with changes in sales volumes.



Restaurant other operating expense, which includes utilities, repair and maintenance, advertising, property taxes, occupancy
and other operating expenses, increased $1.7 million, or 8.9%, to $20.2 million for the 26 weeks ended June 30, 2004 from $18.6 million for the 26 weeks ended June 30, 2003. The increase in these costs is due to $0.9 million resulting from the
net five additional restaurants, $0.7 million related to expenses that are proportionally tied to increased same store sales due to the variable nature of the expenses and increased advertising expenses of $0.3 million in the 2004 period, offset by
lower electricity costs in the 2004 period of $0.2 million. These costs as a percentage of restaurant revenue decreased 0.9% to 19.7% for the 2004 period from 20.6% for the 2003 period, which can be attributed to the higher same store sales leverage
on the relatively fixed portion of these costs.



Franchise
expense consists primarily of rent expense that we pay to landlords associated with leases under restaurants we are subleasing to franchisees. This expense usually fluctuates primarily as subleases expire and to some degree based on rents that are
tied to a percentage of sales calculation. Franchise expense increased $0.2 million, or 9.8%, to $1.8 million for the 26 weeks ended June 30, 2004 compared to $1.6 million for the 26 weeks June 30, 2003 due to the $0.2 million of expenses
incurred to participate in certain Chicago food festivals to support our franchisees expansion into this market.



General and administrative expense increased $3.1 million, or 37.6%, to $11.4 million for the 26 weeks ended June 30, 2004 from $8.3 million for the 26
weeks ended June 30, 2003. This increase was due to $1.8 million in expenses for bonuses paid or accrued for option holders related to the revaluation of stock options and increased legal fees of $0.5 million. Salary and bonus increases and the
filling of vacant supervisor and support staff positions also resulted in $0.1 million and $0.3 million, respectively, of the increase.



Interest expense, net of interest income, increased $4.0 million, or 130.4%, to $7.1 million for the 26 weeks ended June 30, 2004 from $3.1 million for
the 26 weeks ended June 30, 2003. This increase is due to $5.1 million in additional interest expense related to our issuance of the Senior Secured Notes in December 2003, partially offset by $1.3 million in reduced interest expense due to lower
outstanding balances on our term loan under our senior credit facility. Our average debt balances for the 2004 period increased to $132.3 million compared to $69.2 million for the 2003 period and our average interest rate increased to 8.77% for the
2004 period compared to 3.48% for the 2003 period.



Our
provision for income taxes consisted of income tax expense of $1.1 million and $2.4 million for the 26 weeks ended June 30, 2004 and 2003, respectively, or an effective tax rate of 41.0% for both periods.



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Net income as a percentage of restaurant revenue decreased to 1.5% for the 26 weeks ended June 30, 2004
compared to 3.8% for the 26 weeks ended June 30, 2003 primarily due to higher interest expense, the bonus expense incurred related to the revaluation of options and increased legal expense.



Liquidity and Capital Resources



Our principal liquidity requirements are to service our debt and meet our
capital expenditure needs. Our indebtedness at June 30, 2004 was $131.3 million. Our ability to make payments on and to refinance our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash in the future,
which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe our cash flow from operations, available
cash and available borrowings under the $15.0 million revolving portion of our senior credit facility will be adequate to meet our future liquidity needs for the foreseeable future. Cash and cash equivalents decreased $3.6 million from $5.4 million
at December 31, 2003 to $1.7 million at June 30, 2004. During the first six months of fiscal 2004, we paid $1.4 million in deferred financing costs related to the December 2003 sale of the Senior Secured Notes. We also made cash bonus payments of
$1.9 million in January 2004 and $1.3 million in April 2004 related to the revaluation of stock options in connection with the debt transactions. We do not expect to pay significant additional deferred financing costs, and although we will make cash
bonus payments in future years related to the revaluation of stock options, the amounts paid will aggregate $2.1 million through 2009. In the first six months of fiscal 2004, we made $2.2 million in scheduled principal repayments on our term loan
and a cash payment of $5.0 million related to interest expense for the Senior Secured Notes, which will be paid semiannually through 2009. We cannot assure you that our business will generate sufficient cash flow from operations or that future
borrowings will be available to us under our senior credit facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. If we acquire restaurants from franchisees, our debt service requirements
could increase. In addition, we may fund restaurant openings through credit received by trade suppliers and landlord contributions. If our cash flow from operations is inadequate to meet our obligations under our indebtedness we may need to
refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.



Working Capital and Cash Flows



We presently have, in the past have had, and may have in the future,
negative working capital balances. The working capital deficit principally is the result of our investment to build new restaurants, remodel and replace or improve equipment in company-operated restaurants, and to acquire new restaurant information
systems. We do not have significant receivables or inventories and we receive trade credit based upon negotiated terms in purchasing food and supplies. Funds available from cash sales and franchise revenue not needed immediately to pay for food and
supplies or to finance receivables or inventories typically have been used for the capital expenditures referenced above and/or debt service payments under our existing indebtedness. As discussed above we spent cash on a number of items directly or
indirectly related to our and our parents debt financings.



