**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 June 25, 2008




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**
            
            **(I.R.S.
                Employer****Incorporation
                or Organization)**
            
            **Identification
                No.)****3535
                Harbor Blvd., Suite 100****Costa
                Mesa, California**
            
            **92626****(Address
                of Principal Executive Offices)**
            
            **(Zip
                Code)**




**(714)
      599-5000**


**(Registrant’s
      Telephone Number, Including Area Code)**





**Not
      Applicable**


**(Former
      Name, Address or Fiscal Year if Changed from Last Report)**





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 o No x




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company,
      as
      defined in Rule 12b-2 of the Exchange Act.


Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer x Smaller
      reporting company o




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
      August 8, 2008, the registrant had 100 shares of its common stock, $.01 par
      value, outstanding.





**TABLE
      OF CONTENTS**




**Item**
            
            
            **Page****PART
                I – FINANCIAL INFORMATION**1.
            
            Condensed
                Consolidated Financial Statements (Unaudited)
            32.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            143.
            
            Quantitative
                and Qualitative Disclosures About Market Risk
            224T.
            
            Controls
                and Procedures
            22**PART
                II – OTHER INFORMATION**1.
            
            Legal
                Proceedings
            221A.
            
            Risk
                Factors
            225.
            
            Other
                Information
            236.
            
            Exhibits
            26


2


**PART
      I – FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**EPL
                INTERMEDIATE, INC.****(A
                Wholly Owned Subsidiary of El Pollo Loco Holdings,
                Inc.)****CONDENSED
                CONSOLIDATED BALANCE SHEETS (UNAUDITED)****(Amounts
                in thousands)**





**DECEMBER 26,**
            
            **JUNE 30,****2007**
            
            **2008****ASSETS**CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            3,841
            
            $
            4,011Notes
                and accounts receivable—net
            
            
            3,631
            
            
            5,052Inventories
            
            
            1,778
            
            
            1,821Prepaid
                expenses and other current assets
            
            
            3,674
            
            
            5,266Deferred
                income taxes
            
            
            2,357
            
            
            2,357Total
                current assets
            
            
            15,281
            
            
            18,507PROPERTY
                OWNED—Net
            
            
            82,217
            
            
            84,962PROPERTY
                HELD UNDER CAPITALLEASES—Net
            
            
            1,105
            
            
            895GOODWILL
            
            
            276,911
            
            
            276,911DOMESTIC
                TRADEMARKS
            
            
            120,700
            
            
            120,700OTHER
                INTANGIBLE ASSETS—Net
            
            
            10,607
            
            
            9,824OTHER
                ASSETS
            
            
            9,607
            
            
            8,705TOTAL
                ASSETS
            
            $
            516,428
            
            $
            520,504





See
                notes to condensed consolidated financial statements.
            (continued)


3





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





**DECEMBER 26,**
            
            **JUNE 30,****2007**
            
            **2008****LIABILITIES
                AND STOCKHOLDER'S EQUITY**CURRENT
                LIABILITIES:Revolving
                credit facility
            
            $
            2,500
            
            $
            -Current
                portion of note payable
            
            
            1,035
            
            
            1,024Current
                portion of obligations under capital leases
            
            
            1,241
            
            
            927Accounts
                payable
            
            
            13,203
            
            
            16,443Accrued
                salaries
            
            
            3,725
            
            
            3,439Accrued
                vacation
            
            
            1,936
            
            
            2,072Accrued
                insurance
            
            
            1,412
            
            
            1,582Accrued
                income taxes payable
            
            
            102
            
            
            -Accrued
                interest
            
            
            1,934
            
            
            1,896Accrued
                advertising
            
            
            180
            
            
            100Other
                accrued expenses and current liabilities
            
            
            5,076
            
            
            5,336Total
                current liabilities
            
            
            32,344
            
            
            32,819NONCURRENT
                LIABILITIES:Senior
                secured notes (2009 Notes)
            
            
            250
            
            
            250Senior
                unsecured notes (2013 Notes)
            
            
            123,843
            
            
            121,959PIK
                Notes (2014 Notes)
            
            
            30,274
            
            
            24,219Note
                payable—less current portion
            
            
            100,418
            
            
            98,842Obligations
                under capital leases—less current portion
            
            
            2,706
            
            
            2,420Deferred
                income taxes
            
            
            38,864
            
            
            34,650Other
                intangible liabilities—net
            
            
            6,047
            
            
            5,432Other
                noncurrent liabilities
            
            
            9,371
            
            
            10,493Total
                noncurrent liabilities
            
            
            311,773
            
            
            298,265COMMITMENTS
                AND CONTINGENCIESSTOCKHOLDER'S
                EQUITYCommon
                stock, $.01 par value—20,000 shares authorized; 100 shares issued and
                outstanding
            
            
            -
            
            
            -Additional
                paid-in-capital
            
            
            176,296
            
            
            199,447Accumulated
                Deficit
            
            
            (3,985
            )
            
            (10,027
            )Total
                stockholder's equity
            
            
            172,311
            
            
            189,420TOTAL
            
            $
            516,428
            
            $
            520,504





See
                notes to condensed consolidated financial statements.
            (concluded)


4





**EPL
                INTERMEDIATE, INC.****(A
                Wholly Owned Subsidiary of El Pollo Loco Holdings,
                Inc.)****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS
                (UNAUDITED)****(Amounts
                in thousands)**





**13 Weeks Ended June 30,**
            
            **26 Weeks Ended June 30,****2007**
            
            **2008**
            
            **2007**
            
            **2008**OPERATING
                REVENUE:Restaurant
                revenue
            
            $
            64,975
            
            $
            70,827
            
            $
            127,424
            
            $
            137,153Franchise
                revenue
            
            
            4,731
            
            
            5,560
            
            
            9,101
            
            
            10,412Total
                operating revenue
            
            
            69,706
            
            
            76,387
            
            
            136,525
            
            
            147,565OPERATING
                EXPENSES:Product
                cost
            
            
            20,130
            
            
            22,643
            
            
            39,331
            
            
            44,237Payroll
                and benefits
            
            
            16,936
            
            
            18,459
            
            
            33,251
            
            
            36,143Depreciation
                and amortization
            
            
            2,899
            
            
            3,106
            
            
            5,693
            
            
            6,091Other
                operating expenses
            
            
            21,115
            
            
            35,200
            
            
            41,826
            
            
            57,667Total
                operating expenses
            
            
            61,080
            
            
            79,408
            
            
            120,101
            
            
            144,138OPERATING
                INCOME (LOSS)
            
            
            8,626
            
            
            (3,021
            )
            
            16,424
            
            
            3,427INTEREST
                EXPENSE—Net
            
            
            7,176
            
            
            6,445
            
            
            14,504
            
            
            13,617INCOME
                (LOSS) BEFORE PROVISION FOR INCOME TAXES
            
            
            1,450
            
            
            (9,466
            )
            
            1,920
            
            
            (10,190
            )PROVISION
                (BENEFIT) FOR INCOME TAXES
            
            
            96
            
            
            (3,880
            )
            
            332
            
            
            (4,148
            )NET
                INCOME (LOSS)
            
            $
            1,354
            
            $
            (5,586
            )
            $
            1,588
            
            $
            (6,042
            )





See
      notes
      to condensed consolidated financial statements.


5





**EPL
                INTERMEDIATE, INC.****(A
                Wholly Owned Subsidiary of El Pollo Loco Holdings,
                Inc.)****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****(Amounts
                in thousands)**




**26
                Weeks Ended June 30,****2007**
            
            **2008**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income (loss)
            
            $
            1,588
            
            $
            (6,042
            )Adjustments
                to reconcile net income (loss) to net cash provided by operating
                activities:Depreciation
                and amortization of property and intangible assets
            
            
            5,693
            
            
            6,091Stock-based
                compensation expense
            
            
            560
            
            
            384Interest
                accretion
            
            
            2,007
            
            
            1,911Gain
                on disposal of assets
            
            
            (384
            )
            
            (340
            )Amortization
                of deferred financing costs
            
            
            693
            
            
            891Amortization
                of negative leasehold interest
            
            
            (136
            )
            
            (61
            )Deferred
                income taxes
            
            
            308
            
            
            (4,214
            )Excess
                tax benefits related to exercise of stock options
            
            
            -
            
            
            31Litigation
                settlement
            
            
            -
            
            
            10,764Changes
                in operating assets and liabilities:Notes
                and accounts receivable—net
            
            
            (712
            )
            
            (1,421
            )Inventories
            
            
            27
            
            
            (43
            )Prepaid
                expenses and other current assets
            
            
            (101
            )
            
            (1,592
            )Income
                taxes receivable / payable
            
            
            (8
            )
            
            (102
            )Other
                assets
            
            
            (261
            )
            
            4Accounts
                payable
            
            
            2,550
            
            
            3,388Accrued
                salaries and vacation
            
            
            (73
            )
            
            (150
            )Accrued
                insurance
            
            
            269
            
            
            170Other
                accrued expenses and current and noncurrent liabilities
            
            
            (952
            )
            
