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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549



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FORM
10-K



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|           |                                                                                                 
|---------- | ------------------------------------------------------------------------------------------------
|(Mark One)
|x          | ANNUAL
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
  1934    
|           |                                                                                                 
|           | For the fiscal year ended December
  27, 2006                                                   
|          
|OR        
|          
|o          | TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
  1934
|           |                                                                                                 
|           | For the transition period from
  ________ to _________                                          

Commission
file number 333-115644



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EPL
Intermediate, Inc.(Exact name of registrant as specified in its charter)



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|                                                                 |  |                                       
|---------------------------------------------------------------- |  | --------------------------------------
|Delaware                                                         |  | 13-4092105                            
|(State or other jurisdiction of
  Incorporation or organization) |  | (I.R.S. Employer
  Identification No.)
|                                                                 |  |                                       
|3333
  Michelson Drive, Suite 550
  Irvine, California           |  | 92612                                 
|(Address of principal executive offices)                         |  | (Zip Code)                            

Registrants
telephone number, including area code (949) 399-2000



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Securities
registered pursuant to Section 12(b) or Section 12(g) of the Act: None

| | 
| | 
| | 



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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o   No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o   No x

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

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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. Large
accelerated filer o   Accelerated filer o   Non-accelerated
filer x

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

The
common stock of the registrant is not publicly traded and is held 100% by an
affiliate.

An
aggregate of 100 shares of common stock of the registrant were outstanding as of
March 23, 2007.

Documents
Incorporated By Reference

None.

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TABLE
OF CONTENTS

FORM
10-K

|           |                                                                                                                   |  |      | 
|---------- | ----------------------------------------------------------------------------------------------------------------- |  | ---- | 
|           |                                                                                                                   |  | Page
|           |                                                                                                                   |  |     
|           | Forward-Looking Statements                                                                                        |  | 1    | 
|           |                                                                                                                   |  |      | 
|           | Non-GAAP Financial Measures                                                                                       |  | 1    | 
|           |                                                                                                                   |  |      | 
|Item 1.    | Business.                                                                                                         |  | 1    | 
|           |                                                                                                                   |  |      | 
|Item 1A.   | Risk Factors.                                                                                                     |  | 10   | 
|           |                                                                                                                   |  |      | 
|Item 1B.   | Unresolved Staff Comments.                                                                                        |  | 17   | 
|           |                                                                                                                   |  |      | 
|Item 2.    | Properties.                                                                                                       |  | 17   | 
|           |                                                                                                                   |  |      | 
|Item 3.    | Legal Proceedings.                                                                                                |  | 18   | 
|           |                                                                                                                   |  |      | 
|Item 4.    | Submission of Matters to a Vote of
  Security Holders.                                                            |  | 20   | 
|           |                                                                                                                   |  |      | 
|Item 5.    | Market for Registrants Common
  Equity, Related Stockholder Matters and Issuer Purchases of Equity
  Securities. |  | 20   | 
|           |                                                                                                                   |  |      | 
|Item 6.    | Selected Financial Data.                                                                                          |  | 21   | 
|           |                                                                                                                   |  |      | 
|Item 7.    | Managements Discussion and Analysis
  of Financial Condition and Results of Operations.                          |  | 22   | 
|           |                                                                                                                   |  |      | 
|Item 7A.   | Quantitative and Qualitative
  Disclosure About Market Risk.                                                      |  | 34   | 
|           |                                                                                                                   |  |      | 
|Item 8.    | Financial Statements and
  Supplementary Data                                                                     |  | 34   | 
|           |                                                                                                                   |  |      | 
|Item 9.    | Changes in and Disagreements with
  Accountants on Accounting and Financial Disclosure.                           |  | 34   | 
|           |                                                                                                                   |  |      | 
|Item
  9A. | Controls and Procedures.                                                                                          |  | 34   | 
|           |                                                                                                                   |  |      | 
|Item 9B.   | Other Information.                                                                                                |  | 34   | 
|           |                                                                                                                   |  |      | 
|Item 10.   | Directors and Executive Officers of
  the Company.                                                                |  | 35   | 
|           |                                                                                                                   |  |      | 
|Item 11.   | Executive Compensation                                                                                            |  | 37   | 
|           |                                                                                                                   |  |      | 
|Item 12.   | Security Ownership of Certain
  Beneficial Owners and Management and Related Stockholder Matters                  |  | 52   | 
|           |                                                                                                                   |  |      | 
|Item 13.   | Certain Relationships and Related
  Transactionsand Director Independence                                         |  | 52   | 
|           |                                                                                                                   |  |      | 
|Item 14.   | Principal Accounting Fees and
  Services                                                                          |  | 53   | 
|           |                                                                                                                   |  |      | 
|Item 15.   | Exhibits, Financial Statement
  Schedules                                                                         |  | 54   | 

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FORWARD-LOOKING
STATEMENTS

Certain
statements contained within this report constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are those that do not relate solely to historical
fact. They include, but are not limited to, any statement that may predict,
forecast, indicate or imply future results, performance, achievements or
events. They may contain words such as believe, anticipate, expect,
estimate, intend, project, plan, will, should,
may, could or
words or phrases of similar meaning.

These
forward-looking statements reflect our current views with respect to future
events and are based on assumptions and are subject to risks and uncertainties.
Also, these forward-looking statements present our estimates and assumptions
only as of the date of this report. Except for our ongoing obligation to
disclose material information as required by federal securities laws, we do not
intend to provide any updates concerning any future revisions to any
forward-looking statements to reflect events or circumstances occurring after
the date of this report.

Factors
that could cause actual results to differ materially from those expressed or
implied by the forward-looking statements include our substantial level of
indebtedness, food-borne-illness incidents, negative publicity, whether or not
valid, increases in the cost of chicken, our dependence upon frequent
deliveries of food and other supplies, our vulnerability to changes in consumer
preferences and economic conditions, our sensitivity to events and conditions
in the greater Los Angeles area, our ability to compete successfully with other
quick service and fast casual restaurants, our ability to expand into new
markets, our reliance in part on our franchisees, matters relating to labor
laws, our ability to support our expanding franchise system, our ability to
renew leases at the end of their term, the impact of applicable federal, state
or local government regulations, our ability to protect our name and logo and
other proprietary information and litigation we face in connection with our
operations. Actual results may differ materially due to these risks and
uncertainties and those discussed below.

NON-GAAP
FINANCIAL MEASURES

Restaurant-level
cash flow and restaurant-level cash flow margins, as presented in this report
are supplemental measures of our performance that are not required by, or
presented in accordance with, generally accepted accounting principles in the
United States (GAAP). They are not measurements of our financial performance
under GAAP and should not be considered as alternatives to net income or any
other performance measures derived in accordance with GAAP or as alternatives
to cash flow from operating activities as measures of our liquidity.

Restaurant-level
cash flow represents restaurant-level revenue less product cost, payroll and
benefits and restaurant other operating expenses. We present restaurant-level
cash flow margin, which is calculated as a percentage of restaurant revenue, as
a further supplemental measure of the performance of our company-operated
restaurants. We measure each of our company-operated restaurants relative to
other company-operated restaurants, in part on the basis of restaurant-level
cash flow. We believe that analysts and investors consider similar measures of
performance in evaluating other restaurant companies. In addition, because we
do not include general and administrative expense in our computation,
restaurant-level cash flow does not reflect all the costs of operating the
restaurants as if they were a stand-alone business unit. General and
administrative expense includes significant expenses necessary to manage a
multiple-restaurant operation, certain of which, such as financing, payroll
administration, accounting and bookkeeping, legal and tax expenses, would also
be required of a typical stand-alone restaurant operation.

The
  discussion of the results of operations for the twelve months ended December
  28, 2005 included in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations is based on the combined results for the Predecessor period from
  December 30, 2004 through November 17, 2005, and the Successor period
  November 18, 2005 through December 28, 2005. This combined presentation is
  not in accordance with GAAP; however, we believe it is useful in analyzing
  and comparing certain of our operation trends from fiscal 2005 to fiscal 2006
  and fiscal 2004 to fiscal 2005. Because of purchase accounting adjustments
  related to our acquisition by CAC in November 2005, certain amounts might not
  be comparable between the periods.

