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SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549

Form
10-Q

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

For the quarterly period
ended March 29, 2006

or

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

For the transition period from __________ to __________

Commission File No. 333-115644

EPL
Intermediate, Inc.(Exact
Name of Registrant as Specified in Its Charter)

|                                                                 |  |                                       
|---------------------------------------------------------------- |  | --------------------------------------
|Delaware                                                         |  | 13-4092105                            
|(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)                         |  | (Zip Code)                            

(949) 399-2000(Registrants
Telephone Number, Including Area Code)

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 o

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act.
(Check one):

Large Accelerated Filer  o                              Accelerated
Filer  o                             Non-Accelerated
Filer  x


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x

As of May 12, 2006, the
registrant had 100 shares of its common stock, $.01 par value, outstanding.

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TABLE OF CONTENTS

|     |                                                                                         |     
|---- | --------------------------------------------------------------------------------------- | ----
|Item |                                                                                         | Page
|     |                                                                                         |     
|     | PART I  FINANCIAL INFORMATION                                                          |     
|1.   | Financial Statements                                                                    | 3   
|2.   | Managements
  Discussion and Analysis of Financial Condition and Results of Operations | 16  
|3.   | Quantitative
  and Qualitative Disclosures About Market Risk                            | 24  
|4.   | Controls
  and Procedures                                                               | 24  
|     |                                                                                         |     
|     | PART II  OTHER INFORMATION                                                             |     
|6.   | Exhibits                                                                                | 25  
|     |                                                                                         |     

2

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PART I -
FINANCIAL INFORMATION

EPL INTERMEDIATE,
INC.
(A Wholly Owned Subsidiary of EPL Holdings, Inc.)

|                                                   
|---------------------------------------------------
|CONDENSED CONSOLIDATED BALANCE SHEETS
  (UNAUDITED)
|(Amounts in thousands)                             
|                                                   
|                                                   

|                                            |  |                     |         |                  |   |         | 
|------------------------------------------- |  | ------------------- | ------- | ---------------- | - | ------- | 
|                                            |  | DECEMBER 28,
  2005 |         | MARCH 31,
  2006 |  
|                                            |  |                     |         |                  |  
|ASSETS                                      |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|CURRENT ASSETS:                             |  |                     |         |                  |   |         | 
|Cash and cash equivalents                   |  | $                   | 3,552   |                  | $ | 6,352   | 
|Notes and accounts
  receivable--net        |  |                     | 2,998   |                  |   | 3,397   | 
|Inventories                                 |  |                     | 1,372   |                  |   | 1,294   | 
|Prepaid expenses and other
  current assets |  |                     | 3,189   |                  |   | 4,227   | 
|Income taxes receivable                     |  |                     | 3,825   |                  |   | 3,590   | 
|Deferred income taxes                       |  |                     | 1,520   |                  |   | 1,520   | 
|                                            |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|Total current assets                        |  |                     | 16,456  |                  |   | 20,380  | 
|                                            |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|PROPERTY OWNED--Net                         |  |                     | 69,121  |                  |   | 68,799  | 
|                                            |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|PROPERTY HELD UNDER CAPITAL LEASES--Net     |  |                     | 2,186   |                  |   | 1,955   | 
|                                            |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|GOODWILL                                    |  |                     | 272,204 |                  |   | 276,373 | 
|                                            |  |                     |         |                  |   |         | 
|DOMESTIC TRADEMARKS--Net                    |  |                     | 120,700 |                  |   | 120,700 | 
|                                            |  |                     |         |                  |   |         | 
|OTHER INTANGIBLE ASSETS--Net                |  |                     | 13,698  |                  |   | 13,260  | 
|                                            |  |                     |         |                  |   |         | 
|OTHER ASSETS                                |  |                     | 11,554  |                  |   | 11,235  | 
|                                            |  |                     |         |                  |   |         | 
|                                            |  |                     |         |                  |   |         | 
|TOTAL ASSETS                                |  | $                   | 505,919 |                  | $ | 512,702 | 
|                                            |  |                     |         |                  |   |         | 

|                                                          |            
|--------------------------------------------------------- | -----------
|See notes to condensed consolidated financial statements. | (continued)

3

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|                                                 
|-------------------------------------------------
|EPL INTERMEDIATE, INC.                           
|(A Wholly Owned Subsidiary of EPL Holdings, Inc.)
|                                                 
|CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|(Amounts in thousands, except share data)        
|                                                 

|                                                                                            |  |                     |         |                  |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------- | ------- | ---------------- | - | ------- | -
|                                                                                            |  | DECEMBER 28,
  2005 |         | MARCH 31,
  2006 |  
|                                                                                            |  |                     |         |                  |  
|LIABILITIES AND
  STOCKHOLDERS EQUITY                                                      |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|CURRENT LIABILITIES:                                                                        |  |                     |         |                  |   |         |  
|Revolving credit facility                                                                   |  | $                   | 2,775   |                  | $ |        |  
|Current portion of note payable                                                             |  |                     | 1,045   |                  |   | 1,045   |  
|Current portion of obligations under
  capital leases                                       |  |                     | 1,264   |                  |   | 1,264   |  
|Accounts payable                                                                            |  |                     | 10,215  |                  |   | 10,030  |  
|Accrued salaries                                                                            |  |                     | 4,184   |                  |   | 6,227   |  
|Accrued vacation                                                                            |  |                     | 1,728   |                  |   | 1,735   |  
|Accrued insurance                                                                           |  |                     | 3,539   |                  |   | 3,541   |  
|Accrued interest                                                                            |  |                     | 2,631   |                  |   | 6,125   |  
|Accrued advertising                                                                         |  |                     | 911     |                  |   | 978     |  
|Other accrued expenses and current
  liabilities                                            |  |                     | 3,683   |                  |   | 3,740   |  
|Amounts due to Predecessor stockholders                                                     |  |                     |        |                  |   | 3,825   |  
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|Total current liabilities                                                                   |  |                     | 31,975  |                  |   | 38,510  |  
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|NONCURRENT LIABILITIES:                                                                     |  |                     |         |                  |   |         |  
|Senior secured notes                                                                        |  |                     | 250     |                  |   | 250     |  
|Senior unsecured notes                                                                      |  |                     | 123,425 |                  |   | 123,498 |  
|Discount notes                                                                              |  |                     | 22,889  |                  |   | 23,699  |  
|Note payable--less current portion                                                          |  |                     | 103,455 |                  |   | 103,194 |  
|Obligations under capital leases--less
  current portion                                    |  |                     | 5,211   |                  |   | 4,921   |  
|Deferred income taxes                                                                       |  |                     | 34,383  |                  |   | 34,383  |  
|Other intangible liabilities--net                                                           |  |                     | 9,037   |                  |   | 8,588   |  
|Other noncurrent liabilities                                                                |  |                     | 3,603   |                  |   | 3,952   |  
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|Total noncurrent liabilities                                                                |  |                     | 302,253 |                  |   | 302,485 |  
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                               |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|STOCKHOLDERS EQUITY                                                                        |  |                     |         |                  |   |         |  
|Common stock, $.01 par value--20,000 shares
  authorized; 100 shares issued and outstanding |  |                     |        |                  |   |        |  
|Additional paid-in-capital                                                                  |  |                     | 172,279 |                  |   | 172,286 |  
|Accumulated deficit                                                                         |  |                     | (588    | )                |   | (579    | )
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|Total stockholders equity                                                                  |  |                     | 171,691 |                  |   | 171,707 |  
|                                                                                            |  |                     |         |                  |   |         |  
|                                                                                            |  |                     |         |                  |   |         |  
|TOTAL                                                                                       |  | $                   | 505,919 |                  | $ | 512,702 |  
|                                                                                            |  |                     |         |                  |   |         |  

|                                                            |            
|----------------------------------------------------------- | -----------
|See
  notes to condensed consolidated financial statements. | (concluded)