            1,264Net
                cash provided by operating activities
            
            
            11,068
            
            
            10,933CASH
                FLOW FROM INVESTING ACTIVITIES:Proceeds
                from asset disposition
            
            
            570
            
            
            1,080Purchase
                of property
            
            
            (8,463
            )
            
            (9,278
            )Net
                cash used in investing activities
            
            
            (7,893
            )
            
            (8,198
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of common stock
            
            
            -
            
            
            50Repurchase
                of common stock
            
            
            (54
            )
            
            (47
            )Excess
                tax benefits related to exercise of stock options
            
            
            -
            
            
            (31
            )Capital
                contribution
            
            
            -
            
            
            12,000Proceeds
                from borrowings
            
            
            14,500
            
            
            -Payment
                of obligations under capital leases
            
            
            (629
            )
            
            (600
            )Payments
                on debt
            
            
            (7,245
            )
            
            (4,087
            )Repurchase
                of notes
            
            
            -
            
            
            (9,850
            )Deferred
                financing costs
            
            
            (173
            )
            
            -Net
                cash (used in) provided by financing activities
            
            
            6,399
            
            
            (2,565
            )





See
                notes to condensed consolidated financial statements.
            (continued)


6





**EPL
                INTERMEDIATE, INC.****(A
                Wholly Owned Subsidiary of El Pollo Loco Holdings,
                Inc.)****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****(Amounts
                in thousands)**





**26 Weeks Ended****June 30,****2007**
            
            **2008**INCREASE
                IN CASH AND CASH EQUIVALENTS
            
            $
            9,574
            
            $
            170CASH
                AND CASH EQUIVALENTS— Beginning of period
            
            
            2,955
            
            
            3,841CASH
                AND CASH EQUIVALENTS— End of period
            
            $
            12,529
            
            $
            4,011SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION—Cash paid during
                the period for:Interest
                (net of amounts capitalized)
            
            $
            12,921
            
            $
            11,022Income
                taxes
            
            $
            36
            
            $
            164SUPPLEMENTAL
                SCHEDULE OF NON-CASH ACTIVITIES:Unpaid
                purchases of property and equipment
            
            $
            805
            
            $
            148Litigation
                settlement paid by Chicken Acquisition Corp. on behalf of the Company,
                treated as a capital contribution
            
            $
            -
            
            $
            10,764




See
                notes to condensed consolidated financial statements.
            (concluded)


7


**EPL
      INTERMEDIATE, INC.**


**(A
      Wholly-Owned Subsidiary of El Pollo Loco Holdings, Inc.)**




**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**1.
      Basis of Presentation**




The
      accompanying condensed consolidated financial statements are unaudited. EPL
      Intermediate, Inc. (“Intermediate”) and its wholly owned subsidiary El Pollo
      Loco, Inc. (“EPL” and jointly with Intermediate, the “Company,”) prepared these
      condensed consolidated financial statements in accordance with Article 10 of
      Regulation S-X. 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 for
      the year ended December 26, 2007 (File No. 333-115644) as filed with the
      Securities and Exchange Commission (the “Commission”) on March 24, 2008.




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 2007, which ended December 26, 2007, is a 52-week fiscal
      year. Fiscal year 2008, which will end December 31, 2008, is a 53-week year.
      For
      simplicity of presentation, the Company has described the periods ended June
      27,
      2007 and June 25, 2008 as June 30, 2007 and 2008, respectively.




The
      Company is a wholly-owned subsidiary of El Pollo Loco 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, EPL, which develops, franchises, licenses, and operates
      quick-service restaurants under the name El Pollo Loco®.




**2.
      Other Intangible Assets and Liabilities**




Other
      intangible assets and liabilities consist of the following (in
      thousands):




**December
                26, 2007**
            
            **June
                30, 2008**Gross
              Carrying
              Amount
            
            Accumulated
              Amortization
            
            Net
              Carrying
              Amount
            
            Gross
              Carrying
              Amount
            
            Accumulated
              Amortization
            
            Net
              Carrying
              AmountFranchise
                network
            
            $
            8,000
            
            $
            (968
            )
            $
            7,032
            
            $
            8,000
            
            $
            (1,196
            )
            $
            6,804Favorable
                leasehold interest
            
            
            5,862
            
            
            (2,287
            )
            
            3,575
            
            
            5,862
            
            
            (2,842
            )
            
            3,020Other
                intangible assets
            
            $
            13,862
            
            $
            (3,255
            )
            $
            10,607
            
            $
            13,862
            
            $
            (4,038
            )
            $
            9,824Unfavorable
                leasehold interest liability
            
            $
            (9,156
            )
            $
            3,109
            
            $
            (6,047
            )
            $
            (9,156
            )
            $
            3,723
            
            $
            (5,432
            )




Favorable
      leasehold interest represents the asset in excess of the approximate fair market
      value of the leases. The amount is being amortized over the approximate average
      life of the leases.




Unfavorable
      leasehold interest liability represents the liability in excess of the
      approximate fair market value of the leases. The amount is being amortized
      over
      the approximate average life of the leases.


8


Amortization
      expense for other intangible assets and liabilities was $92,000 for the period
      ended June 30, 2007 and $168,000 for the period ended June 30, 2008.




The
      estimated amortization expense for the Company’s amortizable intangible assets
      and liabilities for each of the five succeeding fiscal years is as follows
      (in
      thousands):




**Year
                Ending December 31**2008
                (July 1st–
                December 31st)
            
            $
            1182009
            
            
            2542010
            
            
            1302011
            
            
            1672012
            
            
            182




**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. The Company has not recognized any impairment charges
      during the 26 weeks ended June 30, 2007 and 2008.




**4.
      Stock-Based Compensation**




As
      of
      June 30, 2008, options to purchase 307,556 shares of common stock of CAC were
      outstanding, including 79,650 options that are fully vested. The remaining
      options 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 and vest 100% upon the occurrence of an initial public offering
      of at least $50 million or a change in control of CAC. All options were granted
      with an exercise price equal to the fair value on the date of grant.




Changes
      in stock options for the first quarter ended June 30, 2008 are as follows:





**Weighted-****Average****Remaining**
            
            **Aggregate****Weighted-Average**
            
            **Contractual Life**
            
            **Intrinsic****Shares**
            
            **Exercise Price**
            
            **(in Years)**
            
            **Value (000’s)**Outstanding—December 26, 2007
            
            
            304,287
            
            $
            68.65Granted
            
            
            4,450
            
            $
            109.07Exercised
            
            
            (1,181
            )
            $
            20.60Outstanding—June
                30, 2008
            
            
            307,556
            
            $
            69.42
            
            
            6.6
            
            $
            9,792Vested
                and expected to vest - June 30, 2008
            
            
            303,803
            
            $
            69.42
            
            
            6.6
            
            $
            9,673Exercisable –
                June 30, 2008
            
            
            79,650
            
            $
            8.55
            
            
            3.3
            
            $
            7,384




The
      intrinsic value is calculated as the difference between the market value as
      June
      30, 2008 and the exercise price of options that are outstanding and exercisable.




In
      accordance with the prospective method of adoption of Statement of Financial
      Accounting Standard (“SFAS”) 123R, the Company recognized share-based
      compensation expense before tax of $181,000 and $340,000 and a corresponding
      decrease to net income of $106,000 and $318,000 during the 13 weeks ended June
      30, 2008 and 2007, respectively, related to vesting of stock options.
      Compensation expense of $383,000 and $561,000 and a corresponding decrease
      to
      net income of $224,000 and $464,000 was recognized for the 26 weeks ended June
      30, 2008 and 2007, respectively, related to these options.




As
      of
      June 30, 2008, there was unrecognized compensation expense of $3.4 million
      related to unvested stock options, which the Company expects to recognize over
      a
      weighted-average period of 4.6 years.


9


**5.
      Commitments and Contingencies**




*Legal
      Matters*




On
      or
      about April 16, 2004, former managers Haroldo Elias, Marco Ramirez and Javier
      Rivera filed a purported class action lawsuit 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 court has lifted the stay on the
      class
      action pursuant to a recent California Supreme Court decision. The matter is
      now
      proceeding in Superior Court, and the parties are conducting limited discovery
      on the issue of class certification. While we intend to defend against this
      action vigorously, the ultimate outcome of this case is presently not
      determinable as it is in a preliminary phase. Thus, we cannot at this time
      determine the likelihood of an adverse judgment or a likely range of damages
      in
      the event of an adverse judgment.





On
      or
      about October 18, 2005, Salvador Amezcua, on behalf of all EPL Assistant
      Managers, filed a purported class action complaint in the Superior Court of
      the
      State of California, County of Los Angeles, against EPL. Carlos Olvera replaced
      Mr. Amezcua as the named class representative on August 16, 2006. 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. The court denied EPL’s motion to compel arbitration,
      and the Company has appealed that decision. This matter is subject to an
      automatic stay while the appeal is pending before the Court of Appeal. While
      we
      intend to defend against this action vigorously, the ultimate outcome of this
      case is presently not determinable as it is in a preliminary phase. Thus, we
      cannot at this time determine the likelihood of an adverse judgment or a likely
      range of damages in the event of an adverse judgment.