PART 1

Item 1. Business.

Our Company

EPL
Intermediate, Inc. (EPLI or Intermediate) through its wholly owned
subsidiary El Pollo Loco, Inc. (EPL and collectively with EPLI, the
Company, we, us and our), is the nations leading restaurant
specializing in flame-grilled chicken. We strive to be the consumers top
choice for flavor by serving high-quality meals, featuring our authentic,
marinated, flame-grilled chicken. Our distinct menu, inspired by the kitchens
of Mexico, along with our service format and price points, serves to
differentiate our unique brand. We believe that we are strategically positioned
to straddle the quick service restaurant, or QSR, and fast casual segments of
the restaurant industry. We offer high-quality, freshly-prepared food commonly
found in fast casual restaurants while at the same time providing the value and
convenience typically available at traditional QSR chains. This positioning
allows us to appeal to a broad range of consumers and to achieve a balanced mix
between lunch and dinner sales. When compared with QSR chains, our system-wide AUV
ranked

-1-

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fifth
nationwide in 2005 according to Nations Restaurant News, an industry
publication, and we believe that our average check is higher than that of the
typical QSR chain. We have also achieved strong same-store sales growth, with
our restaurants system-wide demonstrating annual average same-store sales
growth of 5.4% since 2000 and system-wide same-store sales growth of 5.3% for
fiscal 2006.

Our
menu features our authentic flame-grilled chicken and includes approximately 50
items ranging in price from $1.00 to $22.99, most of which we prepare from
scratch using fresh, high-quality ingredients. We serve a variety of individual
and family-size chicken meals, which include flour or corn tortillas,
freshly-prepared salsas and a variety of side orders. In addition, we offer a
wide variety of contemporary, Mexican-inspired entrees, featuring our signature
marinated, flame-grilled chicken as the central ingredient, including our
specialty Pollo Bowl®, Pollo Salads, signature burritos, chicken quesadillas,
chicken tortilla soup and chicken tacos. Our individual and family-size meals
appeal to customers for restaurant dining or take-out during dinnertime, while
our more portable entrees appeal to customers at lunchtime or on the go. Our
high-quality, flavorful food has broad appeal, and as a result, the customer
base of each of our restaurants typically reflects the demographics of its
surrounding area.

As
of December 27, 2006, our restaurant system consisted of 151 company-operated
and 208 franchised restaurants located primarily in California, with additional
restaurants in Arizona, Nevada, Texas, Illinois, Colorado and Connecticut.

On
November 18, 2005, we were acquired by Chicken Acquisition Corp. (CAC) (the
Acquisition). In connection with the Acquisition, we refinanced substantially
all of our existing long-term debt. See Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations. For fiscal year
ending December 27, 2006, we had total revenue of $259.9 million,
operating income of $30.5 million and net income of $0.6 million. Prior to the
Acquisition, from December 30, 2004 to November 17, 2005 we had total
revenue of $210.9 million, operating income of $19.9 million and net loss of
$11.2 million. Subsequent to the Acquisition, from November 18, 2005 to
December 28, 2005 we had total revenue of $26.3 million, operating income
of $2.4 million and net loss of $588,000.

Industry Overview

The
U.S. restaurant industry, which represents about 4% of the U.S. gross domestic
product, has achieved strong sales growth over the past several decades.
According to the National Restaurant Association, a restaurant industry trade
association, 2006 is expected to mark the 15th consecutive year of real sales
growth for the industry. This growth has been driven by favorable
consumer-related trends, including real gains in household income, the aging of
the baby boomer generation, increases in consumer spending and, more generally,
consumers desire for convenience. According to the USDA Economic Research
Service, or ERS, dollars spent on food consumed away from home increased 35%
between 1990 and 2004 in constant dollar terms. This trend is projected to
continue as the percentage of dollars spent on food away from home is expected
to increase from 48% in 2005 to 53% by 2010.

Total
restaurant industry revenue in the United States for 2006 is estimated to be
$511 billion, an increase of 5.1% over 2005s projected restaurant industry
sales, according to the National Restaurant Association. Sales at QSRs are
projected to be $142 billion in 2006, an increase of 4.9% over 2005. We believe
that the fast casual sub-segments sales growth substantially outpaced both the
overall limited-service and the full-service sectors, due to the growing number
of consumers who demand casual-dining quality food and experience in a quick
and convenient QSR delivery format and at a near-QSR price.

Consumer
awareness of the nutritional characteristics of chicken is a major factor that
we believe will continue to drive chicken consumption. According to the ERS,
per capita consumption of chicken in the United States increased 39% from 1990
to 2004.

Competitive Strengths

Our
Passion for Perfect Pollo. Our signature flame-grilled
chicken is the cornerstone of our menu and our brand. We marinate fresh chicken
in an authentic blend of citrus juice and spices in a specialized tumbler to
ensure consistency and to maximize flavor. Our trained grill masters
flame-grill the marinated chicken, giving it a crisp skin and golden-brown
color, right in front of our customers. We believe our singular focus on
delivering high quality, freshly-prepared chicken, from senior management down,
creates loyalty and enthusiasm for our product and our brand among our customers
and employees.

-2-

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Unique
Brand with Broad Appeal. We have strategically
positioned our brand between the QSR and fast casual segments of the restaurant
industry. We believe our flame-grilled cooking method and high-quality food
made fresh-to-order set us apart from our QSR competition, while our
convenience and value proposition differentiate us from our fast casual
competition. As a result, we believe that our brand appeals to a wide variety
of consumers across different ethnic, age and income demographics, giving us
access to an extensive number of markets and increasing the number of locations
within each market in which our restaurants can successfully operate.

Strong
Restaurant-Level Profitability. Since opening our
first restaurant over 25 years ago, we have grown to be the leader in the
chicken QSR market for the greater Los Angeles area, where our restaurants
achieved an estimated 43% market share in 2005, according to Restaurant Trends,
a restaurant industry trade publication. Our balanced mix of business between
lunch and dinner is an important driver of our strong restaurant-level
profitability, with company-operated restaurants averaging restaurant-level
cash flow margins of 22%, 23% and 22% for fiscal 2004, 2005 and 2006,
respectively. In addition, our high AUV and restaurant-level profitability
facilitate a strong return on invested capital for new company-operated and new
franchised restaurants.

Favorable
Position with Respect to Industry and Demographic Trends.
We believe we are well-positioned to benefit from several fundamental trends
within the restaurant industry and the U.S. population, including:

| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased
  expenditure on food consumed away from home and increased consumption of
  freshly-prepared food brought home;                           
| |   |                                                                                                                                                      
| |  | rapid growth
  of ethnic food sales;                                                                                                                 
| |   |                                                                                                                                                      
| |  | ongoing
  increase in chicken consumption as consumers continue to place a high
  priority on the importance of eating a healthy, lower-fat diet; and
| |   |                                                                                                                                                      
| |  | continued
  rapid growth of the Hispanic population, which is our largest customer
  segment.                                                        

Strong
and Growing Franchise Base. As of December 27, 2006,
approximately 58% of our restaurants were franchised. Our franchise base
consists of many successful, long-standing, multi-unit restaurant operators,
with 82% of our franchised restaurants owned and operated by franchisees who
have been with us for more than 10 years. Since we initiated our franchise
growth strategy in June 2003, we have targeted certain areas outside our
Southern California market as dedicated franchise development areas and have
signed agreements with a number of experienced, multi-unit restaurant operators
to open franchise units in California, Washington, Arizona, Texas, Missouri,
Illinois, Georgia, Virginia, Utah and the six New England states. As of January
24, 2007, we have commitments to open 133 restaurants.