4

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|                                                       
|-------------------------------------------------------
|EPL INTERMEDIATE, INC.                                 
|(A Wholly Owned Subsidiary of EPL Holdings, Inc.)      
|                                                       
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|13 WEEKS ENDED MARCH 31, 2005 AND 2006                 
|(Amounts in thousands)                                 
|                                                       

|                                           |  |                  |        |                  |   |        | 
|------------------------------------------ |  | ---------------- | ------ | ---------------- | - | ------ | 
|                                           |  | Predecessor      |        | Successor        |  
|                                           |  |                  |        |                  |  
|                                           |  | MARCH 31,
  2005 |        | MARCH 31,
  2006 |  
|                                           |  |                  |        |                  |  
|                                           |  |                  |        |                  |   |        | 
|OPERATING
  REVENUE:                       |  |                  |        |                  |   |        | 
|Restaurant revenue                         |  | $                | 51,159 |                  | $ | 59,151 | 
|Franchise revenue                          |  |                  | 3,511  |                  |   | 4,017  | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|Total operating
revenue                    |  |                  | 54,670 |                  |   | 63,168 | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|OPERATING
  EXPENSES:                      |  |                  |        |                  |   |        | 
|Product cost                               |  |                  | 16,213 |                  |   | 18,965 | 
|Payroll and benefits                       |  |                  | 13,573 |                  |   | 14,965 | 
|Depreciation and
amortization              |  |                  | 3,482  |                  |   | 2,376  | 
|Other operating
expenses                   |  |                  | 16,472 |                  |   | 19,728 | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|Total operating
expenses                   |  |                  | 49,740 |                  |   | 56,034 | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|OPERATING
  INCOME                         |  |                  | 4,930  |                  |   | 7,134  | 
|                                           |  |                  |        |                  |   |        | 
|INTEREST
  EXPENSE--Net                    |  |                  | 4,736  |                  |   | 7,119  | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|INCOME
  BEFORE PROVISION FOR INCOME TAXES |  |                  | 194    |                  |   | 15     | 
|                                           |  |                  |        |                  |   |        | 
|PROVISION
  FOR INCOME TAXES               |  |                  | 79     |                  |   | 6      | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|                                           |  |                  |        |                  |   |        | 
|NET INCOME                                 |  | $                | 115    |                  | $ | 9      | 
|                                           |  |                  |        |                  |   |        | 

See notes to condensed
consolidated financial statements.

5

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|                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------
|EPL INTERMEDIATE, INC.
  (A Wholly Owned Subsidiary of EPL Holdings, Inc.)                                                     
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
  13 WEEKS ENDED MARCH 31, 2005 AND 2006 
  (Amounts in thousands)
|                                                                                                                               
|                                                                                                                               

|                                                                                    |  |                  |        |                  |   |        |  
|----------------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- | - | ------ | -
|                                                                                    |  | Predecessor      |        | Successor        |  
|                                                                                    |  |                  |        |                  |  
|                                                                                    |  | MARCH 31,
  2005 |        | MARCH 31,
  2006 |  
|                                                                                    |  |                  |        |                  |  
|CASH FLOWS
  FROM OPERATING ACTIVITIES:                                             |  |                  |        |                  |   |        |  
|Net income                                                                          |  | $                | 115    |                  | $ | 9      |  
|Adjustments to reconcile net income to net
  cash provided by operating activities: |  |                  |        |                  |   |        |  
|Depreciation and amortization of property
  and intangible assets                   |  |                  | 3,482  |                  |   | 2,376  |  
|Stock-based compensation expense                                                    |  |                  |       |                  |   | 29     |  
|Interest accretion                                                                  |  |                  | 1,218  |                  |   | 883    |  
|(Gain) loss on disposal of assets                                                   |  |                  | (143   | )                |   |       |  
|Asset impairment                                                                    |  |                  | 165    |                  |   |       |  
|Amortization of deferred financing costs                                            |  |                  | 402    |                  |   | 325    |  
|Amortization of leasehold interest                                                  |  |                  | (374   | )                |   | (125   | )
|Changes in operating assets and
  liabilities:                                      |  |                  |        |                  |   |        |  
|Notes and accounts receivable--net                                                  |  |                  | (277   | )                |   | (399   | )
|Inventories                                                                         |  |                  | 59     |                  |   | 78     |  
|Prepaid expenses and other current
assets                                           |  |                  | (824   | )                |   | (1,038 | )
|Income taxes receivable / payable                                                   |  |                  | 79     |                  |   | 235    |  
|Other assets                                                                        |  |                  | (2     | )                |   | (5     | )
|Accounts payable                                                                    |  |                  | 1,046  |                  |   | 253    |  
|Accrued salaries and vacation                                                       |  |                  | (508   | )                |   | 2,050  |  
|Accrued insurance                                                                   |  |                  | 69     |                  |   | 2      |  
|Other accrued expenses and current and
  noncurrent liabilities                     |  |                  | 2,474  |                  |   | 3,967  |  
|                                                                                    |  |                  |        |                  |   |        |  
|                                                                                    |  |                  |        |                  |   |        |  
|Net cash provided by operating activities                                           |  |                  | 6,981  |                  |   | 8,640  |  
|                                                                                    |  |                  |        |                  |   |        |  
|                                                                                    |  |                  |        |                  |   |        |  
|CASH FLOW
  FROM INVESTING ACTIVITIES:                                              |  |                  |        |                  |   |        |  
|Proceeds from asset disposition                                                     |  |                  | 483    |                  |   |       |  
|Purchase of property                                                                |  |                  | (2,779 | )                |   | (2,147 | )
|Payment of acquisition costs                                                        |  |                  |       |                  |   | (344   | )
|                                                                                    |  |                  |        |                  |   |        |  
|                                                                                    |  |                  |        |                  |   |        |  
|Net cash used in investing activities                                               |  |                  | (2,296 | )                |   | (2,491 | )
|                                                                                    |  |                  |        |                  |   |        |  
|                                                                                    |  |                  |        |                  |   |        |  
|CASH FLOWS
  FROM FINANCING ACTIVITIES:                                             |  |                  |        |                  |   |        |  
|Repurchase of
  common stock                                                        |  |                  |       |                  |   | (22    | )
|Payment of obligations under capital
leases                                         |  |                  | (329   | )                |   | (290   | )
|Payments on debt                                                                    |  |                  | (1,018 | )                |   | (3,036 | )
|Deferred financing costs                                                            |  |                  |       |                  |   | (1     | )
|                                                                                    |  |                  |        |                  |   |        |  
|                                                                                    |  |                  |        |                  |   |        |  
|Net cash used in financing activities                                               |  |                  | (1,347 | )                |   | (3,349 | )
|                                                                                    |  |                  |        |                  |   |        |  

6

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EPL
INTERMEDIATE, INC.
(A Wholly Owned Subsidiary of EPL Holdings, Inc.)

|                                                                                                    
|----------------------------------------------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  13 WEEKS ENDED MARCH 31, 2005 AND 2006
|(Amounts in thousands)                                                                              
|                                                                                                    

|                                                                                     |  |             |             |           |   |       | 
|------------------------------------------------------------------------------------ |  | ----------- | ----------- | --------- | - | ----- | 
|                                                                                     |  | Predecessor |             | Successor |  
|                                                                                     |  |             |             |           |  
|                                                                                     |  | MARCH 31,   |             | MARCH 31, |  
|                                                                                     |  | 2005        |             | 2006      |  
|                                                                                     |  |             |             |           |  
|                                                                                     |  |             |             |           |   |       | 
|INCREASE IN
  CASH AND CASH EQUIVALENTS                                              |  | $           | 3,338       |           | $ | 2,800 | 
|                                                                                     |  |             |             |           |   |       | 
|CASH AND
  CASH EQUIVALENTS--Beginning of period                                     |  |             | 5,636       |           |   | 3,552 | 
|                                                                                     |  |             |             |           |   |       | 
|                                                                                     |  |             |             |           |   |       | 
|CASH AND
  CASH EQUIVALENTS--End of period                                           |  | $           | 8,974       |           | $ | 6,352 | 
|                                                                                     |  |             |             |           |   |       | 
|                                                                                     |  |             |             |           |   |       | 
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION--Cash paid during the period for: |  |             |             |           |   |       | 
|Interest (net of amounts capitalized)                                                |  | $           | 382         |           | $ | 2,565 | 
|                                                                                     |  |             |             |           |   |       | 
|                                                                                     |  |             |             |           |   |       | 
|Income taxes                                                                         |  | $           |            |           | $ |      | 
|                                                                                     |  |             |             |           |   |       | 
|                                                                                     |  |             |             |           |   |       | 
|SUPPLEMENTAL
  SCHEDULE OF NON-CASH INVESTING ACTIVITIES:                            |  |             |             |           |   |       | 
|Unpaid purchases of property and
equipment                                           |  | $           | 670         |           | $ | 438   | 
|                                                                                     |  |             |             |           |   |       | 
|Recording of amounts due to predecessor
  stockholders in connection with acquistion |  | $           |            |           | $ | 3,825 | 
|                                                                                     |  |             |             |           |   |       | 
|                                                                                     |  |             |             |           |   |       | 
|See notes to
  condensed consolidated financial statements.                          |  |             | (concluded) |          

7

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EPL INTERMEDIATE, INC. 
(A Wholly-Owned Subsidiary of EPL Holdings, Inc.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

1. Basis of Presentation

The
accompanying condensed consolidated financial statements are unaudited. EPL
Intermediate, Inc. (EPLI) and its wholly-owned subsidiary, El Pollo Loco,
Inc. (collectively, the Company) prepared these condensed consolidated
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 condensed consolidated 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 consolidated financial statements should be read in
conjunction with the Companys audited consolidated financial statements and
the related notes thereto included in the Companys Annual Report on Form 10-K
(File No. 333-115644) as filed with the Securities and Exchange Commission
(the Commission) on April 10, 2006.