In
      2004
      El Pollo Loco Mexico, S.A. de C.V. (“EPL-Mexico”) sued EPL in U.S. District
      Court alleging breach of an agreement by EPL to exploit intellectual property
      and to develop new restaurants in Mexico (the “Mexico Litigation”). In late
      2007, the District Court issued a final judgment awarding EPL-Mexico damages
      of
      $21.3 million and return of the intellectual property. EPL appealed this
      judgment in January 2008 in the U.S. Fifth Circuit Court of Appeals and posted
      an appeal bond in the amount of $24.3 million.




On
      June
      18, 2008, the parties agreed to settle the Mexico Litigation and executed a
      Confidential Settlement and Release Agreement (the “Settlement Agreement”)
      pursuant to which:




·
            EPL
                paid EPL-Mexico $10,722,860 (“Settlement
                Payment”);


·
            EPL
                assigned to EPL-Mexico the intellectual property which was the subject
                of
                the disputed contract as provided in the District Court’s
                judgment;


·
            The
                parties mutually released each other and related parties from any
                and all
                known and unknown claims relating to or arising out of the Mexico
                Litigation and the facts thereof;


·
            The
                Mexico Litigation and the appeal were dismissed with prejudice and
                the
                judgment against EPL was vacated;


·
            EPL
                received the sum of $1,087,500 plus interest previously deposited
                by it
                with the District Court in connection with the Mexico Litigation;
                and


·
            The
                $24.3 million appeal bond was
                released.





The
      Settlement Payment, plus certain legal expenses of $42,000, were paid by CAC
      on
      behalf of EPL. The payment by CAC was accounted for as a capital contribution
      by
      CAC to EPL with the corresponding settlement included in other operating
      expenses in the accompanying unaudited condensed consolidated statement of
      operations. EPL’s performance under the Settlement Agreement, including the
      payment of the Settlement Payment and the assignment of the intellectual
      property, did not cause a violation of the Company’s or EPL’s covenants under
      their respective bond indentures and credit agreement. The intellectual property
      transferred to EPL-Mexico is not being used by EPL in its current business
      and
      the transfer does not affect its intellectual property rights or operations
      in
      the U.S. and countries other than Mexico.





To
      facilitate posting of the appeal bond referred to above, EPL and CAC entered
      into a Fee Agreement and Subscription Agreement, each dated December 19, 2007,
      with Trimaran Fund II, LLC (“Trimaran”), an affiliate of CAC, pursuant to which,
      among other things, Trimaran collateralized the appeal bond with a $17.9 million
      letter of credit. As a result of the Settlement Agreement, the appeal bond
      has
      been released. Therefore, the parties executed a Termination Agreement on June
      23, 2008 to terminate the Fee Agreement and Subscription Agreement.




On
      June
      22, 2006, the Company filed a complaint for declaratory relief, breach of
      written contract and bad faith against Arch Specialty Insurance Company, seeking
      damages and equitable relief for Arch’s refusal to carry out the obligations of
      its insurance contract to defend and indemnify, among other things, the Company
      in the Mexico Litigation described above. The Court denied the summary judgment
      motions filed by both parties and the trial has been postponed until September
      2008.


10


In
      April
      2007, Dora Santana filed a purported class action against EPL in state court
      in
      Los Angeles County on behalf of all “Assistant Shift Managers.” Plaintiff
      alleges wage and hour violations including working off the clock, failure to
      pay
      overtime, and meal break violations on behalf of the purported class, currently
      defined as all Assistant Managers from April 2003 to present. The parties are
      currently engaged in discovery on the limited issue of class certification.
      The
      Court has ordered plaintiff to file her Motion for Class Certification by
      December 16, 2008. Trial is set for April 14, 2009. While we intend to defend
      against this action vigorously, the ultimate outcome of this case is presently
      not determinable as it is in a preliminary phase. Thus, we cannot at this time
      determine the likelihood of an adverse judgment or a likely range of damages
      in
      the event of an adverse judgment.





On
      May
      30, 2008, Jeannette Delgado, a former Assistant Manager filed a purported class
      action on behalf of all hourly (i.e. non-exempt) employees of EPL in state
      court
      in Los Angeles County alleging violations of certain California labor laws
      and
      the California Business and Professions Code including failure to pay overtime,
      failure to provide meal periods and rest periods and unfair business practices.
      By statute, the purported class extends back four years, to May 30, 2004.
      Plaintiff’s requested remedies include compensatory and punitive damages,
      injunctive relief, disgorgement of profits and reasonable attorneys’ fees and
      costs. This lawsuit has not yet been served on the Company. Thus, we cannot
      at
      this time determine the likelihood of an adverse judgment or a likely range
      of
      damages in the event of an adverse judgment.





The
      Company is also involved in various other claims and legal actions that arise
      in
      the ordinary course of business. We do not believe that the ultimate resolution
      of these actions will have a material adverse effect on our financial position,
      results of operations, liquidity and capital resources. The Company has not
      recorded any reserves for litigation contingencies.




*Purchasing
      Commitments*




The
      Company has entered into long-term beverage supply agreements with certain
      major
      beverage vendors. Pursuant to the terms of these arrangements, marketing funds
      are provided to the Company and its franchisees from the beverage vendors based
      upon the dollar volume of purchases for company-operated restaurants and
      franchised restaurants, respectively, which will vary according to their demand
      for beverage syrup and fluctuations in the market rates for beverage syrup.
      These contracts have terms extending into 2011 with an estimated Company
      obligation totaling $7,500,000.




**6.
      Predecessor Debt (2009 Notes)**





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. At December 26,
      2007 and June 30, 2008, $250,000 principal amount of the 2009 Notes was
      outstanding.




**7.
      Senior Unsecured Notes Payable (2013 Notes)**




EPL
      has
      outstanding 2013 Notes, consisting of $123.0 million aggregate principal amount
      of 11 3/4% senior notes due 2013. Interest is payable in May and November
      beginning May 15, 2006. The 2013 Notes are unsecured, are guaranteed by
      Intermediate, and may be redeemed, at the discretion of the issuer, after
      November 15, 2009. 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 October 2006, EPL completed the exchange of the 2013 Notes for
      registered, publicly tradable notes that have substantially identical terms
      as
      the 2013 Notes.




The
      costs
      incurred in connection with the offering of the 2013 Notes 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 Intermediate’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 Intermediate, and the 2013 Notes
      and the 2014 Notes (see Note 9) have restrictions that limit distributions
      or
      dividends to be paid by EPL to Intermediate. 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 June 30,
      2008, we are restricted from incurring additional indebtedness, as EPL does
      not
      currently meet the fixed charge coverage ratio. This restriction does not apply
      to the existing loan availability of $17.6 million under the revolving line
      of
      credit. 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.


11


**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 Intermediate, 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 a $104.5 million term loan and $25.0 million in revolving
      availability. Utilizing this senior secured revolving credit facility, EPL
      issued $7.4 million of letters of credit as of June 30, 2008. Future principal
      payments under the term loan at June 30, 2008 are as follows (in
      thousands).




**Year
                Ending December 31**2008
                (July 1st – December 31st)
            
            $
            5122009
            
            
            1,0242010
            
            
            1,0242011
            
            
            97,306$
            99,866




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 26, 2007
      and
      June 30, 2008 was 7.70% and 5.11%, respectively. 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.
      As of June 30, 2008, EPL was in compliance with all of the financial covenants
      contained in its senior credit facility and has $17.6 million available for
      borrowings under the revolving line of credit.




**9.
      PIK Notes (2014 Notes)**




At
      December 26, 2007 and June 30, 2008, the Company had $30.3 million and $24.2
      million, respectively, 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 $29.3 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 indenture restricts the ability of Intermediate 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 Intermediate and for Intermediate to make
      payments to Holdings (see Note 7).




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
      October 2006, Intermediate completed the exchange of the 2014 Notes for
      registered, publicly tradable notes that have substantially identical terms
      as
      the 2014 Notes. The costs incurred in connection with its registration of the
      2014 Notes have been capitalized and are included in other assets in the
      accompanying balance sheets.





On
      January 25, 2008, CAC made an $8.0 million capital contribution to the Company.
      The Company used $7.9 million of these proceeds to repurchase a portion of
      the
      outstanding 2014 Notes at a price that approximated their accreted
      value.


12


**10.
      Income Taxes**





The
      Company’s taxable income or loss is included in the consolidated federal and
      state income tax returns of CAC. The Company records its provision for income
      taxes based on its separate stand-alone operating results using the asset and
      liability method.




The
      Company has determined that the total amount of unrecognized tax benefits as
      of
      December 26, 2007, was $2.1 million. There has been no change in the FIN 48
      reserve for uncertain tax positions from December 26, 2007 through June 30,
      2008. The Company estimates that the unrecognized tax benefit as of June 30,
      2008 will not change significantly within the next twelve months. The Company
      will continue to classify income tax penalties and interest as part of the
      provision for income taxes in its Consolidated Statements of Income. The Company
      has not recorded accrued interest and penalties on uncertain tax positions
      as of
      June 30, 2008. The Company’s liability for uncertain tax positions is reviewed
      periodically and is adjusted as events occur that affect the estimated liability
      for additional taxes, such as the lapsing of applicable statutes of limitations,
      the conclusion of tax audits, the measurement of additional estimated
      liabilities based on current calculations, the identification of new uncertain
      tax positions, the release of administrative tax guidance affecting the
      Company’s estimates of tax liabilities, or the rendering of court decisions
      affecting its estimates of tax liabilities.