Scalable
Infrastructure and Enhanced Brand Image. Since Stephen
E. Carley, our President and Chief Executive Officer, joined us in 2001, our
management team has focused on driving operational improvements and upgrading
our brand image to improve our competitiveness and position us for future
growth. Since the beginning of 2001, we have taken the following steps:

| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | invested
  approximately $19.0 million in capital to remodel substantially all of our
  company-operated restaurants, upgrade our technology platform and install new
  kitchen equipment, primarily to correct historical under-investment by our
  former parent company;
| |   |                                                                                                                                                                                                                                                                            
| |  | enhanced our
  logo, menu format, product offering and restaurant design;                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                            
| |  | strengthened
  our infrastructure through investments to improve customer service, enhance
  the restaurant oversight process and upgrade our training programs; and                                                                                                       
| |   |                                                                                                                                                                                                                                                                            
| |  | enhanced the
  overall quality of our franchise base by focusing on experienced,
  well-capitalized operators interested in developing multiple restaurants.                                                                                                               

Experienced
Management Team. Our executive management team has
extensive restaurant industry experience in addition to a significant
multi-industry foundation in consumer marketing, operations and finance, having
held key positions at leading food service businesses including PepsiCo Inc.,
Taco Bell Corp., Applebees International, Inc., McDonalds Corporation and CKE
Restaurants, Inc. Members of our management team were instrumental in the
growth of several publicly-traded restaurant concepts prior to their tenure
with us.

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Business Strategy

Increase
Same-Store Sales. We have a strong track record of
growing our same-store sales through a balanced mix of increasing customer
traffic and average check. We will continue to drive same-store sales growth
by:

| |   |                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increasing Traffic. We intend to continue to
  increase traffic and transaction volume by introducing new items that
  complement our product base and by promoting menu items designed to deliver
  value in a highly competitive marketplace.                                                                             
| |   |                                                                                                                                                                                                                                                                                                                             
| |  | Increasing Average Check. We plan to
  increase the average customer check by selling add-on menu items, introducing
  new products with higher price points, selectively increasing prices on
  existing menu items and adjusting our menu board to encourage customers to
  select higher-priced menu items.              
| |   |                                                                                                                                                                                                                                                                                                                             
| |  | Executing Our Targeted Marketing Plan. Our
  empirical, data driven approach to marketing helps us to determine optimal
  pricing strategies, introduce products that reflect customer taste
  preferences and target advertising based on demographic profiles.                                                            
| |   |                                                                                                                                                                                                                                                                                                                             
| |  | Enhancing Speed of Service. We currently
  have several initiatives to improve the speed of service for our customers,
  including the implementation of an improved labor scheduling system, a
  drive-thru timing reporting system, an additional register at each drive-thru
  location and a speed of service guarantee.
| |   |                                                                                                                                                                                                                                                                                                                             
| |  | Developing Our Catering Business. We
  recently have begun to offer enhanced catering services at select locations
  and intend to introduce these services throughout our system, at both
  company-operated and franchised restaurants.                                                                                   

Increase
Penetration of Existing Markets. We will continue to
open new company-operated and franchise restaurants in our existing markets,
including California, Nevada, Arizona and Texas. We have a significant presence
in the greater Los Angeles area, and we continue to believe that a significant
opportunity for new store growth remains in all of our markets. Our strategy is
to develop new company-operated restaurants in the greater Los Angeles area,
Las Vegas and Fresno, California, and to partner with experienced, multi-unit
restaurant operators in all other regions. Our extensive operational and site
selection expertise in the greater Los Angeles area, Las Vegas and Fresno,
create a strong platform on which to profitably grow our company-operated
restaurant base. By partnering with experienced operators outside these areas,
we expect to be able to leverage local operational and real estate expertise to
generate high margin royalty revenue with limited capital investment on our
part.

We
currently plan to open approximately ten new company-operated restaurants each
year. As of December 27, 2006, a total of 20 sites have been identified for new
company-operated restaurant openings in 2007 through 2008. Historically, there
is a period of time before a new El Pollo Loco restaurant achieves its targeted
level of performance due to higher operating costs caused by start-up costs and
other temporary inefficiencies. We have experienced delays in opening some of
our restaurants and may experience delays in the future. As of January 24,
2007, we had signed franchise development agreements with 13 franchisees to
open an additional 59 restaurants in our existing markets, which are scheduled to
open at various dates through 2015.

Develop
New Markets with Experienced Local Operators. We
believe that our distinct product offering and unique brand will appeal to
consumers in numerous expansion markets throughout the United States. We are currently
legally authorized to market franchises in all 50 states and are pursuing
opportunities in a number of those states. Our approach to developing new markets involves
the identification of an experienced, local multi-unit operator, followed by a
rigorous analysis of market potential before we enter into a development
agreement. To date, we have signed development agreements with 8 franchisees to
open an additional 74 restaurants in Illinois, the six New England states,
Missouri, Georgia, Virginia, Utah and Washington, which are scheduled to open
at various dates through 2015.

Increase
Our Profitability. Over the past several years we
significantly improved our operations and implemented cost controls that led to
increased restaurant-level profitability. We have identified several
opportunities to continue to increase our operational efficiency and reduce our
costs, including:

| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improve Restaurant Operations. We intend to
  continue to improve restaurant operations through the use of our rigorous
  scorecard system and by implementing new information technology initiatives.
| |   |                                                                                                                                                                                                       
| |  | Leverage Our Existing Infrastructure. Our
  infrastructure is sufficient to support substantial growth without                                                                                        

-4-

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| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | significant
  additional expense, and as a result, we anticipate driving increasing
  operating leverage over time as we expect our sales to grow faster than our
  general and administrative expenses.                                                        
| |   |                                                                                                                                                                                                                                                                 
| |  | Grow High Margin Franchise Revenue. Our
  growth strategy, which emphasizes franchise development, is expected to
  increase the percentage of our total revenue generated from high margin
  franchise royalties and is expected to increase our profitability.

Restaurant Operations and Products

Restaurant
Operations and Management. Our management team places
tremendous emphasis on executing our mission, which is to Passionately Serve
Perfect Pollo Every Time. To help ensure that we deliver on this mission, we
have 18 area leaders and two directors of operations for our company-operated
stores that report to our senior vice president of operations. Each area leader
typically oversees eight to nine restaurants. General managers supervise the
operations of each restaurant, and they are supported by a number of assistant
managers, which varies based on the sales volume of the respective restaurant.

We
strive to maintain quality and consistency in our restaurants through the
careful training and supervision of personnel and the establishment of
standards relating to food and beverage preparation, maintenance of facilities
and conduct of personnel. Restaurant general managers, many of whom are
promoted from our restaurant personnel, must complete a training program of
typically six to twelve weeks during which we instruct them in various areas of
restaurant management, including food quality and preparation, hospitality and
employee relations. We also provide restaurant managers with operations manuals
relating to food preparation and operation of restaurants. These manuals are
designed to ensure uniform operations, consistently high-quality products and
service and proper accounting for restaurant operations. We hold regular
meetings of our restaurant managers to discuss new menu items and efficiency
initiatives and to continue training in various aspects of business management.
We have created a set of quantitative metrics that are used to measure the
performance of both the general managers and area leaders. These metrics
measure profitability, food safety, employee safety and various customer
satisfaction attributes. We make this data information that cannot be ignored
by producing a monthly scorecard, holding quarterly meetings, and considering
these metrics for bonus purposes and job performance evaluations.

We
have food safety and quality assurance programs that are designed to maintain
the highest standards for food and food preparation procedures used by
company-operated and franchised restaurants. We have a team of quality
assurance managers that perform comprehensive restaurant audits. Quality
assurance managers visit each company-operated and franchised restaurant an
average of two times a year and evaluate all areas of food handling,
preparation and storage. Our quality assurance team also audits our suppliers
on a frequency schedule based on the potential food safety risk of each
product. In 2006, there were over 800 quality control site visits to
restaurants and 69 audits of various suppliers. We also have continuous food
safety training that teaches employees to pay detailed attention to product
quality at every stage of the food preparation cycle.

We
maintain financial and accounting controls for each of our restaurants through
the use of centralized accounting and management information systems and
reporting requirements. We collect sales, credit card, debit card, menu item
popularity and related information daily for each company-operated restaurant.
We provide general managers with operating statements for their respective
restaurants. Cash, credit card and debit card receipts are controlled through
daily deposits to local operating accounts, which are either picked-up up by
armored car or deposited to our cash concentration accounts by our managers. At
our support center, we use a software program to reconcile on a daily basis the
sales and cash information sent electronically from our restaurants to the cash
detail electronically sent by our bank.