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 2005, which ended December 28, 2005, and fiscal
year 2006, which will end December 27, 2006, are both 52-week fiscal
years. For simplicity of presentation, the Company has described the 13-week
periods ended March 30, 2005 and March 29, 2006 as March 31, 2005 and 2006,
respectively.

The
Company is a wholly-owned subsidiary of EPL Holdings, Inc. (Holdings), which
is a wholly owned indirect subsidiary of Chicken Acquisition Corp (CAC) which
is owned by Trimaran Pollo Partners, LLC (the LLC). The Companys activities
are performed principally through its wholly owned subsidiary, El Pollo Loco,
Inc. (EPL), which develops, franchises, licenses, and operates quick-service
restaurants under the name El Pollo Loco.

The
Company adjusted accounts payable and capital expenditures to present the
unpaid purchases of property and equipment of $0.7 million in the first quarter
of 2005 as a non-cash investing activity in the Consolidated Statements of Cash
Flows.

2. Acquisition of the Company

On
September 27, 2005, Holdings entered into a stock purchase agreement (the
Stock Purchase Agreement) among CAC, Holdings, Intermediate, EPL, the equity
holders of Holdings, and American Securities Capital Partners, L.P. (ASCP).
Pursuant to the Stock Purchase Agreement, CAC, an affiliate of

8

---



Trimaran Fund
II, L.L.C., agreed to purchase (the Acquisition) all of Holdings issued and
outstanding common stock (other than certain shares exchanged by existing
shareholders, including management, representing approximately 7.3% of
Holdings). On November 18, 2005, Holdings, CAC, and the other parties to
the Stock Purchase Agreement completed the Acquisition. The Company prior to
the Acquisition is referred to as the Predecessor and after the Acquisition
is referred to as the Successor.

The
Acquisition was accounted for as purchase of Holdings by CAC in accordance with
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations. The aggregate purchase price was $435.9 million, consisting of
$204.5 million of cash, net of $19.6 million cash acquired, $16.8 million of
stock and options in Holdings, $9.3 million of direct acquisition costs (which
included $7.0 million paid to Trimaran Management, LLC, an entity related to
CAC, for services performed and expenses incurred in connection with the
Acquisition), and $185.7 million of debt that was refinanced or assumed in
connection with the Acquisition.

The
purchase price allocation was based on estimates of the fair value of the
assets acquired and liabilities assumed as determined by an independent
valuation company. The valuation is being finalized. The final determination of
assets acquired and liabilities assumed and final allocation of the purchase
price may differ from the amounts included in these financial statements. Goodwill
was adjusted for various liabilities that were identified during the current
period. Adjustments to the purchase price allocation are expected to be
finalized during fiscal 2006.

The following
transactions occurred in connection with the Acquisition and are reflected in
the Successors consolidated financial statements:

| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a cash
  investment made by CAC totaling $155.5 million                                                                                                                                                                                                                              
| |  
| |  | a
  contribution of shares and options of Holdings with a fair value of $16.8
  million                                                                                                                                                                                              
| |  
| |  | the
  execution of a credit agreement governing new senior secured credit
  facilities providing for a $104.5 million term loan, drawn at closing, and a
  $25.0 million revolving credit facility, of which $2.8 million was drawn down
  at closing (see further description below)
| |  
| |  | $123.4
  million received related to the issuance and sale of $125.0 in aggregate
  principal amount at maturity 113/4% senior notes
  (see description of 2013 Notes below)                                                                                                         
| |  
| |  | $22.5
  million received related to the issuance and sale of $39.3 million in
  aggregate principal amount at maturity 14.5% senior discount notes (see
  description of 2014 Notes below)                                                                                           
| |  
| |  | $9.6 million
  of deferred financing fees incurred in connection with the borrowings
  described above                                                                                                                                                                               

The following
activities occurred with respect to the existing indebtedness of the Predecessor
and its subsidiary that was refinanced by the Successor and its subsidiary:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In October
  2005, EPL commenced a tender offer to purchase for cash any and all
  outstanding 91/4% Senior Secured Notes due 2009 (the 2009 Notes), and EPLI
  commenced a tender offer to purchase for cash any and all outstanding 121/2% Senior
  Discount Notes due 2010 (the 2010 Notes). EPL and EPLI also solicited
  consents to amend the indentures governing the 2009 and 2010 Notes to
  eliminate substantially all of the restrictive covenants and certain events
  of default and modify other provisions contained in such indentures. As of
  December 28, 2005, all of the 2010 Notes have been purchased for cash,
  and all except for $250,000 in aggregate principal amount of the 2009 Notes have
  been purchased for cash. In connection therewith, substantially all of the
  restrictive covenants and events of default in the related indentures have
  been eliminated.
| |  
| |  | On
  November 18, 2005, EPL Intermediate Finance Corp., a Delaware
  corporation (Intermediate Finance) issued $39,342,000 aggregate principal
  amount at maturity of 141/2% Senior Discount Notes due 2014
  (the 2014 Notes). Intermediate Finance merged with and into EPLI, with EPLI
  surviving the merger and assuming Intermediate Finances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

9

---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | obligations
  under the notes and the related indenture. On November 18, 2005, EPL
  Finance Corp., a Delaware corporation (EPL Finance), issued $125,000,000
  aggregate principal amount at maturity of 113/4% Senior Notes
  due 2013 (the 2013 Notes). The 2013 Notes are guaranteed by EPLI. EPL
  Finance merged with and into EPL, with EPL surviving the merger and assuming
  EPL Finances obligations under the notes and the related indenture.                                                                                                                                                                                                
| |  
| |  | On
  November 18, 2005, EPL entered into senior secured credit facilities with
  EPLI, as parent guarantor, Merrill Lynch Capital Corporation, as
  administrative agent, the other agents identified therein, Merrill
  Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
  Incorporated and Bank of America, N.A., as lead arrangers and book managers,
  and a syndicate of financial institutions and institutional lenders. The
  senior secured credit facilities provide for an $104.5 million term loan and
  $25.0 million in revolving availability. In connection therewith, EPLs prior
  credit facility with SunTrust Bank was paid off in full.

3. Asset Impairment

The
Company periodically reviews the performance of company-operated stores for
indicators of asset impairment. If the Company concludes that the carrying
value of certain assets will not be recovered based on expected undiscounted
future cash flows, an impairment write-down is recorded to reduce the assets to
their estimated fair value. As a result of this review, the Company recorded an
impairment charge of approximately $0.2 million in March 2005 for one
under-performing company-operated store that will continue to be operated. The
impairment charge is included in other operating expenses in the accompanying
condensed consolidated statements of income.

4. Stock-Based Compensation

As
of March 31, 2006, options to purchase 292,866 shares of common stock of CAC at
the fair value of the shares at the date of grant were outstanding. Included in
that amount are 81,540 options that are fully vested; the remaining options
vest 100% on the seventh anniversary of the grant date, 100% upon sale of
Holdings by Trimaran if certain conditions are met, or partially vest upon the
Companys attaining annual financial or other goals, with the remaining
unvested portion vesting on the seventh anniversary of the grant date.

In
the event of a successful completion of an initial public offering of the
Companys common shares, 50% of the then unvested options to purchase shares of
CAC common stock will vest immediately upon consummation of an offering. Those
options along with any previously vested options will be converted into options
to purchase shares of the Companys common stock and will remain exercisable in
accordance with the terms of the original grant. The other 50% of the then
unvested options shall automatically terminate and the optionees shall be
entitled to receive grants of the Companys restricted stock with an aggregate
economic value equal to the fair market value (measured at the close of
business of the first day of public trading) of the shares of CAC common stock
into which the terminated unvested options were exercisable minus the aggregate
exercise price of such options.

In
December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based
Payment, (SFAS 123R) which requires companies to expense the estimated fair
value of employee stock options and similar awards based on the grant-date fair
value of the award. The cost will be recognized over the period during which an
employee is required to provide service in exchange for the award, usually the
vesting period. The Company adopted the provisions of SFAS 123R on December 29,
2005 using a prospective application. Under the prospective application, SFAS
123R, applies to new awards and any awards that are modified or cancelled subsequent
to the date of adoption of SFAS 123R. Prior periods are not revised for
comparative purposes. Because the Company used the minimum value method for its
pro forma disclosures under SFAS 123, existing options will continue to be
accounted for in accordance with APB Opinion No. 25 unless such options
are modified, repurchased or cancelled after the effective date.