The
      Company is subject to taxation in the U.S. and various state jurisdictions.
      The
      Company’s tax years for 2003 through 2007 are subject to examination by various
      tax authorities. The Company is no longer subject to U.S. examination for years
      before 2004, and years before 2003 by state taxing authorities.




**11.
      New Accounting Pronouncements**




In
      April
      2008, the Financial Accounting Standards Board (the “FASB”) issued FASB Staff
      Position 142-3, *Determination
      of*  *the
      Useful Lives of Intangible Assets* (“FSP
      142-3”), which amends the factors that should be considered in developing
      renewal or extension assumptions used to determine the useful life of a
      recognized intangible asset under FASB No. 142, *Goodwill
      and Other Intangible Assets* .
      The
      intent of FSP 142-3 is to improve the consistency between the useful life of
      a
      recognized intangible asset under SFAS No. 142 and the period of expected cash
      flows used to measure the fair value of the asset under SFAS No. 141(R) and
      other U.S. generally accepted accounting principles. FSP 142-3 is effective
      for
      fiscal years beginning after December 15, 2008 and for interim periods within
      those fiscal years. The Company does not expect the adoption of FSP 142-3 to
      have a material effect on its consolidated financial position or results of
      operations.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an Amendment of FASB Statement No. 133.” The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The Company is currently evaluating the impact of
      adopting SFAS No. 161 on its financial statements.





In
      February 2008, the FASB issued FASB Staff Position No. 157-2, which deferred
      the
      effective date for certain portions of SFAS No. 157 related to nonrecurring
      measurements of nonfinancial assets and liabilities. That provision of SFAS
      No.
      157 will be effective for the Company’s fiscal year 2009. The Company is
      currently evaluating the effect, if any, that the adoption of SFAS No. 157-2
      will have on its consolidated results of operations, financial position and
      cash
      flows.





In
      December 2007, the FASB issued SFAS No. 141(R), Business Combinations.
      SFAS No. 141(R) requires reporting entities to record fair value
      estimates of contingent consideration and certain other potential liabilities
      during the original purchase price allocation, expense acquisition costs as
      incurred and does not permit certain restructuring activities previously allowed
      under EITF 95-3 to be recorded as a component of purchase accounting.
      SFAS No. 141(R) is effective for fiscal periods beginning after
      December 15, 2008 and should be applied prospectively for all business
      acquisitions entered into after the date of adoption. We are currently
      evaluating the impact the adoption of SFAS No. 141(R) will have on our
      consolidated financial position or results of operations.





In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest
      in Consolidated Financial Statements — an amendment of ARB No. 51.
      SFAS No. 160 requires (i) that noncontrolling (minority)
      interests be reported as a component of shareholders’ equity, (ii) that net
      income attributable to the parent and to the noncontrolling interest be
      separately identified in the consolidated statement of operations,
      (iii) that changes in a parent’s ownership interest while the parent
      retains its controlling interest be accounted for as equity transactions,
      (iv) that any retained noncontrolling equity investment upon the
      deconsolidation of a subsidiary be initially measured at fair value, and
      (v) that sufficient disclosures are provided that clearly identify and
      distinguish between the interests of the parent and the interests of the
      noncontrolling owners. SFAS No. 160 is effective for fiscal periods
      beginning after December 15, 2008. We are currently evaluating the impact
      the adoption of SFAS No. 160 will have on our consolidated financial
      position or results of operations.





**12.
      Events Subsequent to the End of the Second Fiscal Quarter**





On
      June
      26, 2008, the Company entered into an interest rate swap agreement with an
      effective date of September 24, 2008 and a maturity date of June 30, 2010.
      The
      agreement is based on the notional amount of $50,000,000. Under the terms of
      the
      agreement, the Company agreed to make fixed rate payments on the notional amount
      on a quarterly basis at increasing interest rates ranging from 3.17% to 4.61%,
      in exchange for receiving payments on the notional amount at a floating rate
      based on the three-month LIBOR rate, on a quarterly basis.


13




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




*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 concerns about food-borne
      illnesses; negative publicity, whether or not valid; adverse public perception
      due to the occurrence of avian flu; increases in the cost of chicken or other
      commodities; our dependence upon frequent deliveries of food and other supplies;
      our sensitivity to events and conditions in the greater Los Angeles area; our
      ability to open new restaurants in new and existing markets; our reliance in
      part on our franchisees; our vulnerability to changes in consumer preferences
      and economic conditions; our ability to compete successfully with other quick
      service and fast casual restaurants; our ability to service our indebtedness;
      matters relating to employment and labor laws, labor shortages or increases
      in
      labor costs; our ability to renew leases at the end of their terms; the impact
      of federal, state or local government regulations relating to the preparation
      and sale of food, zoning and building codes, and employee, environmental and
      other matters; and our ability to protect our name and logo and other
      proprietary information. 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 March
      24, 2008. See also Part II, Item 1A of this report.




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 periods ended June 27, 2007
      and June 25, 2008 as June 30, 2007 and 2008, 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 2007, which ended
      December 26, 2007, is a 52-week fiscal year. Fiscal year 2008 which will end
      December 31, 2008, is a 53-week fiscal year. 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. (“Intermediate”) through its wholly-owned subsidiary El Pollo
      Loco, Inc. (“EPL” and jointly with Intermediate, the “Company,” “we,” “us” and
“our”) owns, operates and franchises restaurants specializing in marinated
      flame-grilled chicken. Our restaurants are located principally in California,
      with additional restaurants in Arizona, Nevada, Texas, Illinois, Colorado,
      Connecticut, Georgia, Massachusetts, Washington, Virginia, Oregon and Utah.
      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
      store
      counts at June 30, 2008 and 2007, and December 26, 2007 are set forth below:


14


**El
      Pollo Loco Restaurants**




June 30,
            
            December 26,
            
            June 30,2008
            
            2007
            
            2007Company-owned
            
            
            164
            
            
            159
            
            
            156Franchised
            
            
            242
            
            
            230
            
            
            214System-wide
            
            
            406
            
            
            389
            
            
            370




During
      the three and six months ended June 30, 2008, the Company opened 2 and 5 new
      restaurants, respectively. In those periods, franchisees opened 2 and 14 new
      restaurants, respectively and closed 2 and 2 restaurants, respectively.




We
      plan
      to open approximately ten company-operated restaurants in 2008 and a moderately
      increasing number of company-operated restaurants in succeeding years. We
      believe our franchisees will open up from 20 to 25 new restaurants in 2008,
      a
      reduction from the 40 new restaurants we previously expected would be opened.
      The reduction is due to adverse economic and liquidity conditions which have
      caused some franchisees to delay the opening of new restaurants under existing
      development agreements. We will continue our national expansion both with
      franchised locations and company-owned stores.




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.
      A
      common measure of financial performance in the restaurant industry is
“same-store sales.” A restaurant enters the comparable restaurant base for the
      calculation of same-store sales the first full week after the 15-month
      anniversary of its opening. For the 13 weeks and 26 weeks ended June 30, 2008,
      same-store sales for restaurants systemwide increased 1.9% and 1.8%,
      respectively, compared to the corresponding periods in 2007. System-wide
      same-store sales include same-store sales at all company-owned stores and
      franchise-owned stores, as reported by franchisees. We use system-wide sales
      information in connection with store development decisions, planning and
      budgeting analyses. This information is useful in assessing consumer acceptance
      of our brand and facilitates an understanding of financial performance as our
      franchisees pay royalties (included in franchise revenues) and contribute to
      advertising pools based on a percentage of their sales.




Increases
      in company-operated restaurant revenue are due to growth in the number of
      company-operated restaurants and to increases in same store sales, which may
      include price and transaction volume increases. We implemented menu price
      increases in May 2008, January 2008 and January 2007. Many factors can influence
      sales at all or specific restaurants, including increased competition, strength
      of marketing promotions, the restaurant manager’s operational execution, changes
      in local market conditions and demographics and the status of the economy.
      We
      believe that consumers are being affected by the economy more dramatically
      this
      year as they struggle with the sustained impact of significant higher gasoline
      costs, rising food prices, declining home values and the prospect of a
      recession, and these factors have negatively impacted restaurant traffic.