We
devote considerable attention to controlling product costs, which are a
significant portion of our restaurant expenses. We make extensive use of
information technology to provide us with pertinent information on ideal food
cost, inventory levels and inventory cost variances. We have implemented a new
back office computer system that has added more controls surrounding inventory
and cash management.

Menu
and Food Preparation. We are committed to serving
quality chicken and Mexican-inspired food. This process begins with the
selection of fresh ingredients. In preparing menu items, we emphasize quality
and freshness. We regularly inspect our vendors to ensure both that the
products we purchase conform to our high-quality standards and that the prices
offered are competitive. We are committed to differentiating ourselves from
other QSR competitors by utilizing fresh, high-quality ingredients as well as
by preparing most of our items from scratch. The menu items at each of our
restaurants are prepared at that restaurant from fresh chicken and ingredients
delivered several times each week. All of our tortillas are trans fat free and
we also use a trans fat free oil to prepare our chips.

-5-

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Our
marinated, flame-grilled chicken is the key ingredient in many of our menu
items. Fresh chickens are marinated in our restaurants twice a day, using
marinating tumblers to ensure that our proprietary marinade deeply and
consistently flavors the chicken. The cooking process on our extensive grill
system does not employ any timers, so our cooks must use acquired experience to
turn the chicken at the proper intervals in order to deliver our signature
chicken to our customers. We believe our singular focus on delivering high
quality, freshly-prepared chicken, from senior management down, creates loyalty
and enthusiasm for the brand among our customers and employees.

Our
chicken is served with flour or corn tortillas, freshly-prepared salsas and a
wide variety of side orders including Spanish rice, pinto beans, coleslaw and
mashed potatoes. In addition to individual and family chicken meals in
quantities of 8, 10 and 12 pieces, we also serve a wide variety of contemporary
Mexican entrées including specialty chicken burritos, chicken quesadillas, our
specialty Pollo Bowl®, fresh Pollo Salads, chicken tortilla soup, chicken tacos
and taquitos. To complement our menu items, a salsa bar in each of our
locations features four kinds of salsa prepared daily with fresh ingredients.
We also serve Fosters Freeze® brand of soft-serve ice cream products in 76
company-operated restaurants and 88 franchised restaurants.

Marketing and Advertising

Marketing
Strategy. We strive to be the consumers top choice
for flavor by serving high-quality meals, featuring our signature flame-grilled
chicken, inspired by traditional Mexican cuisine. We seek to build long-term
relationships with consumers based on a complete brand experience. With our
brands authentic roots and our high-quality, tasty food, we attempt to inspire
our consumers not only to frequent the brand, but also to generate other
customers by word-of-mouth.

We
closely follow competitive trends, subscribe to secondary consumer research and
conduct primary research to prioritize opportunities and stay abreast of our
position in the market. Through our strategic marketing efforts and unique
product offerings, we believe we have positioned ourselves into the sweet
spot between the QSR and fast casual restaurant segments. We believe consumers
find our restaurant experience superior to traditional fast food restaurants
but not as high-priced or inconvenient as fast casual restaurants.

We
have developed and implemented an empirical, data-driven approach to marketing
which helps us to determine optimal pricing strategies, customer taste
preferences and demographic profiles. As a result of analyzing this data, we
have developed a metric that assigns all items on the menu a piece of chicken
equivalent. Sales per equivalent piece of chicken sold reveals pricing and
promotion impact by factoring out the impact of the bundled family meals. We
use this and other metrics to analyze potential promotions and to perform
comparative post-promotion analyses to evaluate the accuracy of the assumptions
made for each promotion.

Promotional/Discount Strategy. We develop
promotions designed to deliver value in a highly competitive marketplace. Each
year, the calendar is divided into six promotional periods of approximately
eight weeks each that feature new products, attractively-priced family meal
offers and/or value-added promotions. Each promotional period features an
advertised focus and in-restaurant components. To avoid unprofitable
discounting, we use internal modeling aids to assist the marketing team in
developing promotions designed to deliver incremental sales at a profit.

Advertising Strategy. We have developed
key consumer insights that define consumer segments and their motivators. Our
advertising is designed to capture our brand by stirring consumers preferences
for wholesome, flavorful food without compromising convenience. Our advertising
strategy is centered on our signature flame-grilled chicken while reinforcing
our authentic Mexican-flavor profile. To most effectively execute this plan, we
have developed targeted campaigns for the Hispanic market in addition to
separate campaigns for the broader general market.

Our
target audience is 25 to 49 years old with a balanced gender mix. We use
television and radio advertising as the primary medium in markets where there
is adequate market penetration. We use in-restaurant merchandising materials to
further convey the freshness and quality of the menu. We periodically use print
media to introduce new products and deliver brand communication along with
purchase incentives. We implement public relations activities to carry our
brand messaging into the consumer press and strengthen our ties to our customer
community.

Annual
advertising expenditures are approximately 4% of company-operated and
franchised restaurant revenue in the Los Angeles market area and 5% of
company-operated and franchised restaurant revenue in markets outside of the
Los Angeles market area. Approximately 23% of total advertising is spent on
Spanish-language initiatives in the Hispanic market.

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Intellectual Property

We
have registered El Pollo Loco®, Pollo Bowl®, The Crazy Chicken® and certain
other names used by our restaurants as trademarks or service marks with the
United States Patent and Trademark Office and in approximately 42 foreign
countries. In addition, El Pollo Locos logo and Web site name and address are
our intellectual property. The success of our business strategy depends on our
continued ability to use our existing trademarks and service marks in order to
increase brand awareness and further develop our branded products. If our efforts
to protect our intellectual property are unsuccessful, or if any third party
misappropriates or infringes on our intellectual property, either in print, on
the Internet or through other media, the value of our brands may be harmed,
which could have a material adverse effect on our business, including the
failure of our brands and branded products to achieve and maintain market
acceptance. Our policy is to pursue and maintain registration of our service
marks and trademarks in those countries where our business strategy requires us
to do so and to oppose vigorously any infringement or dilution of our service
marks or trademarks in such countries. See Item 3. Legal Proceedings for a
description of certain litigation involving our intellectual property.

We
maintain the recipe for our chicken marinade, as well as certain proprietary
standards, specifications and operating procedures, as trade secrets or
confidential proprietary information. We may not be able to prevent the
unauthorized disclosure or use of our trade secrets or proprietary information,
despite the existence of confidentiality agreements and other measures. If any
of our trade secrets or proprietary information were to be disclosed to or
independently developed by a competitor, our business, financial condition and
results of operations could be materially adversely affected.

Franchise Program

We
use franchising as our strategy to accelerate new restaurant growth in new
markets, leveraging the ownership of entrepreneurs with specific local market
expertise and requiring a relatively minimal capital commitment by us. As of
December 27, 2006, there were a total of 208 franchised restaurants, operated
by 61 franchisees and 1 licensee (operating at Universal Studios Theme Park in
Los Angeles, California). Franchisees range in size from single restaurant
operators to our largest franchisee, who currently operates 38 restaurants. We
employ three franchise consultants who work with franchisees to maintain
system-wide quality. These consultants assist franchisees with new site
proposals, new restaurant openings, marketing programs and ongoing operations
activities. To support the expected growth in franchise restaurants, we have
invested in a dedicated team of franchise management professionals including
three directors of franchise sales, along with managers of operations, field
marketing, training, real estate and purchasing.

Our
standard franchise agreement gives our franchisees the right to use our
trademarks, service marks, trade dress and our proprietary recipes, systems,
manuals, processes and related items. We also provide our franchisees with
access to training, marketing, quality control, purchasing, distribution and
operations assistance. We are not obligated to and currently do not provide nor
plan to provide any direct or indirect financing or financing guarantees for
our franchisees. The franchisee is required to pay an initial franchise fee of
$40,000 for a 20-year franchise term per restaurant and in most cases, a
renewal fee for a successor franchise agreement beyond the initial term. The
initial franchise fee is reduced to $30,000 for second and subsequent
restaurants opened under a development agreement. The franchisee is also
required to pay monthly royalty fees of 4% of gross sales as well as monthly
advertising fees of 4% of gross sales for the Los Angeles designated market
area or 5% of gross sales for other markets. Our company-operated restaurants
contribute 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 brand.