10

---



In
order to meet the fair value measurement objective, the Company utilizes the
Black-Scholes option-pricing model to value compensation expense for
share-based awards granted beginning in fiscal 2006 and developed estimates of
various inputs including forfeiture rate, expected term life, expected
volatility, and interest rate. The forfeiture rate is based on historical rates
and reduces the compensation expense recognized. The expected term of options
granted is derived from both historical and forecasted exercise activity for
options granted within a specified date range. The risk-free interest rate is
based on the implied yield on a U.S. Treasury constant maturity with a
remaining term equal to the expected term of the Companys employee stock options.
Expected volatility is based on the comparative industry entity data. The
Company does not anticipate paying any cash dividends in the foreseeable future
and therefore uses an expected dividend yield of zero for option valuation.

The
  weighted-average estimated fair value of employee stock options granted during
  the 13 weeks ended March 31, 2006 was $43.59 per share using the Black-Scholes
  model with the following weighted-average assumptions used to value the option
  grants:

|                         |  |  |                                 | 
|------------------------ |  |  | ------------------------------- | 
|                         |  |  |                                
|                         |  |  | 13 weeks ended
  March 31, 2006 | 
|                         |  |  |                                 | 
|                         |  |  |                                 | 
|Expected
  volatility    |  |  | 41%                             | 
|Expected
  term life     |  |  | 7.0 years                       | 
|Forfeiture
  rate        |  |  | 1.22%                           | 
|Risk free interest rates |  |  | 4.46%                           | 
|Expected dividend        |  |  | 0%                              | 
|                         |  |  |                                 | 

Under
  the prospective method of SFAS 123R, compensation expense was recognized during
  the 13 weeks ended March 31, 2006 for all stock based payments granted after
  December 28, 2005 based on the grant date fair value estimated in accordance
  with the provisions of SFAS 123R. During the 13 weeks ended March 31, 2006,
  the Company recognized share-based compensation expense before tax of $29,000
  related to stock option grants. This expense was included in other operating
  expenses. This incremental stock based compensation expense caused a decrease
  to net income of $17,000, net of income taxes of $12,000. As of March 31, 2006,
  there was $746,000 of total unrecognized compensation cost related to nonvested
  options, which is expected to be recognized over a remaining vesting period
  of approximately 6.8 years.

Changes in stock options for the 13 weeks ended March 31, 2006
  are as follows:

|                                                                 |  |        |         |                                    |   |                        |  |  |        | 
|---------------------------------------------------------------- |  | ------ | ------- | ---------------------------------- | - | ---------------------- |  |  | ------ | 
|                                                                 |  | Shares |         | Weighted-Average 
  Exercise Price |   | Options 
  Exercisable | 
|                                                                 |  |        |         |                                    |   |                        | 
|OutstandingDecember 28,
  2005                                  |  |        | 277,608 |                                    | $ | 63.53                  |  |  | 81,835 | 
|Grants
        (weighted-average fair value of $43.59 per share) |  |        | 17,778  |                                    | $ | 86.43                  |  |  |        | 
|Exercised                                                        |  |        | (295    | )                                  | $ | 10.80                  |  |  |        | 
|Forfeited                                                        |  |        | (2,225  | )                                  | $ | 86.43                  |  |  |        | 
|                                                                 |  |        |         |                                    |   |                        |  |  |        | 
|                                                                 |  |        |         |                                    |   |                        |  |  |        | 
|OutstandingMarch 29, 2006                                       |  |        | 292,866 |                                    | $ | 64.80                  |  |  | 81,540 | 
|                                                                 |  |        |         |                                    |   |                        |  |  |        | 

11

---



Outstanding stock options at March 31, 2006 are summarized as
  follows:

|                           |  |                      |         |                                                                   |  |                                      |  |                      |       |                                      |  |        |  |   |       | 
|-------------------------- |  | -------------------- | ------- | ----------------------------------------------------------------- |  | ------------------------------------ |  | -------------------- | ----- | ------------------------------------ |  | ------ |  | - | ----- | 
|Range of
  Exercise Prices |  | Number
  Outstanding |         | Weighted-
  Average
  Remaining 
  Contractual Life 
  (in Years) |  | Weighted-
  Average
  Exercise Price |  | Number
  Exercisable |       | Weighted-
  Average
  Exercise Price | 
|                           |  |                      |         |                                                                   |  |                                      |  |                      |       |                                      | 
|                           |  |                      |         |                                                                   |  |                                      |  |                      |       |                                      | 
|$2.98                      |  |                      | 17,694  |                                                                   |  | 3.88                                 |  | $                    | 2.98  |                                      |  | 17,694 |  | $ | 2.98  | 
|$7.56                      |  |                      | 24,026  |                                                                   |  | 5.04                                 |  | $                    | 7.56  |                                      |  | 24,026 |  | $ | 7.56  | 
|$9.68-$11.77               |  |                      | 33,074  |                                                                   |  | 6.44                                 |  | $                    | 10.67 |                                      |  | 33,074 |  | $ | 10.67 | 
|$15.48-$20.60              |  |                      | 6,746   |                                                                   |  | 8.60                                 |  | $                    | 18.59 |                                      |  | 6,746  |  | $ | 18.59 | 
|$86.43                     |  |                      | 211,326 |                                                                   |  | 9.70                                 |  | $                    | 86.43 |                                      |  |       |  | $ |      | 
|                           |  |                      |         |                                                                   |  |                                      |  |                      |       |                                      |  |        |  |   |       | 
|                           |  |                      | 292,866 |                                                                   |  | 8.50                                 |  | $                    | 64.80 |                                      |  | 81,540 |  | $ | 8.74  | 
|                           |  |                      |         |                                                                   |  |                                      |  |                      |       |                                      |  |        |  |   |       | 

The weighted average remaining contractual life for options exercisable as of
March 31, 2006 was 5.7 years.

The
aggregate intrinsic value of options outstanding and options exercisable as of
March 31, 2006 was $8.7 million and $7.0 million, respectively. The intrinsic
value is calculated as the difference between the market value as of March 31,
2006 and the exercise price of the options outstanding and options exercisable.

5. Commitments and Contingencies

On
or about April 16, 2004, two former employees and one current employee filed a
class action suit in the Superior Court of the State of California, County of
Los Angeles, against EPL on behalf of all putative class members (former and
current general managers and restaurant managers from April 2000 to present)
alleging certain violations of California labor laws, including alleged
improper classification of general managers and restaurant managers as exempt
employees. Plaintiffs requested remedies include compensatory damages for
unpaid wages, interest, certain statutory penalties, disgorgement of alleged
profits, punitive damages and attorneys fees and costs as well as certain
injunctive relief. The complaint was served on EPL on April 19, 2004. The court
has ordered the class action stayed pending the arbitration of one of the named
putative class plaintiffs as a result of his execution of a mandatory
arbitration agreement with EPL. While the Company intends to defend against
this action vigorously, the ultimate outcome of this case is presently not
determinable as it is in a preliminary phase. Thus, the Company cannot at this
time determine the likelihood of an adverse judgment or a likely range of
damages in the event of an adverse judgment. If a class were ultimately
certified, any settlement of or judgment arising from such lawsuit could be
material, and the Company cannot give any assurance that the Company would have
the resources available to pay such settlement or judgment.

On
or about October 18, 2005, Salvador Amezcua, on behalf of himself and all
others similarly situated, filed a purported class action complaint against EPL
in the Superior Court of the State of California, County of Los Angeles. This
action alleges certain violations of California labor laws and the California
Business and Professions Code, based on, among other things, failure to pay
overtime compensation, failure to provide meal periods, unlawful deductions
from earnings and unfair competition. Plaintiffs requested remedies include
compensatory and punitive damages, injunctive relief, disgorgement of profits
and reasonable attorneys fees and costs. EPL was served with this complaint on
December 16, 2005. The court has ordered that the case be deemed complex and
assigned it to the complex litigation panel. While the Company intends to
defend against this action vigorously, the ultimate outcome of this case is
presently not determinable as it is in a preliminary phase. Thus, the Company
cannot at this time determine the likelihood of an adverse judgment or a likely
range of damages in the event of an adverse

12

---



judgment. Any
settlement of or judgment with a negative outcome arising from such lawsuit
could have an adverse material impact.

On
June 14, 2005, the American Disability Institute, a non-profit Pennsylvania
corporation, on behalf of itself and all others similarly situated, Orlando
Hardy, Jr. and Joann Montes, filed a purported class action complaint against
EPL in the United States District Court, Central District of California,
Western Division. This action alleged violations of the Americans With
Disabilities Act of 1990, the Unruh Civil Rights Act in California and the
California Disabled Persons Act, based on, among other things, denying
plaintiffs full and equal access and accommodations to our facilities.
Plaintiffs requested remedies included certification of the class, injunctive
relief, statutory damages and reasonable attorneys fees and costs. The parties
entered into a confidential settlement agreement dated February 1, 2006, which
agreement provided, among other things, for a lump sum payment to the
plaintiffs.