Franchise
      revenue consists of royalties, initial franchise fees, help desk revenue and
      franchise rental income. Royalties average 4% of the franchisees’ net sales. As
      of July 28, 2008, we are legally authorized to market franchises in 50 states
      and we are pursuing opportunities in a number those states. We have entered
      into
      development agreements that 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, which includes food and paper costs, 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. We currently have chicken supply contracts with 4 suppliers. Our
      supply contracts typically are short-term, one or two years, and provide for
      fixed or floor and ceiling prices. We implemented menu price increases in May
      2008, January 2008 and January 2007 that have partially mitigated the impact
      of
      higher chicken prices. We expect the cost of chicken will continue to be
      negatively affected by the significant demand for corn and, due to competitive
      pressures, there is no assurance that we will be able to increase menu prices
      in
      the future to offset these increased costs. In the last year, corn prices,
      which are a primary feed source for chicken, have increased dramatically. A
      major driver of this increase is rapidly increasing demand for corn from the
      ethanol industry. There have been many new ethanol plants opening in the United
      States, and most of these plants use corn as the primary source of grain to
      make
      ethanol. When farmers plant more corn to take advantage of high prices, they
      may
      take land for wheat, soybeans, or other crops out of production which could
      negatively impact prices for our other commodities. Corn prices also temporarily
      increased due to the destruction of crops with the recent flooding in the
      Midwest. The effect of higher oil prices on transportation costs also impact
      the
      cost of commodities. In addition, there has been a global increase in demand
      for
      corn and wheat, which has put pressure on grain prices worldwide. This increased
      demand on the nation’s corn crop has had and may continue to have an adverse
      impact on chicken prices.


15


Payroll
      and benefits make up the next largest single expense. Payroll and benefits
      are
      subject to inflation, minimum wage increases and expenses for health insurance
      and workers’ compensation insurance. A significant number of our hourly staff
      are paid at the applicable federal or state minimum wage and, accordingly,
      increases in the minimum wage will increase our labor cost. On September 12,
      2006, the state of California passed legislation increasing the minimum wage
      in
      the state from $6.75 per hour to $7.50 per hour effective January 1, 2007.
      Additionally on January 1, 2008, the minimum wage in California increased to
      $8.00 per hour. The federal minimum wage increased from $5.85 to $6.55 per
      hour
      effective July 24, 2008 and will increase to $7.25 per hour effective July
      24,
      2009. The Company implemented menu price increases in January 2007 and 2008
      and
      May 2008 in order to partially mitigate the impact of the minimum wage increase.
      Workers’ compensation insurance costs are subject to a number of factors, and
      although we have seen a reduction in the number of workers’ compensation claims
      due to employee safety initiatives that we began implementing in fiscal 2002,
      we
      cannot predict whether this trend will continue and what the impact to our
      workers’ compensation expense will be.




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




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 includes all corporate and administrative functions
      that support existing operations and provide the infrastructure to facilitate
      our growth. These expenses have been impacted by rating agency fees, directors
      and officers insurance, compliance with laws relating to corporate governance
      and public disclosure, and audit fees. In addition, general and administrative
      expense includes costs associated with disclosure controls and procedures and
      implementing the level of internal controls required for a company with
      registered securities.




**Results
      of Operations**




Our
      operating results for the 13 weeks ended June 30, 2007 and 2008 are expressed
      as
      a percentage of restaurant revenue below:





**13
                Weeks Ended****June
                30,****2007**
            
            **2008****Operating
                Statement Data:**Restaurant
                revenue
            
            
            100.0
            %
            
            100.0
            %Product
                cost
            
            
            31.0
            
            
            32.0Payroll
                and benefits
            
            
            26.1
            
            
            26.1Depreciation
                and amortization
            
            
            4.5
            
            
            4.4Other
                operating expenses
            
            
            32.5
            
            
            49.7Operating income (loss)
            
            
            13.3
            
            
            (4.3
            )Interest
                expense
            
            
            11.0
            
            
            9.1Income (loss) before income taxes
            
            
            2.2
            
            
            (13.4
            )Net income (loss)
            
            
            2.1
            
            
            (7.9
            )**Supplementary
                Operating Statement Data:**Restaurant
                other operating expense
            
            
            21.5
            
            
            22.6Franchise
                expense
            
            
            1.3
            
            
            1.5General
                and administrative expense
            
            
            9.7
            
            
            25.6Total
                other operating expenses
            
            
            32.5
            
            
            49.7


16


***13
      Weeks Ended June 30, 2008 Compared to 13 Weeks Ended June 30,
      2007***




Restaurant
      revenue increased $5.8 million, or 9.0%, to $70.8 million for the 13 weeks
      ended
      June 30, 2008 from $65.0 million for the 13 weeks ended June 30, 2007. This
      increase was partially due to an additional $1.3 million in restaurant revenue
      resulting from a 2.0% increase in company-operated same-store sales for the
      2008
      period from the 2007 period. Restaurants enter the comparable restaurant base
      for same-store sales the first full week after that restaurant’s 15-month
      anniversary. The positive impact from price increases taken in January and
      May
      2008, approximately 3.4% for the 13 weeks ended June 30, 2008, more than
      compensated for a transaction decline in the second quarter. The increase in
      restaurant revenue was also due in part to $2.3 million in current year revenue
      from eleven restaurants opened in 2007, $1.6 million from five restaurants
      opened in 2008, $0.7 from a store that was closed for part of 2007 due to a
      fire
      and $2.1 million from five restaurants acquired from a franchisee in 2007
      partially offset by lost sales of $2.0 million due to the sale of eight company
      restaurants to franchisees in 2007. The transaction decrease reflects intense
      competition and a general sales softness in the QSR industry, in part due to
      higher gas prices, recession fears and other economic factors that are expected
      to continue throughout 2008.




Franchise
      revenue increased $0.8 million, or 17.5%, to $5.6 million for the 13 weeks
      ended
      June 30, 2008 from $4.7 million for the 13 weeks ended June 30, 2007. This
      increase is due to increased royalties resulting from a 1.8% increase in
      franchise same-store sales, increased royalties from new franchise stores opened
      in the current period and to an increase in franchise fees due to the increased
      number of franchise stores opened in the current period.




Product
      cost increased $2.5 million, or 12.5%, to $22.6 million for the 13 weeks ended
      June 30, 2008 from $20.1 million for the 13 weeks ended June 30, 2007. These
      costs as a percentage of restaurant revenue increased 1.0% to 32.0% for the
      2008
      period compared to 31.0% for the 2007 period. The increase is attributed to
      increased chicken and commodity costs and increased promotional discounting
      in
      the current period which was partially offset by the benefit of the menu price
      increases.




Payroll
      and benefit expenses increased $1.4 million, or 9.0%, to $18.5 million for
      the
      13 weeks ended June 30, 2008 from $16.9 million for the 13 weeks ended June
      30,
      2007. As a percentage of restaurant revenue, these costs remained flat at 26.1%
      for the 2008 and 2007 periods.




Depreciation
      and amortization increased $0.2 million, or 7.1%, to $3.1 million for the 13
      weeks ended June 30, 2008 compared to $2.9 million for the 13 weeks ended June
      30, 2007. These costs as a percentage of restaurant revenue decreased slightly
      to 4.4% for the 2008 period compared with 4.5% for the 2007 period.




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
      $2.0 million, or 14.5%, to $16.0 million for the 13 weeks ended June 30, 2008
      from $14.0 million for the 13 weeks ended June 30, 2007. These costs as a
      percentage of restaurant revenue increased to 22.6% for the 2008 period from
      21.5% for the 2007 period. The increase in operating costs was due to a 0.5%
      increase in occupancy costs as a percentage of revenue, which was primarily
      a
      result of higher rent expense and a property tax adjustment in the current
      period. The increase was also due to a 0.5% increase in utilities as a
      percentage of revenue which was due to higher gas prices in the current period.
      The increase was also attributed to higher credit card fees of 0.1% as a
      percentage of revenue. The increase in restaurant other operating expense was
      partially offset by a decrease of 0.4% in advertising expense as a percentage
      of
      revenue. Advertising expense each quarter may be above or below our planned
      annual rate of approximately 4% of revenue, depending on the timing of marketing
      promotion and the relative weights and price of media
      spending.




Franchise
      expense consists primarily of rent expense that we pay to landlords associated
      with leases under restaurants we are subleasing to franchisees. This expense
      usually fluctuates primarily as subleases expire and to some degree based on
      rents that are tied to a percentage of sales calculation. Franchise expense
      increased $0.2 million, or 25.9%, to $1.0 million for the 13 weeks ended June
      30, 2008 from $0.8 million for the 13 weeks ended June 30, 2007. This increase
      was primarily attributed to increased expenses related to the help desk for
      the
      franchisees.




Included
      in general and administrative expense in the second quarter of 2008 is a $10.7
      million expense to settle the Mexico Litigation described in Note 5 of the
      unaudited condensed consolidated financial statements in Part I of this report.
      This expense accounted for 170.0% of the 187.6% increase in general and
      administrative expense in the second quarter of 2008 compared to the second
      quarter of 2007. Excluding this settlement expense, general and administrative
      expense increased $1.1 million, or 17.6%, to $7.4 million for the 13 weeks
      ended
      June 30, 2008 from $6.3 million for the 13 weeks ended June 30, 2007. Excluding
      the settlement expense, general and administrative expense as a percentage
      of
      revenue increased 0.8% to 10.5% for the 13 weeks ended June 30, 2008 from 9.7%
      for the 13 weeks ended June 30, 2007. The increase was primarily attributed
      to
      increased salaries and wages of $0.4 million due to increased headcount, and
      an
      increase of $0.8 million in legal fees in the 2008 period, primarily attributed
      to the Mexico Litigation.