We
have entered into development agreements which generally grant exclusive rights
to a prospective franchisee, who may be an existing franchisee, to develop a
specified number of restaurants in a defined territory within a specified
period of time. The development agreement typically requires the opening of
three or more restaurants, with the first restaurant to be opened within
eighteen months after execution of the development agreement and each
subsequent restaurant to be opened within twelve-month intervals thereafter.
The development agreements typically outline a schedule of requirements that
the prospective franchisee must meet, such as site selection and acquisition,
and typically require the developer to use diligent efforts to obtain
government approvals and complete construction in order to open the restaurants
as scheduled. If a prospective franchisee who has been granted an exclusive
territory fails to meet the schedule set forth in the development agreement,
the prospective franchisee could lose its exclusive rights in the defined
territory and, in certain circumstances, the development agreement and the
right to open our restaurants could terminate. Under the development agreement,
we collect a development fee of $10,000 per restaurant, which is applied to the
initial franchise fee when the franchise agreement for a restaurant is signed.
In some circumstances, when a prospective franchisee does not meet the
development schedule and the development agreement is terminated or expires,
the development fee is forfeited.

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Under
our agreement with Fosters Freeze International, Inc., our franchisees in
California may also enter into a sublicense agreement with us under which they
may sell a limited Fosters Freeze® menu in their restaurants.

As
a result of an initiative in the mid-1990s to transfer certain
company-operated restaurants to new franchisees, some franchisees sublease
their restaurants from us. However, most franchisees currently either purchase
the real estate upon which the restaurants are operated or enter into direct
leases with third-party owners of real estate.

Purchasing

Our
ability to maintain consistent quality throughout our restaurants depends in
part upon the ability to acquire food products and related items from reliable
sources in accordance with our specifications. We have a contract with one
national distributor for substantially all of the food and supplies, including
the chicken that our company-operated restaurants receive from our suppliers.
Fresh chicken is typically delivered every other day to each restaurant. We
have a five-year distribution agreement with our long-standing distributor,
which expires August 15, 2010. Currently, all franchisees are required to use
this distributor as the sole approved distributor and they must purchase food
and supplies only from approved suppliers.

We
regularly inspect vendors to ensure both that the products purchased conform to
our high-quality standards and that the prices offered are competitive. To
support this, we have a quality assurance team that performs comprehensive
supplier audits on a frequency schedule based on the potential food safety risk
of each product. In 2006, the quality control team conducted 69 supplier
audits. With the exception of our distributor and chicken and beverage
suppliers, we normally contract for food and paper items at fixed price
contracts ranging from one to two years.

In
February 2005, we entered into a five-year contract with our primary beverage
supplier, which provides for a marketing allowance based on gallons sold. A
portion of the marketing allowance is specifically earmarked to be used to
support our beverage product advertising programs. All franchisees are required
to purchase beverages from approved suppliers.

Historically,
we have been able to limit our exposure to chicken prices through contracts
ranging in term from one to three years and through menu price increases. In
March 2007, we entered into new contracts with two of our current suppliers of
chicken with terms that expire in February 2008 and February 2009. We also have
an additional chicken supplier with a contract that started in March 2005 and
goes through March 2008. The cost of chicken under these new contracts is
slightly higher than under our prior contracts. We raised prices in January
2006 to help offset the impact of previous price increases. Chicken makes up
the largest part of our total product cost, approximately 13.2% of our revenue
from company-operated restaurants for fiscal 2006.

Competition

We
operate in the restaurant industry, which is highly competitive and fragmented.
The number, size and strength of competitors vary by region. Competition
includes a variety of locally owned restaurants and national and regional
chains that offer dine-in, carry-out and/or delivery services. Our competition
in the broadest perspective includes restaurants, pizza parlors, coffee shops,
street vendors, convenience food stores, delicatessens and supermarkets. We do
not have any direct competitors. However, we indirectly compete with
chicken-specialty QSRs and Mexican QSRs, as well as fast casual restaurants and
franchisors of other restaurant concepts. We believe that QSR competition is
based primarily on quality, taste, quickness of service, value, name
recognition, restaurant location and customer service. The fast casual
restaurant industry is also highly competitive. We believe that competition
within the fast casual restaurant segment is based primarily on price, taste,
quality and the freshness of the menu items and the comfort and ambiance of the
restaurant environment.

In
addition, we compete with franchisors of other restaurant concepts for
prospective franchisees.

Our
greatest strength in this competitive environment is our high-quality food. We
believe we are positioned to take advantage of a number of consumer trends,
including the impact of the Hispanic culture on food and flavors, growth of the
Mexican food segment, increased interest in healthy dining and the growth of
the Hispanic population in many regions of the United States, which should each
provide us with opportunities to continue to grow our market position in
existing and new markets. We believe we can continue to increase our market
share with our marketing focus on building our brand, as well as our operations
focus on achieving improvements in all aspects of customer service.

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Regulation

Our
business is subject to extensive federal, state and local government regulation,
including those relating to, among others, public health and safety, zoning and
fire codes. Failure to obtain or retain food or other licenses would adversely
affect the operations of our restaurants. Although we have not experienced and
do not anticipate any significant problems in obtaining required licenses,
permits or approvals, any difficulties, delays or failures in obtaining such
licenses, permits or approvals could delay or prevent the opening of, or
adversely impact the viability of, a restaurant in a particular area. We
operate each of our restaurants in accordance with standards and procedures
designed to comply with applicable codes and regulations.

The
development and construction of additional restaurants will be subject to compliance
with applicable zoning, land use and environmental regulations. We believe that
federal and state environmental regulations have not had a material effect on
our operations, but more stringent and varied requirements of local government
bodies with respect to zoning, land use and environmental factors could delay
construction and increase development costs for new restaurants.

We
also are subject to the Fair Labor Standards Act, the Immigration Reform and
Control Act of 1986 and various federal and state laws governing such matters
as minimum wages, overtime, unemployment tax rates, workers compensation
rates, citizenship requirements and other working conditions. A significant
number of our hourly staff are paid at rates consistent with the applicable
federal or state minimum wage and, accordingly, increases in the minimum wage
will increase our labor cost. We are also subject to the Americans With
Disabilities Act, which prohibits discrimination on the basis of disability in
public accommodations and employment, which may require us to design or modify
our restaurants to make reasonable accommodations for disabled persons. See
Risk FactorsMatters relating to employment and
labor laws may adversely affect our business.

Many
states, including California, and the Federal Trade Commission require
franchisors to transmit specified disclosure statements to potential
franchisees when offering or modifying a franchise. Some states require us to
register our franchise offering documents and file our advertising material
before we may offer a franchise for sale. Our non-compliance could result in
civil or criminal penalty, rescission of a franchise, and suspension of our
ability to offer and sell franchises in a state. We believe that our Uniform
Franchise Offering Circular, together with any applicable state versions or
addenda, complies in all material respects with both the Federal Trade
Commission guidelines and all applicable state laws regulating franchising. We
are currently legally authorized to market franchises in all 50 states and are
pursuing opportunities in those states.

Environmental Matters

Our
operations are also subject to federal, state and local laws and regulations
relating to environmental protection, including regulation of discharges into
the air and water, storage and disposal of waste and clean-up of contaminated
soil and groundwater. Under various federal, state and local laws, an owner or
operator of real estate may be liable for the costs of removal or remediation
of hazardous or toxic substances on, in or emanating from such property. Such
liability may be imposed without regard to whether the owner or operator knew
of, or was responsible for, the presence of such hazardous or toxic substances.

Certain
of our properties may be located on sites that we know or suspect have been
used by prior owners or operators as retail gas stations. Such properties
previously contained underground storage tanks, and some of these properties
may currently contain abandoned underground storage tanks. We are aware of
contamination from a release of hazardous materials by a previous owner at two
of our owned properties and one of our leased properties. We do not believe
that we have contributed to the contamination at any of these properties. It is
possible that petroleum products and other contaminants may have been released
at other properties into the soil or groundwater. Under applicable federal and
state environmental laws, we, as the current owner or operator of these sites,
may be jointly and severally liable for the costs of investigation and
remediation of any contamination. Although we lease most of our properties, or
when we own the property we obtain certain assurances from the prior owner or
often obtain indemnity agreements from third parties, we cannot assure you that
we will not be liable for environmental conditions relating to our prior,
existing or future restaurants or restaurant sites. If we are found liable for
the costs of remediation of contamination at or emanating from any of our
properties, our operating expenses would likely increase and our operating
results would be materially adversely affected. As of December 27, 2006, we believe that the risk of loss is remote.