Operating Activities.We had net cash provided by operating activities of $9.3 million for the 26 weeks ended June 30, 2004 compared with net cash provided by operating activities of $14.3 million for the 26 weeks ended June 30,
2003. The decrease in cash provided by operating activities of $5.0 million in the 2004 period compared to the 2003 period was primarily attributable to decreased net income in the 2004 period, decreased changes in accounts payable and accrued
salaries and vacation balances, offset partially by increased advertising accruals in the 2004 period. In January 2004, we made $1.9 million in cash bonus payments related to the revaluation of stock options to acquire shares of the common stock of
EPL Holdings, Inc. in connection with the sale of the Senior Secured Notes. An additional $1.3 million in cash was paid in April 2004 to make similar cash bonus payments in connection with the sale of the Intermediate Notes. We also made a cash
payment of $5.0 million related to interest expense for the bonds which will be paid semiannually through 2009.



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Investing Activities.We had net cash used in investing activities of $8.7 million for the 26
weeks ended June 30, 2004 compared with net cash used in investing activities of $6.4 million for the 26 weeks ended June 30, 2003. The increase in cash used in investing activities of $2.3 million was related to timing of expenditures for new
store construction and we also incurred capital expenditures of approximately $2.4 million in 2004 related to the acquisition of two franchise restaurants in the greater Los Angeles area. We expect to spend approximately $14.0 million in capital
expenditures in fiscal 2004, which includes $2.4 million in capital expenditures to complete the company-operated restaurant remodel program, $1.6 million to continue the rollout of new restaurant computer systems in our company-operated
restaurants, $1.4 million to install chicken marinating tumblers in all company-operated restaurants and approximately $6.0 million to acquire from franchisees and build new company-operated restaurants.



Financing Activities.We had net cash used in financing activities of
$4.3 million for the 26 weeks ended June 30, 2004 compared with net cash used in financing activities of $4.0 million for the 26 weeks ended June 30, 2003. The increase in cash used in financing activities in the 2004 period was attributable to $1.4
million in deferred financing costs related to the issuance of the Senior Secured Notes that were paid in 2004, offset partially by $1.2 million less payments on the term loan portion of our senior credit facility.



Debt and Other Obligations



Our senior credit facility provides for an $11.0 million term loan and $15.0
million in revolving availability, with a $10.0 million sub limit for letters of credit. In addition, we have $110.0 million outstanding in aggregate principal amount of the Senior Secured Notes.



At June 30, 2004, we had certain secured loan commitments, which were assumed
in connection with purchases of restaurants from franchisees, of approximately $2.2 million.



We have capital leases relating to the building portion of certain land and building leases. These assets are amortized over the life of the respective lease.



At June 30, 2004, we had outstanding letters of credit totaling $5.7 million,
which served as collateral for our various workers compensation insurance programs.



Franchisees pay a monthly advertising fee of 4% of gross sales for the Los Angeles designated market area or 5% of gross sales for other markets. Pursuant to our Uniform Franchise Offering Circular, we contribute,
where we have company-operated restaurants, to the advertising fund on the same basis as franchised restaurants. Under our franchise agreements, we are obligated to use all advertising fees collected from franchisees to purchase, develop and engage
in advertising, public relations and marketing activities to promote the El Pollo Loco brand.



In connection with the issuance of the Senior Secured Notes and the dividend paid by EPL Holdings, Inc. shortly thereafter, the exercise prices of outstanding options to purchase shares of the common stock of EPL
Holdings, Inc. were adjusted. In addition, we accrued in December 2003 and paid option holders in January 2004 $1.9 million in bonuses. We will make additional cash bonus payments to the option holders related to the revaluation of the stock options
at various times through 2009 subject to continued employment and other conditions, which we estimate will aggregate approximately $1.1 million. The combined effect of the adjustment to the exercise price and such cash bonus payments was to restore
the approximate economic position of such option holders to that existing immediately before the dividend that EPL Holdings, Inc. paid to its stockholders following the sale of the Senior Secured Notes.



In connection with the sale by EPL Intermediate, Inc. of the Intermediate
Notes in March 2004 and the dividend paid by EPL Holdings, Inc. shortly thereafter, the exercise prices of outstanding options to purchase shares of the common stock of EPL Holdings, Inc. were adjusted. In addition, we accrued and paid option
holders in April 2004 $1.3 million in bonuses. We will make additional cash bonus payments to the option



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holders related to the revaluation of the stock options at various times through 2009 subject to continued employment and other conditions, which we estimate
will aggregate approximately $1.0 million. The combined effect of the adjustment to the exercise price and such cash bonus payments will be to restore the approximate economic position of such option holders to that existing immediately before the
dividend that EPL Holdings, Inc. paid to its stockholders following the sale of the Intermediate Notes.