17


Interest
      expense, net of interest income, decreased $0.8 million, or 10.2%, to $6.4
      million for the 13 weeks ended June 30, 2008 from $7.2 million for the 13 weeks
      ended June 30, 2007. Our average debt balances for the 2008 period decreased
      to
      $250.5 million compared to $265.1 million for the 2007 period and our average
      interest rate decreased to 9.52% for the 2008 period compared to 10.52% for
      the
      2007 period.




Our
      provision for income taxes consisted of an income tax benefit of $3.9 million
      and income tax expense of $0.1 million for the 13-week periods ended June 30,
      2008 and 2007, respectively, for an effective tax rate of 41.5% for 2008 and
      6.6% for 2007.




As
      a
      result of the factors above, in particular, the $10.7 million settlement
      expense, we had a net loss of $5.6 million for the 13 weeks ended June 30,
      2008
      compared with net income of $1.4 million for the 13 weeks ended June 30, 2007,
      or (7.9)% and 2.1% as a percentage or restaurant revenue, for the 13 weeks
      ended
      June 30, 2008 and 2007, respectively.





***26
      Weeks Ended June 30, 2008 Compared to 13 Weeks Ended June 30,
      2007***





Our
      operating results for the 26 weeks ended June 30, 2007 and 2008 are expressed
      as
      a percentage of restaurant revenue below:





**26
                Weeks Ended****June
                30,****2007**
            
            **2008****Operating
                Statement Data:**Restaurant
                revenue
            
            
            100.0
            %
            
            100.0
            %Product
                cost
            
            
            30.9
            
            
            32.3Payroll
                and benefits
            
            
            26.1
            
            
            26.4Depreciation
                and amortization
            
            
            4.5
            
            
            4.4Other
                operating expenses
            
            
            32.8
            
            
            42.0Operating income
            
            
            12.9
            
            
            2.5Interest
                expense
            
            
            11.4
            
            
            9.9Income (loss) before income taxes
            
            
            1.5
            
            
            (7.4
            )Net income (loss)
            
            
            1.2
            
            
            (4.4
            )**Supplementary
                Operating Statement Data:**Restaurant
                other operating expense
            
            
            21.3
            
            
            22.4Franchise
                expense
            
            
            1.4
            
            
            1.4General
                and administrative expense
            
            
            10.1
            
            
            18.2Total
                other operating expenses
            
            
            32.8
            
            
            42.0




Restaurant
      revenue increased $9.7 million, or 7.6%, to $137.2 million for the 26 weeks
      ended June 30, 2008 from $127.4 million for the 26 weeks ended June 30, 2007.
      This increase was partially due to an additional $1.4 million in restaurant
      revenue resulting from a 1.1% increase in company-operated same-store sales
      for
      the 2008 period from the 2007 period. Restaurants enter the comparable
      restaurant base for same-stores sales the first full week after that
      restaurant’s 15-month anniversary. The positive impact from price increases
      taken in January and May 2008, approximately 3.0% for the 26 weeks ended June
      30, 2008, more than compensated for a transaction decline in the current period.
      The increase in restaurant revenue was also due in part to $5.4 million in
      current year revenue from fourteen restaurants opened in 2006 and 2007, $1.9
      million from five restaurants opened in 2008, $1.0 from a store that was closed
      for part of 2007 due to a fire and $4.1 million from five restaurants acquired
      from a franchisee in 2007 partially offset by lost sales of $4.1 million due
      to
      the sale of eight company restaurants to franchisees in 2007. The transaction
      decrease reflects intense competition and a general sales softness in the QSR
      industry, in part due to higher gas prices, recession fears and other economic
      factors that are expected to continue throughout 2008.




Franchise
      revenue increased $1.3 million, or 14.4%, to $10.4 million for the 26 weeks
      ended June 30, 2008 from $9.1 million for the 26 weeks ended June 30, 2007.
      This
      increase is primarily due to increased royalties resulting from a 2.3% increase
      in franchise same-store sales, increased royalties from new franchise stores
      opened in the current period and to an increase in franchise fees due to the
      increased number of franchise stores opened in the current period.




Product
      cost increased $4.9 million, or 12.5%, to $44.2 million for the 26 weeks ended
      June 30, 2008 from $39.3 million for the 26 weeks ended June 30, 2007. These
      costs as a percentage of restaurant revenue increased 1.4% to 32.3% for the
      2008
      period compared to 30.9% for the 2007 period. The increase is attributed to
      increased chicken and commodity costs and increased promotional discounting
      in
      the current period which was partially offset by the benefit of the menu price
      increases.


18


Payroll
      and benefit expenses increased $2.8 million, or 8.7%, to $36.1 million for
      the
      26 weeks ended June 30, 2008 from $33.3 million for the 26 weeks ended June
      30,
      2007. As a percentage of restaurant revenue, these costs increased 0.3% to
      26.4%
      in 2008 from 26.1% for the 2007 period. This increase as a percentage of
      restaurant revenue is primarily attributed to higher wages which is due in
      part
      to the increase in the minimum wage partially offset by the leverage from the
      menu price increases.




Depreciation
      and amortization increased $0.4 million, or 7.0%, to $6.1 million for the 26
      weeks ended June 30, 2008 compared to $5.7 million for the 26 weeks ended June
      30, 2007. These costs as a percentage of restaurant revenue decreased slightly
      to 4.4% for the 2008 period compared with 4.5% for the 2007 period.




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
      $3.5 million, or 12.8%, to $30.7 million for the 26 weeks ended June 30, 2008
      from $27.2 million for the 26 weeks ended June 30, 2007. These costs as a
      percentage of restaurant revenue increased to 22.4% for the 2008 period from
      21.3% for the 2007 period. The increase in operating costs was due to a 0.4%
      increase in occupancy costs as a percentage of revenue, which was primarily
      a
      result of higher rent expense and a property tax adjustment in the current
      period. The increase was also due to a 0.3% increase in utilities as a
      percentage of revenue which was due to higher gas prices in the current period.
      The increase in restaurant other operating expense was also due in part to
      a
      0.1% increase in credit card fees as a percentage of revenue and a 0.1% increase
      in janitorial expense as a percentage of revenue.




Franchise
      expense consists primarily of rent expense that we pay to landlords associated
      with leases under restaurants we are subleasing to franchisees. This expense
      usually fluctuates primarily as subleases expire and to some degree based on
      rents that are tied to a percentage of sales calculation. Franchise expense
      increased $0.2 million, or 10.7%, to $2.0 million for the 26 weeks ended June
      30, 2008 from $1.8 million for the 26 weeks ended June 30, 2007. This increase
      was due in part to increased expenses related to the help desk for the
      franchisees. There is a corresponding increase in franchise income related
      to
      the help desk.




Included
      in general and administrative expense in the 26 weeks ended June 30, 2008 is
      a
      $10.7 million expense to settle the Mexico Litigation described in Note 5 to
      the
      unaudited condensed consolidated financial statements in Part I of this report.
      This expense accounted for 83.6% of the 94.8% increase in general and
      administrative expense in the 2008 period over the 2007 period. Excluding this
      settlement expense, general and administrative expense increased $1.5 million,
      or 11.2%, to $14.3 million for the 26 weeks ended June 30, 2008 from $12.8
      million for the 26 weeks ended June 30, 2007. Excluding the settlement expense,
      general and administrative expense as a percentage of revenue increased 0.3%
      to
      10.4% for the 26 weeks ended June 30, 2008 from 10.1% for the 26 weeks ended
      June 30, 2007. The increase was primarily attributed to increased salaries
      and
      wages of $0.5 million due to increased headcount and an increase of $1.2 million
      in legal fees in the 2008 period.




Interest
      expense, net of interest income, decreased $0.9 million, or 6.1%, to $13.6
      million for the 26 weeks ended June 30, 2008 from $14.5 million for the 26
      weeks
      ended June 30, 2007. Our average debt balances for the 2008 period decreased
      to
      $256.0 million compared to $266.5 million for the 2007 period and our average
      interest rate decreased to 9.96% for the 2008 period compared to 10.63% for
      the
      2007 period.




Our
      provision for income taxes consisted of an income tax benefit of $4.1 million
      and income tax expense of $0.3 million for the 26-week periods ended June 30,
      2008 and 2007, respectively, for an effective tax rate of 41.5% for 2008 and
      17.3% for 2007.




As
      a
      result of the factors above, in particular, the $10.7 million settlement
      expense, we had a net loss of $6.0 million for the 26 weeks ended June 30,
      2008
      compared with net income of $1.6 million for the 26 weeks ended June 30, 2007,
      or (4.4)% and 1.2% as a percentage or restaurant revenue, for the 26 weeks
      ended
      June 30, 2008 and 2007, respectively.





**Liquidity
      and Capital Resources**




Our
      principal sources of liquidity are cash flow from operations, a $25.0 million
      revolving credit facility, and capital contributions from our shareholder.
      Our
      principal liquidity requirements are to service our debt and meet our capital
      expenditure needs. Our indebtedness at June 30, 2008 was $249.6 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 ($17.6 million at June 30,
      2008) will be adequate to meet our future liquidity needs for at least the
      next
      twelve months.