The
contractual rights to use the name El Pollo Loco_ and certain related
trademarks and intellectual property in Mexico were assigned to EPL in 1996,
pursuant to an agreement between EPL and a company controlled by Jose Francisco
Ochoa, the founder of the first El Pollo Loco restaurant in Mexico and the
United States. As consideration for the assignment of such rights, EPL agreed,
subject to the terms and conditions of the agreement, to use commercially
reasonable efforts to develop a minimum number of restaurants in Mexico by
February 2006 and to pay certain fees for each such restaurant that EPL
develops. On March 31, 2004, EPL-Mexico filed suit against EPL in state court
in Laredo, Texas alleging, among other things, that EPL breached its agreement
with EPL-Mexico by failing to exploit the trademarks and develop new
restaurants in Mexico and claiming that the right to use the name El Pollo
Loco_ in Mexico should revert to EPL-Mexico. EPL-Mexico also initiated an amparo
proceeding, which is an administrative challenge under Mexican law, to EPLs
ownership of the trademarks before the Mexican Intellectual Property Institute.
This proceeding was resolved in favor of EPL by Mexicos Supreme Court of
Justice of the Nation. EPL successfully removed the Texas action to federal
court and EPL has filed a counterclaim against EPL-Mexico to defend its rights
to the trademarks in Mexico. The Company believes that EPL-Mexicos claims are
without merit and that, based on the rights we possess pursuant to the
agreement, EPL possesses adequate legal and contractual rights to use the
intellectual property in question in Mexico. However, failure to prevail in
this action could result in the loss of EPLs ownership in Mexico of the El
Pollo Loco trademarks and intellectual property at issue, which could affect
the EPL brand in the United States and elsewhere.

The
Company is also involved in various other claims and legal actions that arise
in the ordinary course of business. The Company does not believe that the
ultimate resolution of these actions will have a material adverse effect on the
Companys financial position, results of operations, liquidity and capital
resources. A significant increase in the number of these claims or an increase
in amounts owing under successful claims could materially adversely affect the
Companys business, financial condition, results of operation and cash flows.

6. Predecessor Debt

In
December 2003, EPL issued the 2009 Notes, consisting of $110.0 million of
senior secured notes accruing interest at 9.25% per annum, due 2009. In
March 2004, EPLI issued the 2010 Notes, consisting of $70.0 million in
aggregate principal amount at maturity of 12 1/2% senior discount notes due 2010. In
October 2005, EPL and EPLI commenced tender offers to purchase all outstanding
2009 Notes and 2010 Notes (collectively, the Notes), respectively;
concurrently, EPL and EPLI solicited consents to amend the indentures governing
the Notes to eliminate substantially all of the restrictive covenants and
certain events of default and to modify other provisions contained in the
indentures. As of December 28, 2005, all of the Notes, with the exception
of $250,000 of 2009 Notes, have been purchased. In connection therewith, substantially
all of the restrictive covenants and events of default in the related
indentures have been eliminated.

13

---



The
Predecessors notes payable, which consisted of approximately $7.3 million due
to SunTrust Bank (SunTrust) at December 29, 2004, were repaid in 2005.
SunTrust continues to be the issuing bank with respect to certain of the
Companys letters of credit totaling $7,973,000.

7. Senior Unsecured Notes Payable

On
November 18, 2005, EPL Finance issued the 2013 Notes, consisting of $125.0
million aggregate principal amount of 11 3/4% senior notes due 2013 in a private
placement. Interest is payable in May and November beginning May 15, 2006.
The 2013 Notes are unsecured, are guaranteed by EPLI, and may be redeemed, at
the discretion of the issuer, after November 15, 2009.

EPL
Finance merged with and into EPL, with EPL surviving the merger and assuming
EPL Finances obligations under the 2013 Notes and the related indenture. The
indenture contains certain provisions which may prohibit EPLs ability to incur
additional indebtedness, sell assets, engage in transactions with affiliates,
and issue or sell preferred stock, among other items.

In
connection with the issuance of the 2013 notes, EPL agreed to file a
registration statement within 150 days after the issuance of the 2013 Notes,
enabling holders to exchange the privately placed 2013 Notes for publicly
registered notes with, subject to limited exceptions, identical terms.

EPL
incurred direct costs in connection with this offering. These costs have been
capitalized and are included in other assets in the accompanying balance
sheets. The Company used the proceeds from the 2013 Notes to purchase
substantially all of the outstanding 2009 Notes.

As
a holding company, the stock of EPL constitutes EPLIs only material asset.
Consequently, EPL conducts all of the Companys consolidated operations and
owns substantially all of the consolidated operating assets. The Companys
principal source of the cash required to pay its obligations is the cash that
EPL generates from its operations. EPL is a separate and distinct legal entity,
has no obligation to make funds available to EPLI, and the 2013 Notes and the
2014 Notes (see Note 9) have restrictions that limit distributions or dividends
to be paid by EPL to the Company. Conditions that would allow for distributions
or dividends to be made include compliance with a Fixed Charge Coverage Ratio
test (as defined in the indenture governing the 2013 Notes) and cash received
from the proceeds of new equity contributions.   As of March 31, 2006, we are generally restricted from incurring
additional indebtedness, as EPL does not currently meet the fixed charge
coverage ratio.  There are also some
allowed distributions, payments and dividends for other specific events.
Distributions, dividends or investments would also be limited to 50% of
consolidated net income under certain circumstances.

8. Notes Payable to Merrill Lynch, Bank of
America, Et Al and Revolving Credit Facility

On
November 18, 2005, EPL entered into senior secured credit facilities (the Credit
Facility) with EPLI, as parent guarantor, Merrill Lynch Capital Corporation,
as administrative agent, the other agents identified therein, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Bank of America, N.A., as lead arrangers and book managers, and a syndicate
of financial institutions and institutional lenders. The Credit Facility
provides for an $104.5 million term loan and $25.0 million in revolving
availability. Of this senior secured revolving credit facility, EPL drew down
$2.8 million and issued $8.1 million of letters of credit to replace existing
letters of credit. Future principal payments under the new term loan at
December 28, 2005 are as follows (in thousands).

|                          |  |   |         | 
|------------------------- |  | - | ------- | 
|Year Ending
  December 31 |  |   |         | 
|                          |  |   |         | 
|2006                      |  | $ | 1,045   | 
|2007                      |  |   | 1,045   | 
|2008                      |  |   | 1,045   | 
|2009                      |  |   | 1,045   | 
|2010                      |  |   | 1,045   | 
|Thereafter                |  |   | 99,275  | 
|                          |  |   |         | 
|                          |  | $ | 104,500 | 
|                          |  |   |         | 

14

---



The
Credit Facility bears interest, payable quarterly, at a Base Rate or LIBOR, at
EPLs option, plus an applicable margin. The applicable margin is based on
EPLs financial performance, as defined. The applicable margin rate was 3.00%
with respect to LIBOR and 2.00% with respect to Base Rate advances and
thereafter ranges from: 2.75% to 2.25% with respect to LIBOR advances and 1.75%
to 1.25% with respect to Base Rate advances. The effective rate at December 28,
2005 was 7.56%. The Credit Facility is secured by a first-priority pledge by
Holdings of all of the outstanding stock of the Company, a first priority
pledge by the Company of all of EPLs outstanding stock and a first priority
security interest in substantially all of EPLs tangible and intangible assets.
In addition, the Credit Facility is guaranteed by the Company and Holdings. The
Credit Facility matures on November 18, 2011.

9. Discount Notes

On
November 18, 2005, Intermediate Finance issued the 2014 Notes in a private
placement. Intermediate Finance merged with and into EPLI, with EPLI surviving
the merger and assuming Intermediate Finances obligations under the notes and
the related indenture. The indenture restricts the ability of EPLI and its
subsidiaries to incur additional indebtedness, sell assets, engage in
transactions with affiliates, and issue or sell preferred stock, among other
items. The indenture also limits the ability of EPL or other subsidiaries to
make dividend or other payments to EPLI and for EPLI to make payments to
Holdings (see Note 7).

At
December 28, 2005, the Company had $22.9 million outstanding in aggregate
principal amount of the 2014 Notes. No cash interest will accrue on the 2014
Notes prior to November 15, 2009. Instead, the principal value of the 2014
Notes will increase (representing accretion of original issue discount) from
the date of original issuance until but not including November 15, 2009 at a
rate of 14 1/2% per annum compounded annually, so that the accreted value of
the 2014 Notes on November 15, 2009 will be equal to the full principal amount
of $39.3 million at maturity. Beginning on November 15, 2009, cash interest
will accrue on the 2014 Notes at an annual rate of 14 1/2% per annum payable
semi-annually in arrears on May 15 and November 15 of each year, beginning May
15, 2010. Principal is due on November 15, 2014.