No cash interest will accrue on the Intermediate Notes prior to March 15, 2009. Instead, the principal value of the Intermediate Notes will increase
(representing accretion of original issue discount) from the date of original issuance until but not including March 15, 2009 at a rate of 121⁄2% per annum compounded annually, so that the accreted value of the Intermediate Notes on March 15,
2009 will be equal to the full principal amount at maturity. Beginning on March 15, 2009, cash interest will accrue on the Intermediate Notes at an annual rate of 121⁄2% per annum payable in arrears on March 15, 2010. Principal is also due March
15, 2010.



As of June 30, 2004, we were in compliance with all
of the covenants contained in our senior credit facility and in the indenture governing the Senior Secured Notes. As of such date we calculated all relevant ratios under our senior credit facility as follows:



| |  | our ratio of funded debt to Adjusted EBITDA (as such terms are defined in the senior credit agreement) was 3.45 to 1;
| | - | -------------------------------------------------------------------------------------------------------------------------



| |  | our ratio of senior funded debt to Adjusted EBITDA (as such terms are defined in the senior credit agreement) was 0.68 to 1;
| | - | --------------------------------------------------------------------------------------------------------------------------------



| |  | our interest coverage ratio (as such term is defined in the senior credit agreement) was 3.05 to 1; and
| | - | ---------------------------------------------------------------------------------------------------------



| |  | our fixed charge coverage ratio (as such term is defined in the senior credit agreement) was 1.28 to 1.
| | - | ---------------------------------------------------------------------------------------------------------



These four ratios were permitted to be no greater than 4.75 to 1, no greater
than 1.5 to 1, no less than 2.0 to 1 and no less than 1.1 to 1, respectively, as of such date. As of June 30, 2004, we calculated our fixed charge coverage ratio (as such term is defined in the indenture governing the Senior Secured
Notes), the only ratio under our indenture, at 2.85 to 1. Until December 15, 2005, the indenture permits us to incur indebtedness if our fixed charge coverage ratio for the most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such indebtedness was incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such
indebtedness had been incurred at the beginning of such four-quarter period.



In addition, as of June 30, 2004, EPL Intermediate, Inc. calculated its fixed charge coverage ratio under the indenture governing the Intermediate Notes at 2.87 to 1. Such indenture permits EPL Intermediate,
Inc.s restricted subsidiaries (as such term is defined in such indenture), including us, to incur indebtedness, if EPL Intermediate, Inc.s fixed charge coverage ratio for the most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date on which such indebtedness was incurred would have been at least 2.0 to 1, as determined on a pro forma basis (including a pro forma application of the net proceeds
therefrom) as if such indebtedness had occurred at the beginning of such four-quarter period.



Critical Accounting Policies and Estimates



The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to recoverability of fixed assets, intangible assets,
closed restaurants, workers compensation insurance and contingent liabilities. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Refer to the
Amendment No. 3 to our registration statement



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on Form S-4 (File No. 333-115486) filed August 11, 2004 for discussion of our critical accounting policies and estimates.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------



The inherent risk in market risk sensitive instruments and positions primarily relates to potential losses arising from adverse changes in interest rates.



We are subject to market risk from exposure to changes in
interest rates based on our financing activities. This exposure relates to borrowings under our senior credit facility that are payable at floating rates of interest.



We do not consider the change in fair value of our long-term fixed rate debt resulting from a hypothetical 10% fluctuation
in interest rates, as of June 30, 2004 to be material.



|Item 4. | Controls and Procedures
|------- | -----------------------



We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the
Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



As of June 30, 2004, the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective.



There have been no significant changes in our internal controls over financial reporting or in other factors that have materially affected that are reasonably likely to materially affect our internal controls over
financial reporting subsequent to the date we completed our evaluation.



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PART II



|Item 6. | Exhibits and Reports on Form 8-K.
|------- | ---------------------------------



|(a) | Exhibits.
|--- | ---------



|               |  |                                                                                                  
|-------------- |  | -------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Documents                                                                         
|31.1           |  | Chief Executive Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|31.2           |  | Chief Financial Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32.1           |  | Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002           

---

|(b) | Reports on Form 8-K
|--- | -------------------



None.



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|                           |  |  |  |                     |  |                          |  |                                          
|-------------------------- |  |  |  | ------------------- |  | ------------------------ |  | -----------------------------------------
|                           |  |  |  | EL POLLO LOCO, INC.
|                           |  |  | 
|Date:    November 15, 2004 |  |  |  | By:                 |  | /s/    Stephen E. Carley
|                           |  |  |  |                     |  |                          |  | Stephen E. Carley Chief Executive Officer
|                           |  |  |  |                    
|                           |  |  |  |                     |  | By:                      |  | /s/    Joseph Stein                      
|                           |  |  |  |                     |  |                          |  | Joseph Stein Chief Financial Officer     



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