19


In
      December 2007, our parent company, CAC, received a capital infusion of $45.0
      million. On December 26, 2007, CAC made a $3.0 million capital contribution
      to
      EPL through intermediary subsidiaries which was used for normal operating
      purposes and capital expenditures. On January 25, 2008, CAC made an $8.0 million
      capital contribution to the Company. The Company used $7.9 million of these
      proceeds to repurchase a portion of the outstanding 14.5% senior discount notes
      due 2014 (see Note 9 to our Unaudited Condensed Consolidated Financial
      Statements) at a price that approximated their accreted value. In May of 2008,
      CAC made a $4.0 million capital contribution to the Company that was used for
      normal operating purposes. On June 18, 2008 we settled the Mexico Litigation
      as
      described in Note 5 to our unaudited condensed consolidated financial
      statements. The Settlement Payment of $10,722,860 was paid by CAC on behalf
      of
      EPL. This payment is accounted for as a capital contribution by CAC to EPL.
      The
      Company expects that CAC will make future capital contributions to the Company
      and EPL for acceleration of company-owned store growth and other corporate
      purposes.




In
      the
      2008 six-month period, our capital expenditures totaled $9.3 million, consisting
      of $6.8 million for new restaurants, $1.0 million for capitalized repairs of
      existing sites, $0.7 million for costs related to remodeling our existing
      restaurants to comply with the federal Americans with Disabilities Act, $0.3
      million for construction costs related to our new training center, and $0.5
      million related to other projects. We also had cash proceeds of $1.1 million
      from asset dispositions in the current period. As a result, net cash used in
      investing activities in the current period was $8.2 million.




Cash
      and
      cash equivalents increased $0.2 million from $3.8 million at December 26, 2007
      to $4.0 million at June 30, 2008. In the first six months of 2008, we made
      $1.6
      million in principal repayments on EPL’s term loan, and $2.5 million in payments
      to pay off borrowings under our revolving credit facility. In the first six
      months of 2008 we did not have any 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 EPL under
      EPL’s senior secured credit facilities in an amount sufficient to enable us to
      service our indebtedness or to fund our other liquidity needs. If we acquire
      additional restaurants from franchisees, our debt service requirements could
      increase. In addition, we may fund restaurant openings through credit received
      by trade suppliers and landlord contributions. If our cash flow from operations
      is inadequate to meet our obligations under our indebtedness we may need to
      refinance all or a portion of our indebtedness, including the notes, on or
      before maturity. We cannot provide assurance that we will be able to refinance
      any of our indebtedness on commercially reasonable terms or at all.




As
      a
      holding company, the 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 (consisting primarily of the $24.2
      million outstanding principal amount of 2014 Notes) 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 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 the terms of which may further restrict
      or prohibit the making of distributions, the payment of dividends or the making
      of loans by EPL.




***Working
      Capital and Cash Flows***




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




*Operating
      Activities.* We
      had
      net cash provided by operating activities of $10.9 million for the 26 weeks
      ended June 30, 2008 compared with $11.1 million for the 26 weeks ended June
      30,
      2007. The decrease in cash provided by operating activities was related to
      increased prepaid expenses and other current asset balances, changes in deferred
      income taxes balances, and the net loss partially offset by changes in other
      accrued expenses and liabilities and the capital contribution.




*Investing
      Activities.* We
      had
      net cash used in investing activities of $8.2 million for the 26 weeks ended
      June 30, 2008 compared with $7.9 million for the 26 weeks ended June 30, 2007.
      The increase in cash used in investing activities of $0.3 million was related
      to
      $0.8 million in increased expenditures, primarily for the remodeling of our
      existing restaurants to comply with the federal Americans with Disabilities
      Act,
      partially offset by $0.5 million in proceeds received for asset dispositions.


20


*Financing
      Activities.* We
      had
      net cash used in financing activities of $2.6 million for the 26 weeks ended
      June 30, 2008 compared with net cash provided by financing activities of $6.4
      million for the 26 weeks ended June 30, 2007. The increase of $9.0 million
      in
      cash used in financing activities in the 2008 period was primarily attributable
      to the cash used in the repurchase of the 2014 Notes and the 2013 Notes of
      $9.9
      million, and there was also an increase in cash in the 2007 period related
      to a
      drawdown of our revolving credit facility of $14.5 million that did not recur
      in
      the current period. The increase was partially offset by the capital
      contribution of $12.0 million that was received in the current period and a
      decrease in debt payments in the current period of $3.1 million




***Debt
      and Other Obligations***




On
      November 18, 2005, EPL entered into senior secured credit facilities with
      Intermediate, 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. As of June 30, 2008, EPL was in compliance with all of the
      financial covenants contained in its senior credit facility. In March 2007
      we
      amended the credit facility to reduce the interest rate and to modify in our
      favor the terms of certain restrictive covenants.




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.




At
      June
      30, 2008, we had $24,219,000 outstanding in aggregate principal amount of 141⁄2%
      senior discount Notes due 2014. 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 $29,342,000 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. On January 25,
      2008, CAC made an $8.0 million capital contribution to the Company. The Company
      used $7.9 million of these proceeds to repurchase a portion of these notes
      at a
      price that approximated their accreted value.




At
      June
      30, 2008, we had $250,000 and $121,959,000 outstanding in aggregate principal
      amount under our 2009 Notes and 2013 Notes, respectively (see Notes 8 and 9
      to
      our Unaudited Condensed Consolidated Financial Statements). On June 25, 2008,
      the Company used $2.0 million in cash from operations to repurchase a portion
      of
      the 2013 Notes at a price that approximated their accreted value. As
      of
      June 30, 2008, we are restricted from incurring additional indebtedness, as
      EPL
      does not currently meet the fixed charge coverage ratio under the 2013 Notes.
      This restriction does not apply to the existing loan availability of $17.6
      million under the revolving line of credit.




At
      June
      30, 2008, we had outstanding letters of credit totaling $7.4 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
      Franchise Disclosure Document, 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.




As
      of
      June 30, 2008, 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 its senior credit facility as follows:




·
            EPL’s
                “fixed charge coverage ratio” (as such term is defined in the senior
                credit agreement) was 1.05 to 1; and·
            EPL’s
                “leverage ratio” (as such term is defined in the senior credit agreement)
                was 4.94 to 1.




These
      two
      ratios were permitted to be no less than 1.0 to 1, and no greater than 5.25
      to
      1, respectively, as of such date.


21




In
      addition, as of June 30, 2008, 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 1.17 to 1 and 7.78 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. This restriction does not apply
      to
      borrowings available under the revolving line of credit.




**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, the realization of gross
      deferred tax assets, tax reserves, and contingent liabilities including the
      outcome of litigation. 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 March 24,
      2008. See also Note 5 to our Unaudited Condensed Consolidated Financial
      Statements.





**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 EPL’s senior
      secured credit facilities that are payable at floating rates of
      interest.




A
      hypothetical 10% fluctuation in the variable interest rate on our existing
      debt
      of $99.9 million as of June 30, 2008 would result in an increase in interest
      expense of approximately $0.6 million in a given year. We do not consider the
      change in fair value of our long-term fixed rate debt resulting from a
      hypothetical 10% fluctuation in interest rates as of June 30, 2008 to be
      material.





To
      manage
      or reduce the interest rate risk, we may periodically enter into interest rate
      swap transactions. The Company enters into these contracts with major financial
      institutions, which may minimize its risk of credit loss. The Company first
      began engaging in these transactions in 2002.




**Item
      4T. Controls and Procedures**




Our
      Chief
      Executive Officer and Senior Vice President of Finance have concluded that
      the
      design and operation of our disclosure controls and procedures are effective
      as
      of June 30, 2008. This conclusion is based on an evaluation conducted under
      the
      supervision and with the participation of Company management. Disclosure
      controls and procedures are those controls and procedures which are designed
      to
      ensure that information required to be disclosed in our SEC filings and
      submissions is accumulated and communicated to management and is recorded,
      processed, summarized and reported in a timely manner and in accordance with
      SEC
      rules and regulations.




There
      have been no changes in our internal control over financial reporting that
      occurred during our first 26 weeks ended June 30, 2008.




**PART
      II – OTHER INFORMATION**




**Item
      1. Legal Proceedings**




The
      information set forth in Note 5 to our Unaudited Condensed Consolidated
      Financial Statements in Part I of this Report is incorporated herein by this
      reference.


22


Also
      see
      our Annual Report on Form 10-K for the year ended December 26, 2007 as filed
      with the SEC on March 24, 2008.




**Item
      1A. Risk Factors**





***Food-borne
      illness incidents could reduce our restaurant sales.*** ****




We
      cannot
      guarantee that our internal controls and training will be fully effective in
      preventing all food-borne illnesses. Furthermore, our reliance on third-party
      food processors makes it difficult to monitor food safety compliance and may
      increase the risk that food-borne illness would affect multiple locations rather
      than single restaurants. Some food-borne illness incidents could be caused
      by
      third-party food suppliers and transporters outside of our control. New
      illnesses resistant to our current precautions may develop in the future, or
      diseases with long incubation periods could arise, that could give rise to
      claims or allegations on a retroactive basis. One or more instances of
      food-borne illness in one of our company-operated or franchised restaurants
      could negatively affect restaurant sales if highly publicized. This risk exists
      even if it were later determined that the illness was wrongly attributed to
      one
      of our restaurants. A number of other restaurant chains have experienced
      incidents related to food-borne illnesses that have had a material adverse
      impact on their operations, and we cannot assure you that we can avoid a similar
      impact upon the occurrence of a similar incident at our restaurants.