The
2014 Notes are effectively subordinated to all existing and future indebtedness
and other liabilities of the Companys subsidiaries. The 2014 Notes are
unsecured and are not guaranteed. If any of the 2014 Notes are outstanding at
May 15, 2011, the Company is required to redeem for cash a portion of each note
then outstanding at 104.5% of the accreted value of such portion of such note,
plus accrued and unpaid interest. Additionally, the Company may, at its
discretion, redeem any or all of the 2014 Notes, subject to certain provisions.

In
connection with the issuance of the 2014 notes, the Company agreed to file a
registration statement within 150 days after the issuance of the 2014 Notes,
enabling holders to exchange the privately placed 2014 Notes for publicly
registered notes with, subject to limited exceptions, identical terms. The
Company filed such registration statement on April 14, 2006.

EPLI
incurred direct costs in connection with this offering. These costs have been
capitalized and are included in other assets in the accompanying balance
sheets.

10. Income Taxes

The
Companys taxable income or loss is included in the consolidated federal and
state income tax returns of Holdings. The Company records its provision for
income taxes based on its separate stand-alone operating results using the
asset and liability method. The Company recorded a provision for income taxes
of $79,000 for the 13-week period ended March 31, 2005 and $6,000 for the
13-week period ended March 31, 2006. The effective tax rates for the 13 weeks
ended March 31, 2005 and 2006, were 40.8% and 41.0%, respectively.

15

---



11. New Accounting Pronouncements

In
October 2005, the Financial Accounting Standards Board (the FASB) issued FASB
Staff Position (FSP) 13-1, Accounting for Rental Costs Incurred During a
Construction Period. FSP 13-1 requires rental costs associated with ground or
building operating leases that are incurred during a construction period to be
recognized as rental expense. FSP 13-1 applies to reporting periods beginning
after December 15, 2005. Retrospective application in accordance with FASB SFAS
No. 154 Accounting Changes and Error Corrections, is permitted but not
required. The Company does not believe that the adoption of FSP 13-1 will have
a significant impact on its financial position or results of operations.

In
June 2005, the FASB ratified Emerging Issues Task Force (EITF) 05-06,
Determining the Amortization Period for Leasehold Improvements Purchased after
Lease Inception or Acquired in a Business Combination. This EITF addresses the
amortization period for leasehold improvements in operating leases that are
either (a) placed in service significantly after and not contemplated at or
near the beginning of the initial lease term or (b) acquired in a business
combination. Leasehold improvements that are placed in service significantly
after and not contemplated at or near the beginning of the lease term should be
amortized over the shorter of the useful life of the assets or a term that
includes required lease periods and renewals that are deemed to be reasonably
assured at the date the leasehold improvements are purchased. Leasehold
improvements acquired in a business combination should be amortized over the
shorter of the useful life of the assets or a term that includes required lease
periods and renewals that are deemed to be reasonably assured at the date of
acquisition. This EITF is effective for leasehold improvements that are
purchased or acquired after June 29, 2005. The adoption of this EITF did not
have a material impact on the Companys consolidated results of operations or
financial position.

In
May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections. SFAS No. 154 requires retrospective application to prior periods
financial statements of a voluntary change in accounting principle, and that a
change in method of depreciation, amortization, or depletion for long-lived,
non-financial assets be accounted for as a change in accounting estimate that
is effected by a change in accounting principle. SFAS No. 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. The Company does not currently believe that the
adoption of SFAS No. 154 will have a significant impact on its financial
position or results of operations.

In March 2005, the FASB issued Interpretation No. 47, Accounting for
Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143 (FIN 47). FIN 47 requires the recognition of a liability for the
fair value of a legally-required conditional asset retirement obligation when
incurred, if the liabilitys fair value can be reasonably estimated. FIN 47
also clarifies when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. FIN 47 is effective
for fiscal years ending after December 15, 2005. The adoption of FIN 47 was not
material to the Companys financial statements for any of the years or periods
presented.

In
  December 2004, the FASB issued SFAS 123(R), Share-Based Payment.
  SFAS 123(R) requires that companies recognize compensation expense equal to
  the fair value of stock options or other share-based payments. The standard
  was effective for the Company beginning with the first quarter of fiscal 2006.
  Because the Company used the minimum value method for its pro forma disclosures
  under SFAS 123, the Company applied SFAS 123(R) prospectively to newly issued
  stock options. Existing options will continue to be accounted for in accordance
  with APB Opinion No. 25 unless such options are modified, repurchased or cancelled
  after the effective date. The Companys net income is reduced as a result
  of the recognition of the fair value of all newly issued stock options, which
  is contingent upon the number of future options granted and other variables.

12. Events Subsequent to the End of the First Fiscal Quarter

On
  May 8, 2006, the indirect parent of EPL, El Pollo Loco Holdings, Inc., filed
  a registration statement with the Securities and Exchange Commission for an
  initial public offering of approximately $135 million of common stock.

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

16

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You should read the following discussion together
with our unaudited condensed consolidated financial statements and related
notes thereto included elsewhere in this filing.

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
Annual Report on Form 10-K (File No. 333-115644) as filed with the
Securities and Exchange Commission on April 10, 2006.

We
use a 52-, 53-week fiscal year ending on the last Wednesday of the calendar
year. For simplicity of presentation, we have described the 13-week periods
ended March 30, 2005 and March 29, 2006 as March 31, 2005 and 2006,
respectively. 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 2005, which ended December 28, 2005, and fiscal
year 2006, which ends December 27, 2006, are both 52-week fiscal years.
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

EPL
Intermediate, Inc. (EPLI) through its wholly-owned subsidiary El Pollo Loco,
Inc. (EPL and collectively with EPLI, the Company, we, us and our)
owns, operates and franchises quick service restaurants (QSR) specializing in
marinated flame-grilled chicken. As of March 31, 2006, our restaurant system
had 340 restaurants, consisting of 146 company-operated and 194 franchised
locations, located principally in California, with additional restaurants in
Arizona, Nevada, Texas and Illinois. Our typical restaurant is a freestanding
building ranging from approximately 2,200 to 2,600 square feet with seating for
approximately 60 customers and offering drive-thru convenience.

Our
revenue is derived from two primary sources, company-operated restaurant
revenue and franchise revenue, the latter of which is comprised principally of
franchise royalties and to a lesser extent franchise fees and sublease rental
income. For the 13 weeks ended March 31, 2006, same-store sales for restaurants
systemwide increased 11.4% over the 13 weeks ended March 31, 2005.

17

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The
increase in company-operated restaurant revenue is due to growth in new
company-operated restaurants and to increases in same-store sales, which
includes transaction and price increases over this period. We implemented a
chicken meal restructuring in May 2005 and a menu price increase in January
2006. The chicken meal restructuring consisted of changing our menu to allow
our customers to select chicken meals specifying white meat, dark meat or mixed
pieces and changing prices accordingly. We expect to open seven to ten
company-operated restaurants per year over the next few years, which is
slightly higher than our company-operated restaurant growth over the last few
years. 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. As of May 5, 2006, we
are legally qualified to market franchises in 44 states and are pursuing
opportunities in those states and are awaiting state regulator approval to
market in the remaining states. We have entered into area development
agreements that, beginning in the fourth quarter of 2004, have resulted in area
development fees being recognized as 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 and is our largest single expense. It 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 2005, we renewed our chicken contracts with terms
ranging from two to three years at higher prices than the expiring contracts.
One of these contracts provides a floor and ceiling price for the chicken we
buy from the supplier after the first year. We implemented the chicken meal
restructuring in May 2005 and a price increase in January 2006 that have
partially mitigated the impact of higher chicken prices on our profitability.

After
product costs, payroll and benefits comprise 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. A significant number of our hourly staff is
paid at rates consistent with the applicable federal or state minimum wage and,
accordingly, increases in the minimum wage will increase our labor cost.
Workers compensation insurance costs are subject to a number of factors, and
although the state of California 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 seen a reduction in the number of workers compensation claims due to
employee safety initiatives that we began implementing in fiscal year 2002.

Depreciation
and amortization expense changed subsequent to the Acquisition, which is a
result of fair values assigned to assets acquired and liabilities assumed at
the date of the Acquisition as determined by an independent valuation company.

Other
operating expenses include restaurant other operating expense, franchise
expense, and general and administrative expense.

18

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Occupancy
expense increased subsequent to the Acquisition as a result of the revaluation
of the fair market value of leases assumed in the Acquisition and the reduction
in the annual amortization of the unfavorable leasehold interest liability.

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 is to some degree
based on rents that are tied to a percentage of sales calculation. Because 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.