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Employees

As
of December 27, 2006, we had approximately 4,004 employees, of whom
approximately 3,275 were hourly restaurant employees, 154 were salaried general
managers engaged in managerial capacities, 448 were assistant managers and 127
were corporate and office personnel. Most of our restaurant employees are
employed on a part-time basis to provide services necessary during peak periods
of restaurant operations. None of our employees are covered by a collective
bargaining agreement. We believe that we generally have good relations with our
employees.

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.

Negative publicity
could reduce sales at some or all of our restaurants.

We
are, from time to time, faced with negative publicity relating to food quality,
the safety of chicken, which is our principal food product, restaurant
facilities, customer complaints or litigation alleging illness or injury,
health inspection scores, integrity of our or our suppliers food processing,
employee relationships or other matters at one of our restaurants. Negative
publicity may adversely affect us, regardless of whether the allegations are
valid or whether we are held to be responsible. In addition, the negative
impact of adverse publicity relating to one restaurant may extend far beyond
the restaurant involved to affect some or all of our other restaurants. The
risk of negative publicity is particularly great with respect to our franchised
restaurants because we are limited in the manner in which we can regulate them,
especially on a real-time basis. A similar risk exists with respect to food
service businesses unrelated to us, if customers mistakenly associate such
unrelated businesses with our own operations. Employee claims against us based
on, among other things, wage and hour violations, discrimination, harassment or
wrongful termination may also create negative publicity that could adversely
affect us and divert our financial and management resources that would
otherwise be used to benefit the future performance of our operations. A
significant increase in the number of these claims or an increase in the number
of successful claims could materially adversely affect our business, financial
condition, results of operations and cash flows.

The prospect of a pandemic
spread of avian flu could adversely affect our business.

If avian flu were to affect our supply of chicken, our operations may be
negatively impacted, as prices may rise due to limited supply. In addition,
misunderstanding by the public of information regarding the threat of avian flu
could result in negative publicity that could adversely affect consumer
spending and confidence levels. A decrease in traffic to our restaurants as a
result of this negative publicity or as a result of health concerns, whether or
not warranted, could materially harm our business.

Increases in the
cost of chicken, including the impact on chicken prices due to the increased
price of corn because of ethanol demand, could materially adversely affect our
operating results.

Our
principal food product is chicken. During fiscal 2004, fiscal 2005 and fiscal
2006, the cost of chicken included in our product cost was approximately 14.1%,
14.0% and 13.2%, respectively, of our revenue from company-operated
restaurants. Material increases in the cost of chicken could materially
adversely affect our operating results. Changes in the cost of chicken can
result from a number of factors, including seasonality, increases in the cost
of grain, disease and other factors that affect availability and greater
international demand for domestic chicken products. In the last year, corn
prices, which is a primary feed source for chicken, have increased
dramatically. A major driver of this increase is rapidly increasing

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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. This increased demand on the nations corn crop may have
an adverse impact on chicken prices in the future. If we fail to anticipate and
react to increasing food costs by adjusting our purchasing practices, our cost
of sales may increase and our operating results could be adversely affected. We
currently do not engage in futures contracts or other financial risk management
strategies with respect to potential price fluctuations in the cost of chicken
or other food and supplies, which we purchase at prevailing market or
contracted prices. We have in the past limited our exposure to chicken prices
through contracts with suppliers ranging in term from one to three years. In
2007, EPL entered into new contracts with terms ranging from one to two years
with two primary suppliers of chicken that expire in February 2008 and February
2009. We also have an additional chicken supplier with a contract that started
in March 2005 and goes through March 2008. The price that we pay for chicken
has increased slightly as a result of these new contracts. Although it appears
that our menu price increases in January 2006 have significantly offset the
higher prices of chicken, future increases in the cost of chicken could
materially and adversely affect our business, financial condition, results of
operations and cash flows.

We rely on only one
company to distribute substantially all of our products to company-operated and
franchised restaurants, and three companies as our principal chicken suppliers.
Failure to receive timely deliveries of food or other supplies could result in
a loss of revenue and materially and adversely impact our operations.

Our
and our franchisees ability to maintain consistent quality menu items
significantly depends upon our ability to acquire fresh food products,
including the highest quality chickens and related items, from reliable sources
in accordance with our specifications on a timely basis. Shortages or
interruptions in the supply of fresh food products caused by unanticipated
demand, problems in production or distribution, contamination of food products,
an outbreak of poultry diseases, inclement weather or other conditions could
materially adversely affect the availability, quality and cost of ingredients,
which would adversely affect our business, financial condition, results of
operations and cash flows. We have contracts with a limited number of suppliers
of most chicken, food and other supplies for our restaurants. In addition, one
company distributes substantially all of the products we receive from suppliers
to company-operated and franchised restaurants. If that distributor or any
supplier fails to perform as anticipated or seeks to terminate agreements with
us, or if there is any disruption in any of our supply or distribution
relationships for any reason, our business, financial condition, results of operations
and cash flows could be materially adversely affected. Our inability to replace
our suppliers in a short period of time on acceptable terms could increase our
costs and cause shortages at our restaurants that may cause our
company-operated or franchised restaurants to remove certain items from a
restaurants menu or temporarily close a restaurant. If we or our franchisees
temporarily close a restaurant or remove popular items from a restaurants
menu, that restaurant may experience a significant reduction in revenue during
the time affected by the shortage and thereafter if our customers change their
dining habits as a result.

As most of our
restaurants are concentrated in the greater Los Angeles area, our business is
highly sensitive to events and conditions in the greater Los Angeles area.

Our
company-operated and franchised restaurants in the greater Los Angeles area
generated, in the aggregate, approximately 88% of our revenue in fiscal 2005
and approximately 86% in fiscal 2006. Our business will be materially adversely
affected if we experience a significant decrease in revenue from these
restaurants. Adverse changes in the demographic or economic conditions or an
adverse regulatory climate in the greater Los Angeles area or the state of
California could have a material adverse effect on our business. We also may
have exposure to unexpected losses resulting from natural disasters or other
catastrophic events affecting these areas. Catastrophes can be caused by
various events, including earthquakes, fires, hurricanes, hailstorms,
explosions, severe weather, or other natural or man-made disasters. The
incidence and severity of catastrophes are inherently unpredictable and our
losses from catastrophes could be substantial.

Our growth strategy
depends in part on opening restaurants in new and existing markets and
expanding our franchise system. We may be unsuccessful in opening new
restaurants or establishing new markets, which could adversely affect our
growth.

Our
ability to open new restaurants is dependent upon a number of factors, many of
which are beyond our control, including our or our franchisees ability to:

| |   |                                                    
| | - | ---------------------------------------------------
| |  | identify
  available and suitable restaurant sites;
| |   |                                                    
| |  | compete for
  restaurant sites;                    

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| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | reach acceptable
  agreements regarding the lease or purchase of locations;                                   
| |   |                                                                                                               
| |  | raise or
  have available an adequate amount of money for construction and opening
  costs;                   
| |   |                                                                                                               
| |  | timely hire,
  train and retain the skilled management and other employees necessary to meet
  staffing needs;
| |   |                                                                                                               
| |  | obtain, for
  an acceptable cost, required permits and regulatory approvals; and                              
| |   |                                                                                                               
| |  | control
  construction and equipment cost increases for new restaurants.                                      
| |   |                                                                                                               

If
we are unable to open new restaurants, or if restaurant openings are
significantly delayed, our earnings or revenue growth could be adversely
affected and our business negatively affected as we expect a portion of our
growth to come from new locations.