For
      example, in the Spring of 2008 there was an outbreak of salmonella illness
      which
      was first attributed to fresh tomatoes. The FDA has since traced the outbreak
      to
      fresh jalapeno and serrano chiles from Mexico. EPL uses fresh tomatoes and
      chili
      peppers in its salsas. Although none of the fresh tomatoes or peppers used
      by
      EPL has been linked to the tainted produce, federal health officials have warned
      the public about eating fresh salsa products, and, accordingly, such warnings
      and concerns about salmonella could negatively affect customer traffic at our
      restaurants.





***We
      rely on our franchisees to successfully develop and operate new
      restaurants.*** ****




We
      rely
      in part on our franchisees and the manner in which they operate their locations
      to develop and promote our business. Our top ten franchisees operate
      approximately half of our franchised restaurants. A loss of, or the failure
      of,
      one or more of these franchisees could have a material adverse effect on our
      results of operations. Additionally, if one or more of these franchisees were
      to
      become insolvent or otherwise were unwilling or unable to pay us their fees,
      our
      business could be adversely affected.




As
      of
      December 26, 2007, we have executed development agreements that represent
      commitments to open 208 restaurants. These franchised restaurants will be
      located in California, Washington, Arizona, Missouri, Illinois, Georgia,
      Virginia, Utah, New York, New Jersey, Oregon, North Carolina, Florida and the
      six New England states. Although we have developed criteria to evaluate and
      screen prospective franchisees, we cannot be certain that the franchisees we
      select will have the business acumen or financial resources necessary to operate
      successful franchises in their franchise areas, and state franchise laws may
      limit our ability to terminate or modify these franchise arrangements. Moreover,
      franchisees may not successfully operate restaurants in a manner consistent
      with
      our standards and requirements, or may not hire and train qualified managers
      and
      other restaurant personnel. The failure of franchisees to operate franchises
      successfully could have a material adverse effect on us, our reputation, our
      brands and our ability to attract prospective franchisees and could materially
      adversely affect our business, financial condition, results of operations and
      cash flows.




Franchisees
      may not have access to the financial or management resources that they need
      to
      open the restaurants contemplated by their agreements with us, or be able to
      find suitable sites on which to develop them. Franchisees may not be able to
      negotiate acceptable lease or purchase terms for restaurant sites, obtain the
      necessary permits and government approvals or meet construction schedules.
      Any
      of these problems could slow our growth and reduce our franchise revenue.
      Additionally, our franchisees typically depend on financing from banks and
      other
      financial institutions, which may not always be available to them, in order
      to
      construct and open new restaurants. The lack of adequate financing could
      adversely affect the number and rate of new restaurant openings by our
      franchisees and adversely affect our future franchise revenue. Due to adverse
      economic and liquidity conditions, our franchisees are delaying the opening
      of
      new restaurants under existing development agreements, resulting in a reduction
      in the number of new franchised restaurants we expect to open in 2008 from
      40 to
      between 20 and 25.





Also,
      we
      sublease certain restaurants to some existing California franchisees. If any
      such franchisees cannot meet their financial obligations under the sublease,
      or
      otherwise fail to honor or default under the terms of the sublease, we would
      be
      financially obligated under the master lease and could be materially adversely
      affected.


23


***We
      are vulnerable to changes in consumer preferences and economic conditions that
      could harm our business, financial condition, results of operations and cash
      flow.*** ****




Food
      service businesses are often affected by changes in consumer tastes, national,
      regional and local economic conditions and demographic trends. Factors such
      as
      traffic patterns, weather, fuel prices, local demographics and the type, number
      and location of competing restaurants may adversely affect the performance
      of
      individual locations. In addition, inflation and increased food or energy costs
      may harm the restaurant industry in general and our locations in particular.
      Adverse changes in any of these factors could reduce consumer traffic or impose
      practical limits on pricing that could harm our business, financial condition,
      results of operations and cash flow. In 2008, the impact of significantly higher
      gasoline prices, rising food costs, declining home values and the prospect
      of a
      recession have negatively affected discretionary spending, which could result
      in
      reduced customer traffic at our restaurants.





There
      can
      be no assurance that consumers will continue to regard chicken-based or
      Mexican-inspired food favorably or that we will be able to develop new products
      that appeal to consumer preferences. Our continued success depends in part
      on
      our ability to anticipate, identify and respond to changing consumer preferences
      and economic conditions.





***We
      and our franchisees are subject to extensive government regulations that could
      result in claims leading to increased costs and restrict our ability to operate
      or sell franchises.***




We
      and
      our franchisees are subject to extensive government regulation at the federal,
      state and local government levels. These include, but are not limited to,
      regulations relating to the preparation and sale of food, zoning and building
      codes, drive thru restrictions, franchising, land use and employee, health,
      sanitation and safety matters. For example, in July 2008, the State of
      California passed legislation which bans the use of trans fats in restaurants
      beginning in 2010. New York City has a similar ban. The majority of our products
      are already in compliance and we do not expect that full compliance with this
      law will have a material impact on our business or financial condition. In
      July
      2008 the Los Angeles City Council imposed a one-year moratorium on new fast
      food
      restaurants in South Los Angeles, which is not applicable to EPL because it
      is a
      fast-casual restaurant.





We
      and
      our franchisees are required to obtain and maintain a wide variety of
      governmental licenses, permits and approvals. Difficulty or failure in obtaining
      them in the future could result in delaying or canceling the opening of new
      restaurants. Local authorities may suspend or deny renewal of our governmental
      licenses if they determine that our operations do not meet the standards for
      initial grant or renewal. This risk would be even higher if there were a major
      change in the licensing requirements affecting our types of
      restaurants.




We
      are
      also subject to regulation by the Federal Trade Commission and subject to state
      and foreign laws that govern the offer, sale, renewal and termination of
      franchises and our relationship with our franchisees. The failure to comply
      with
      these laws and regulations in any jurisdiction or to obtain required approvals
      could result in a ban or temporary suspension on franchise sales, fines or
      the
      requirement that we make a rescission offer to franchisees, any of which could
      affect our development agreements for new restaurants that we expect to open
      in
      the future and thus could materially adversely affect our business and operating
      results. Any such failure could also subject us to liability to our
      franchisees.




These
      and
      other factors may have a material adverse effect on our business, financial
      condition and results of operations and you should carefully consider them.
      For
      a discussion of other potential risks and uncertainties, refer to “Risk
      Factors,” included in our Annual Report on Form 10-K for the year ended December
      26, 2007 as filed with the U.S. Securities Exchange Commission on March 24,
      2008.




**Item
      5. Other Information.**




On
      August
      11, 2008, the Company issued a press release reporting results of operations
      for
      the second quarter ended June 30, 2008. A copy of the press release is being
      furnished as Exhibit 99.1 hereto and is incorporated herein by this reference.
      We do not intend for this exhibit to be incorporated by reference into any
      other
      filings we make with the SEC. This information is provided in this Report in
      response to Item 2.02, Results of Operations and Financial Condition, and Item
      9.01, Financial Statements and Exhibits, of Form 8-K in lieu of filing a Form
      8-K.


24


**Item
      6. Exhibits.**




**Exhibit****Number**
            
            **Description
                of Documents**10.1
            
            Confidential
                Settlement and Release Agreement dated June 18, 2008, between El
                Pollo
                Loco, Inc and El Pollo Loco, S.A. de C.V.10.2
            
            Termination
                Agreement dated June 23, 2008, among El Pollo Loco, Inc., Chicken
                Acquisition Corp. and Trimaran Fund II, LLC31.1
            
            Certification
                Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
                Act of 193431.2
            
            Certification
                Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
                Act of 193432.1
            
            Certification
                Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
                Act of 193432.2
            
            Certification
                Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
                Act of 193499.1
            
            Press
                Release dated August 11, 2008


25


**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:
                August 11, 2008
            By:
            /s/
                Stephen E. CarleyStephen
                E. Carley*President*By:
            /s/
                Joseph SteinJoseph
                Stein*Chief
                Financial Officer and
                Treasurer*


26


**EXHIBIT
      INDEX**




**Exhibit****Number**
            
            **Description
                of Documents**10.1
            
            Confidential
                Settlement and Release Agreement dated June 18, 2008, between El
                Pollo
                Loco, Inc and El Pollo Loco, S.A. de C.V.10.2
            
            Termination
                Agreement dated June 23, 2008, among El Pollo Loco, Inc., Chicken
                Acquisition Corp. and Trimaran Fund II, LLC31.1
            
            Certification
                Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
                Act of 193431.2
            
            Certification
                Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange
                Act of 193432.1
            
            Certification
                Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
                Act of 193432.2
            
            Certification
                Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
                Act of 193499.1
            
            Press
                Release dated August 11, 2008


27