General
and administrative expense has increased as a result of the issuance of the
2009 Notes, the 2010 Notes, the 2013 Notes and the 2014 Notes. Since the
issuance of the 2009 Notes in December 2003, we have incurred and will incur
expenses due to rating agency fees, higher directors and officers insurance,
compliance with laws relating to corporate governance and public disclosure and
audit fees. In addition, in 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. General and administrative expense has also increased during the
past few years as a result of stock option bonus expense to restore the
approximate economic position of our option holders after dividends were paid
to our stockholder with the net proceeds from the issuance of the 2009 Notes
and the 2010 Notes.

Results of Operations

Our
operating results for the 13 weeks ended March 31, 2005 and 2006 are expressed
as a percentage of restaurant revenue below:

|                                     |  |                            |       |      |  |       |  
|------------------------------------ |  | -------------------------- | ----- | ---- |  | ----- | -
|                                     |  | 13 Weeks Ended
  March 31, |      
|                                     |  |                            |      
|                                     |  | 2005                       |       | 2006 | 
|                                     |  |                            |       |      | 
|Income Statement Data:               |  |                            |       |      |  |       |  
|Restaurant
  revenue                 |  |                            | 100.0 | %    |  | 100.0 | %
|Product cost                         |  |                            | 31.7  |      |  | 32.1  |  
|Payroll and
  benefits               |  |                            | 26.5  |      |  | 25.3  |  
|Depreciation
  and amortization      |  |                            | 6.8   |      |  | 4.0   |  
|Other
  operating expenses           |  |                            | 32.2  |      |  | 33.4  |  
|Operating income                     |  |                            | 9.6   |      |  | 12.1  |  
|Interest
  expense                   |  |                            | 9.3   |      |  | 12.0  |  
|Income before income taxes           |  |                            | 0.4   |      |  | 0.0   |  
|Net income                           |  |                            | 0.2   |      |  | 0.0   |  
|Supplementary Income Statement Data: |  |                            |       |      |  |       |  
|Restaurant
  other operating expense |  |                            | 19.4  |      |  | 21.0  |  
|Franchise
  expense                  |  |                            | 1.4   |      |  | 1.5   |  
|General and
  administrative expense |  |                            | 11.4  |      |  | 10.9  |  
|Total other operating expenses       |  |                            | 32.2  |      |  | 33.4  |  

19

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13
Weeks Ended March 31, 2006 Compared to 13 Weeks Ended March 31, 2005

Restaurant
revenue increased $8.0 million, or 15.6%, to $59.2 million for the 13 weeks
ended March 31, 2006 from $51.2 million for the 13 weeks ended March 31, 2005.
This increase was partially due to an additional $5.1 million in restaurant
revenue resulting from a 10.0% increase in company-operated same-store sales
for the 2006 period from the 2005 period. 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 also was due in part
to $2.4 million from six restaurants opened in fiscal 2005 and $0.5 million
from four restaurants opened in fiscal 2006.

Franchise
revenue increased $0.5 million, or 14.4%, to $4.0 million for the 13 weeks
ended March 31, 2006 from $3.5 million for the 13 weeks ended March 31, 2005.
This increase is due primarily to an increase in royalties resulting from a
12.7% increase in franchise same-store sales.

Product
cost increased $2.8 million, or 17.0%, to $19.0 million for the 13 weeks ended
March 31, 2006 from $16.2 million for the 13 weeks ended March 31, 2005. These
costs as a percentage of restaurant revenue were 32.1% for the 2006 period
compared to 31.7% for the 2005 period. The 0.4% increase in product cost as a
percentage of restaurant revenue resulted primarily from chicken prices
increasing as our new chicken contracts took effect in March 2005. This
increase was partially offset by the chicken meal restructuring in May 2005 and
the menu price increases taken in January 2006.

Payroll
and benefit expenses increased $1.4 million, or 10.3%, to $15.0 million for the
13 weeks ended March 31, 2006 from $13.6 million for the 13 weeks ended March
31, 2005. As a percentage of restaurant revenue, these costs decreased 1.2% to
25.3% for the 2006 period from 26.5% for the 2005 period. This decrease was
primarily due to margin leverage from the chicken meal restructuring in May
2005 and the menu price increases taken in January 2006 and also in part to
labor savings from the implementation of a labor scheduling guide used to
improve labor scheduling and efficiencies.

Depreciation
and amortization decreased $1.1 million, or 31.8%, to $2.4 million for the 13
weeks ended March 31, 2006 compared to $3.5 million for the 13 weeks ended
March 31, 2005. These costs as a percentage of restaurant revenue decreased
2.8% to 4.0% in 2006 from 6.8% for the 2005 period. The decrease in
depreciation expense is due to the revaluation of the companys assets that was
completed with the sale of the company to CAC.

Other
operating expenses include restaurant other operating expense, franchise
expense, and general and administrative expense.

Restaurant
other operating expense, which includes utilities, repair and maintenance,
advertising, property taxes, occupancy and other operating expenses, increased
$2.5 million, or 25.4%, to $12.4 million for the 13 weeks ended March 31, 2006
from $9.9 million for the 13 weeks ended March 31, 2005. These costs as a
percentage of restaurant revenue increased 1.6% to 21.0% for the 2006 period
from 19.4% for the 2005 period. The increase in operating costs is due
primarily to an increase in occupancy expense of $0.8 million, which is
partially attributed to the revaluation of our leases that was completed with
the sale of the company. The increase is also due to higher utilities of $0.4
million, increased preopening expenses of $0.3 million and higher repair and
maintenance costs of $0.4 million, which is primarily due to fryer maintenance,
which was completed on all company stores in the first quarter of 2006. Advertising
expense was also $0.3 million higher in the 2006 period due to increased sales.

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 to $0.9 million the 13-week periods ended March 31, 2006 compared to
$0.7 million for the 2005 period.

20

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General
and administrative expense increased $0.6 million, or 10.2%, to $6.4 million
for the 13 weeks ended March 31, 2006 from $5.8 million for the 13 weeks ended
March 31, 2005. General and administrative expense as a percentage of revenue
was 10.9% and 11.4% for the thirteen weeks ended March 31, 2006 and 2005,
respectively. The increase was primarily attributed to an increase in salaries
and wages of $0.4 million due to increased headcount.

Interest
expense, net of interest income, increased $2.4 million, or 50.3%, to $7.1
million for the 13 weeks ended March 31, 2006 from $4.7 million for the 13
weeks ended March 31, 2005. Our average debt balances for the 2006 period
increased to $259.1 million compared to $170.0 million for the 2005 period and
our average interest rate increased to 10.53% for the 2006 period compared to
9.75% for the 2005 period.

Our
provision for income taxes consisted of income tax expense of $6,000 for the
13-week period ended March 31, 2006 and $79,000 for the 13-week period ended
March 31, 2005, for an effective tax rate of 41.0% for 2006 and 40.8% for 2005.

As
a result of the factors above, net income remained relatively flat at $9,000
for the 13 weeks ended March 31, 2006 and at $115,000, or 0.2% as a percentage
or restaurant revenue, for the 13 weeks ended March 31, 2005.

Liquidity and Capital Resources

Our
principal liquidity requirements are to service our debt and meet our capital
expenditure needs. Our indebtedness at March 31, 2006 was $257.9 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 $25.0
million revolving portion of EPLs senior credit facility will be adequate to
meet our future liquidity needs for the foreseeable future. Cash and cash
equivalents increased $2.8 million from $3.6 million at December 28, 2005
to $6.4 million at March 31, 2006. In the first three months of fiscal 2006, we
made $0.3 million in principal repayments on EPLs loan and $2.8 million in
payments to pay off borrowings under our revolving credit facility. We cannot
assure you that our business will generate sufficient cash flow from operations
or that future borrowings will be available to us under EPLs 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 2013 Notes and the 2014 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.

As
a holding company, the capital stock of EPL constitutes our only material
asset. Consequently, EPL conducts all of our consolidated operations and owns
substantially all of our consolidated operating assets. Our principal source of
the cash required to pay our obligations is the cash that EPL generates from
its operations. EPL is a separate and distinct legal entity and has no
obligation to make funds available to us and currently has restrictions that
limit distributions or dividends to be paid by EPL to us. Furthermore, subject
to certain restrictions, EPL is permitted under the terms of EPLs senior
secured credit facilities and the indenture governing the 2013 Notes and 2014
Notes to incur additional indebtedness that may severely restrict or prohibit
the making of distributions, the payment of dividends or the making of loans by
EPL.

Working
Capital and Cash Flows

21

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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
debt financings.

Operating
Activities.We had net cash provided by operating
activities of $8.6 million for the 13 weeks ended March 31, 2006 compared with
net cash provided by operating activities of $7.0 million for the 13 weeks
ended March 31, 2005. The increase in cash provided by operating activities of
$1.6 million in the 2006 period compared to the 2005 period was primarily
attributable to an increase in accrued salaries and vacation and other accrued
expenses partially offset by a decrease in depreciation and a decreased
accounts payable balance.