As
part of our growth strategy, we expect to enter into new geographic markets in
which we have no prior operating or franchising experience through development
agreements. Since fiscal 2003, we executed development agreements for new
restaurants in California, Arizona, Illinois, Texas, Washington, Missouri,
Georgia, Virginia, Utah and the six New England states. We may face challenges
in entering new markets, including difficulties in hiring experienced personnel
and difficulties due to our unfamiliarity with local real estate markets and
demographics. In addition, we may face additional challenges as most of the
consumers in the new markets we plan to enter may be unfamiliar with our brand.
Consumer recognition of our brand has been important in the success of
company-operated and franchised restaurants in our existing markets. New
markets may also have different competitive conditions, consumer tastes and
discretionary spending patterns than our existing markets. Any failure on our
part to recognize or respond to these differences may adversely affect the
success of our new restaurants. Expanding our franchise network will require
the implementation of enhanced business support systems, management information
systems, financial controls as well as additional management, franchise support
and financial resources. The failure of a significant number of restaurants
that open in new markets, or the failure to provide our franchisees with
adequate support and resources, could materially adversely affect our business,
financial condition, results of operations and cash flows.

As
part of our growth strategy, we also intend to open new restaurants in areas
where we have existing restaurants. Since we typically draw customers from a
relatively small geographic area around each of our restaurants, the operating
results and comparable restaurant sales for existing restaurants that are near
the area in which a new restaurant opens may decline, and the new restaurant
itself may not be successful, due to the close proximity of some of our other
restaurants and market saturation.

We rely in part on
our franchisees, and if our franchisees cannot develop or finance new
restaurants or build them on suitable sites or open them on schedule, our
growth and success may be affected.

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 January 24, 2007, we have executed development agreements that represent
commitments to open 133 restaurants. These franchised restaurants will be
located in California, Washington, Arizona, Texas, Missouri, Illinois, Georgia,
Virginia, Utah 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.

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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. 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.

Our franchisees
could take actions that could harm our business.

Franchisees
are independent business operators and are not our employees and we do not
exercise control over their day-to-day operations of the restaurants. We
provide training and support to franchisees, and set and monitor operational
standards, but the quality of franchised restaurant operations may be
diminished by any number of factors beyond our control. Consequently,
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. If franchisees do not, our image and
reputation, and the image and reputation of other franchisees, may suffer materially
and system-wide sales could decline significantly.

Franchisees,
as independent business operators, may from time to time disagree with us and
our strategies regarding the business or our interpretation of our respective
rights and obligations under the franchise agreement. This may lead to disputes
with our franchisees and we expect such disputes to occur from time to time in
the future as we continue to offer franchises. To the extent we have such
disputes, the attention of our management and our franchisees will be diverted
from our restaurants, which could have a material adverse effect on our
business, financial condition, results of operations or cash flows.

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. 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 will depend in part on our ability to
anticipate, identify and respond to changing consumer preferences and economic
conditions.

We may not be able
to compete successfully with other quick service and fast casual restaurants.

The
food service industry, and particularly the quick service and fast casual
segments, is intensely competitive. In addition, the greater Los Angeles area,
the primary market in which we compete, consists of what we believe is the most
competitive Mexican-inspired quick service and fast casual market in the
country. We expect competition in this market to continue to be intense because
consumer trends are favoring QSRs that offer healthier menu items made with
better quality products. Competition in our industry is primarily based on
price, convenience, quality of service, brand recognition, restaurant location
and type and quality of food. If our company-operated and franchised
restaurants cannot compete successfully with other quick service and fast
casual restaurants in new and existing markets, we could lose customers and our
revenue may decline. Our company-operated and franchised restaurants compete
with national and regional quick service and fast casual restaurant chains for
customers, restaurant locations and qualified management and other restaurant staff.
Compared with us, some of our competitors have greater financial and other
resources, have been in business longer, have greater name recognition and are
better established in the markets where our restaurants are located or are
planned to be located.

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Our substantial
level of indebtedness could materially and adversely affect our business,
financial condition and results of operations.

We
have substantial debt service obligations. At December 27, 2006, our total debt
was approximately $262.2 million, which represented approximately 60% of our
total capitalization, and we had approximately $14.6 million of available
revolving credit facility borrowings under our existing senior secured credit
facilities.

Our
high level of indebtedness could have significant effects on our business, such
as:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limiting our
  ability to borrow additional amounts to fund working capital, capital
  expenditures, acquisitions, debt service requirements, execution of our
  growth strategy and other purposes;                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | requiring us
  to dedicate a substantial portion of our cash flow from operations to pay
  principal and interest on our debt, which was approximately 160% of our
  operating cash flow in fiscal 2006 (including 30% of our operating cash flow,
  which comprised repayments of borrowings under the revolving credit facility
  of our existing senior secured credit facilities), which would reduce
  availability of our cash flow to fund working capital, capital expenditures,
  acquisitions, execution of our growth strategy and other general corporate
  purposes;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | making us
  more vulnerable to adverse changes in general economic, industry and
  competitive conditions, in government regulation and in our business by
  limiting our flexibility in planning for, and making it more difficult for us
  to react quickly to, changing conditions;                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | placing us
  at a competitive disadvantage compared with our competitors that have less
  debt; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | exposing us
  to risks inherent in interest rate fluctuations because some of our
  borrowings will be at variable rates of interest, which could result in
  higher interest expense in the event of increases in interest rates.                                                                                                                                                                                                                                                                                                                                               

In
addition, we may not be able to generate sufficient cash flow from our
operations to repay our indebtedness when it becomes due and to meet our other
cash needs. If we are not able to pay our debts as they become due, we will be
required to pursue one or more alternative strategies, such as selling assets,
refinancing or restructuring our indebtedness or selling additional debt or
equity securities. We may not be able to refinance our debt or sell additional
debt or equity securities or our assets on favorable terms, if at all, and if
we must sell our assets, it may negatively affect our ability to generate
revenue.

Our
senior secured credit facilities contain a number of covenants that, among
other things, limit or restrict our ability to dispose of assets, incur
additional indebtedness, incur guarantee obligations, prepay other indebtedness,
pay dividends, create liens, make equity or debt investments, make
acquisitions, engage in mergers, make capital expenditures, engage in certain
transactions with affiliates, enter into sale-leaseback transactions, amend
documents relating to other material indebtedness and other material documents
and redeem or repurchase equity interests. In addition, our senior secured
credit facilities require us to comply with a minimum interest coverage ratio
test and a maximum leverage ratio test. Our ability to borrow under our
revolving credit facility depends, among other things, on our compliance with
these tests. Events beyond our control, including changes in general economic
and business conditions, may affect our ability to meet these financial ratios
and financial condition tests. We cannot assure you that we will meet these
tests in the future, or that the lenders will waive any failure to meet those
tests.

Matters relating to
employment and labor laws may adversely affect our business.

Various
federal and state labor laws govern the relationship with our employees and
affect operating costs. These laws include employee classifications as exempt
or non-exempt, minimum wage requirements, unemployment tax rates, workers
compensation rates, citizenship requirements and other wage and benefit
requirements for employees classified as non-exempt. Significant additional
government regulations or increases in minimum wages or mandated benefits could
materially affect our business, financial condition, operating results or cash
flow.

Employee
claims against us based, among other things, on discrimination, harassment,
wrongful termination, or violation of wage and labor laws may divert our
financial and management resources that would otherwise be used to benefit our
operations. We have been in the past, and currently are, subject to employee
claims. See Item 3. Legal Proceedings. A significant increase in these
claims, or a significant class-action, could adversely affect our business,
financial condition, operating results or cash flows.

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If we or our
franchisees face labor shortages or increased labor costs, our growth and
operating results could be adversely affected.

Labor
is a primary component in the cost of operating our company-operated and
franchised restaurants. If we or our franchisees face labor shortages or
increased labor costs because of increased competition for employees, higher
employee-turnover rates or increases in the federal minimum wage or other
employee benefits costs (including costs associated with health insurance
coverage), our operating expenses could increase and our growth could be
adversely affected.