Investing
Activities.We had net cash used in investing
activities of $2.5 million for the 13 weeks ended March 31, 2006 compared with
net cash used in investing activities of $2.3 million for the 13 weeks ended
March 31, 2005. The increase in cash used in investing activities of $0.2
million was related to $0.3 million in acquisition costs incurred in the 2006
period and $0.5 million in proceeds from disposition of assets in 2005 that did
not recur in 2006, partially offset by decreased spending in expenditures for
new store construction of $0.6 million.

Financing
Activities.We had net cash used in financing
activities of $3.3 million for the 13 weeks ended March 31, 2006 compared with
net cash used in financing activities of $1.3 million for the 13 weeks ended
March 31, 2005. The increase in cash used in financing activities in the 2006
period was attributable to the $2.8 million payment of the revolver partially
offset by decreased principal payments of our new term loan.

Debt and Other Obligations

On
November 18, 2005, EPL entered into senior secured credit facilities with
EPLI, as parent guarantor, Merrill Lynch Capital Corporation, as administrative
agent, the other agents identified therein, Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of
America, N.A., as lead arrangers and book managers, and a syndicate of
financial institutions and institutional lenders. The senior secured credit
facilities provide for an $104.5 million term loan and $25.0 million in
revolving availability. Of this senior secured revolving credit facility, EPL
drew down $2.8 million and issued $8.1 million of letters of credit to replace
existing letters of credit.

At
December 28, 2005, certain secured loans, which were assumed in connection
with purchases of restaurants from franchisees, were fully repaid.

We
have certain land and building leases for which the building portion is treated
as a capital lease. These assets are amortized over the life of the respective
lease.

In
October 2005, we commenced a tender offer to purchase for cash any and all
outstanding 2009 Notes and 2010 Notes and solicited consents to amend the
indentures governing the 2009 and 2010 Notes to eliminate substantially all of
the restrictive covenants and certain events of default and modify other
provisions contained in such indentures. As of March 31, 2006, all of the 2010
Notes have been purchased for cash, and all except for $250,000 in aggregate
principal amount of the 2009 Notes have been purchased for cash. In connection therewith,
substantially all of the restrictive covenants and events of default in the
related indentures have been eliminated.

22

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On
November 18, 2005, Intermediate Finance issued $39.3 million aggregate
principal amount at maturity of 14 1/2% senior
discount notes due 2014. Intermediate Finance merged with and into EPLI, with
EPLI surviving the merger and assuming Intermediate Finances obligations under
the notes and the related indenture. On November 18, 2005, EPL Finance
issued $125.0 million aggregate principal amount of 11 3/4% senior notes
due 2013. The 2013 Notes are guaranteed by EPLI. EPL Finance merged with and
into EPL, with EPL surviving the merger and assuming EPL Finances obligations
under the 2013 Notes and the related indenture.

At
March 31, 2006, we had $23.7 million outstanding in aggregate principal amount
of the 2014 Notes. No cash interest will accrue on the 2014 Notes prior to
November 15, 2009. Instead, the principal value of the 2014 Notes will
increase (representing accretion of original issue discount) from the date of
original issuance until but not including November 15, 2009 at a rate of
14 1/2% per
annum compounded annually, so that the accreted value of the 2014 Notes on
November 15, 2009 will be equal to the full principal amount of $39.3
million at maturity. Beginning on November 15, 2009, cash interest will
accrue on the 2014 Notes at an annual rate of 14 1/2% per annum payable semi-annually in arrears on
May 15 and November 15 of each year, beginning May 15, 2010.
Principal is due on November 15, 2014.

At
March 31, 2006, we had outstanding letters of credit totaling $7.5 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. At March 31, 2006, the Company recorded a liability for
unused advertising fees collected from franchisees of $1.0 million and has a
corresponding $0.8 million obligation to contribute to the advertising fund for
company-operated restaurants.

We
accrued in December 2003 and paid option holders in January 2004 $1.9 million
in bonuses. We made cash payments of $0.6 million in March 2005 related to the
revaluation of stock options in connection with the 2009 and 2010 Notes. We
paid an additional $0.5 million in November 2005 as a result of the Stock
Purchase Agreement (the Stock Purchase Agreement), dated as of
September 27, 2005, among us, Chicken Acquisition Corp., Holdings, EPL, the
stockholders of Holdings parties thereto, and American Securities Capital
Partners, L.P.

In
connection with the issuance of the 2010 Notes in March 2004 and the dividend
paid by Holdings shortly thereafter, the exercise prices of outstanding options
to purchase shares of the common stock of Holdings were adjusted. We accrued
and paid option holders in April 2004 $1.3 million in bonuses. Also, in fiscal
2004, we accrued $0.5 million in bonuses that we paid in the first quarter of
2005. We paid an additional $0.5 million in November 2005 as a result of the
Stock Purchase Agreement.

As
of March 31, 2006, EPL was in compliance with all of the financial covenants
contained in its senior credit facility. As of such date we calculated all
relevant ratios under EPLs senior credit facility as follows:

| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | EPLs
  consolidated fixed charge coverage ratio (as such term is defined in the
  senior credit agreement) was 1.05 to 1; and
| |   |                                                                                                                                 
| |  | EPLs
  consolidated leverage ratio (as such term is defined in the senior credit
  agreement) was 5.7 to 1.                  

These
two ratios were permitted to be no less than 1.00 to 1, and no greater than
6.00 to 1, respectively, as of such date.

23

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In
addition, as March 31, 2006, we calculated our fixed charge coverage ratio
and our consolidated leverage ratio (as such terms are defined in the
indenture governing the 2014 Notes) at 1.48 to 1 and 5.99 to 1, respectively.
Similar ratios exist in the indenture governing the 2013 Notes. The indenture
permits us to incur indebtedness that (a) is contractually subordinated to
the 2014 Notes, (b) has a maturity date after November 15, 2014, and
(c) does not provide for payment of cash interest prior to November 15,
2014. The indenture also permits our restricted subsidiaries (as such term is
defined in the indenture), including EPL, 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,
and, in the case of indebtedness incurred by us, if our consolidated leverage
ratio would have been equal to or less than 7.5 to 1, all as 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. Since EPL does not currently meet the fixed charge
coverage ratio, EPL is not permitted to incur additional indebtedness.

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. A
  summary of our critical accounting polices and estimates is included in our
  Annual Report on Form 10-K (File No. 333-115644) as filed with the Securities
  and Exchange Commission on April 10, 2006.

Events Subsequent to the End of the First Fiscal Quarter

On
  May 8, 2006, the indirect parent of EPL, El Pollo Loco Holdings, Inc., filed
  a registration statement with the Securities and Exchange Commission for an
  initial public offering of approximately $135 million of common stock.

|                                                                   | 
|------------------------------------------------------------------ | 
|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 March
31, 2006 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 (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 Commissions rules and
forms, and that such information is accumulated and communicated to our
management, including the principal executive officer and principal 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.

24

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As
of March 31, 2006, 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 principal executive officer and principal financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures were effective.

There
have been no changes in our internal control over financial reporting or in
other factors that have materially affected or that are reasonably likely to
materially affect our internal control over financial reporting during the
quarter.

PART II  OTHER INFORMATION

|                  | 
|----------------- | 
|Item 6. Exhibits.

|                 |  |                                                                                                           
|---------------- |  | ----------------------------------------------------------------------------------------------------------
|Exhibit
  Number |  | Description
  of Documents                                                                                
|                 |  |                                                                                                           
|                 |  |                                                                                                           
|31.1             |  | Certification
  of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
  Act of 2002
|                 |  |                                                                                                           
|31.2             |  | Certification
  of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
  of 2002
|                 |  |                                                                                                           
|32.1             |  | Certification
  of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002
|                 |  |                                                                                                           
|32.2             |  | Certification
  of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002

25

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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.

|                     |                                         
|-------------------- | ----------------------------------------
|                     | EPL INTERMEDIATE, INC                   
|Date: May
  12, 2006 | By:               
/s/ Stephen E. Carley
|                     |                                         
|                     | Stephen E. Carley                       
|                     | President                               

| |                                        
| | ---------------------------------------
| | By:            
       /s/ Joseph Stein
| |                                        
| | Joseph Stein                           
| | Vice President and Treasurer           

26

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EXHIBIT INDEX

|                 |  |                                                                                                           
|---------------- |  | ----------------------------------------------------------------------------------------------------------
|Exhibit
  Number |  | Description
  of Documents                                                                                
|                 |  |                                                                                                           
|31.1             |  | Certification
  of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
  Act of 2002
|                 |  |                                                                                                           
|31.2             |  | Certification
  of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
  Act of 2002
|                 |  |                                                                                                           
|32.1             |  | Certification
  of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002
|                 |  |                                                                                                           
|32.2             |  | Certification
  of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002

27

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