In
addition, our success depends in part upon our and our franchisees ability to
attract, motivate and retain a sufficient number of well-qualified restaurant
operators and management personnel, as well as a sufficient number of other
qualified employees, including guest service and kitchen staff, to keep pace
with our expansion schedule. Qualified individuals needed to fill these
positions are in short supply in some geographic areas. In addition, QSRs have
traditionally experienced relatively high employee turnover rates. Although we
have not yet experienced any significant problems in recruiting or retaining
employees, our and our franchisees ability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in
higher employee turnover in existing restaurants, which could increase our and
our franchisees labor costs and have a material adverse effect on our
business, financial condition, results of operations or cash flows. If we or
our franchisees are unable to recruit and retain sufficiently qualified
individuals, our business and our growth could be adversely affected.
Competition for these employees could require us or our franchisees to pay
higher wages, which could also result in higher labor costs.

We
have a substantial number of hourly employees who are paid wage rates at or
based on the applicable federal or state minimum wage and increases in the
minimum wage will increase our labor costs. 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 will go up to $8.00 per hour.
There is also pending legislation to raise the federal minimum wage to $7.25
per hour. We may be unable to increase our menu prices in order to pass these
increased labor costs on to our guests, in which case our margins would be
negatively affected.

We
and our franchisees have been affected by increasing healthcare and workers
compensation expenses impacting business in most industries, including ours. To
manage premium increases we have been required to self-insure through higher
deductibles or otherwise. If we are exposed to material liabilities that are
not insured it could materially adversely affect our financial condition,
results of operations and cash flows.

We may be locked
into long-term and non-cancelable leases and may be unable to renew leases at
the end of their terms.

Many
of our current restaurant leases are non-cancelable and typically have initial
terms of 20 years and two or three renewal terms of five years that we may
exercise at our option. We expect the leases that we enter into in the future
will also be long-term and non-cancelable and have similar renewal options.
Even if we close a restaurant, we may remain committed to perform our
obligations under the applicable lease, which could include, among other
things, payment of the base rent for the balance of the lease term. We have
obligations under leases for closed restaurants that had a net present value of
$0.5 million at December 27, 2006. In addition, in connection with leases for
restaurants that we will continue to operate, we may, at the end of the lease
term and any renewal period for a restaurant, be unable to renew the lease
without substantial additional cost, if at all. As a result, we may close or
relocate the restaurant, which could subject us to construction and other costs
and risks. Additionally, the revenue and profit, if any, generated at a
relocated restaurant may not equal the revenue and profit generated at the
existing restaurant. We maintain a reserve for restaurant closures, but there
can be no assurance that this reserve will cover our actual full exposure from
all restaurant closures.

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, franchising, land use and employee, health, sanitation and
safety matters. 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

-15-

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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.

The failure to
enforce and maintain our trademarks and protect our other intellectual property
could materially adversely affect our business, including our ability to
establish and maintain brand awareness.

We
have registered the names El Pollo Loco®, Pollo Bowl® and certain other names
used by our restaurants as trademarks or service marks with the United States
Patent and Trademark Office and in approximately 42 foreign countries. The
success of our business strategy depends on our continued ability to use our
existing trademarks and service marks in order to increase brand awareness and
further develop our branded products. If our efforts to protect our
intellectual property are not adequate, or if any third party misappropriates
or infringes on our intellectual property, either in print, on the Internet or
through other media, the value of our brands may be harmed, which could have a
material adverse effect on our business, including the failure of our brands
and branded products to achieve and maintain market acceptance.

We
are currently involved in litigation relating to intellectual property rights
in Mexico as discussed in Item 3. Legal Proceedings. Our failure to prevail
in this action could result in the loss of our ownership in Mexico of the El
Pollo Loco trademarks and intellectual property at issue, which could affect
our brand in the United States and elsewhere.

We
maintain as trade secrets or otherwise confidential certain proprietary
standards, specifications and operating procedures. We may not be able to
prevent the unauthorized disclosure or use of our trade secrets or proprietary
information, despite the existence of confidentiality agreements and other
measures. If any of our trade secrets or proprietary information were to be
disclosed to or independently developed by a competitor, our business,
financial condition and results of operations could be materially adversely
affected.

We
franchise our restaurants to various franchisees. While we try to ensure that
the quality of our brands and branded products is maintained by all of our
franchisees, we cannot be certain that these franchisees will not take actions
that adversely affect the value of our intellectual property or reputation.

There
can be no assurance that all of the steps we have taken to protect our
intellectual property in the United States and foreign countries will be
adequate. In addition, the laws of some foreign countries do not protect
intellectual property rights to the same extent as the laws of the United States.

We may become
subject to liabilities arising from environmental laws that could likely
increase our operating expenses and materially and adversely affect our
business and results of operations.

We are subject to federal, state and local laws, regulations and ordinances
that:

| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | govern
  activities or operations that may have adverse environmental effects, such as
  discharges to air and water, as well as waste handling and disposal practices
  for solid and hazardous wastes; and
| |   |                                                                                                                                                                                                             
| |  | impose
  liability for the costs of cleaning up, and damage resulting from, sites of
  past spills, disposals or other releases of hazardous materials.                                                     

In
particular, under applicable environmental laws, we may be responsible for
remediation of environmental conditions and may be subject to associated
liabilities, including liabilities for clean-up costs and personal injury or
property damage, relating to our restaurants and the land on which our
restaurants are located, regardless of whether we lease or own the restaurants
or land in question and regardless of whether such environmental conditions
were created by us or by a prior owner or tenant. If we are found liable for
the costs of remediation of contamination at any of our properties, our
operating expenses would likely increase and our operating results would be
materially adversely affected. See Item 1. Business  Environmental Matters.

-16-

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We are a holding
company and there may be limitations on our ability to receive distributions
from our subsidiaries.

As
a holding company, we have no direct operations and substantially no assets
other than ownership of 100% of the stock of EPL. Consequently, our wholly
owned subsidiary, EPL, conducts all of our consolidated operations and owns
substantially all of our consolidated operating assets. Our principal source of
the cash required to pay our obligations is the cash that EPL generates from
its operations. EPL is a separate and distinct legal entity, has no obligation
to make funds available to us and currently has restrictions that limit its
ability to make distributions or dividends to us. Furthermore, EPL is permitted
under the terms of the senior secured credit facilities, subject to certain
restrictions, to incur additional indebtedness that could severely restrict or
prohibit the making of distributions, the payment of dividends or the making of
loans by EPL. The earnings from, or other available assets of, EPL may also not
be sufficient to pay dividends or make distributions or loans to enable us to
meet our obligations. In addition, even if such earnings were sufficient, we
cannot assure you that the agreements governing the current and future
indebtedness of EPL will permit EPL to provide us with sufficient dividends,
distributions or loans, if any, to meet our obligations.

We are controlled by
affiliates of Trimaran, and their interests as equity holders may conflict with
the interests of the Companys noteholders.

Certain
private equity funds affiliated with Trimaran Capital, LLC (Trimaran)
indirectly beneficially own all of our equity. The Trimaran affiliates are able
to control the election of a majority or more of our directors and the
directors of our parent and subsidiary companies, the appointment of new
management and the approval of any action requiring the vote of our outstanding
common stock, including amendments of our certificate of incorporation, mergers
or sales of substantially all our assets. The directors elected by the Trimaran
affiliates are able to make decisions affecting our capital structure,
including decisions to issue additional capital stock and incur additional
debt. The interests of our equity holders may not in all cases be aligned with
the interests of our noteholders. For example, if we encounter financial
difficulties or are unable to pay our debts as they mature, the interest of our
equity holders might conflict with the interests of our noteholders. In
addition, our equity holders may have an interest in pursuing acquisitions,
divestitures, financings or other transactions that, in their judgment, could
enhance their equity investments, even though such transaction might involve
risks to our business and financial condition or to our noteholders.

Item 1B. Unresolved Staff Comments.

Not
applicable.

Item 2. Properties.

Our
restaurants are either free-standing facilities, typically with drive-thru
capability, or attached restaurants. The average free-standing restaurant
provides seating for approximately 60 customers while the average attached
restaurant provides seating for approximately 40 customers. A typical
restaurant generally ranges from 2,200 to 2,600 square feet. For a majority of
our company-operated restaurants, we lease land on which our restaurants are
built. Our leases generally have terms of 20 years, with two or three renewal
terms of five years. Restaurant leases provide for a specified annual rent, and
some leases call for additional or contingent rent based on revenue above
specified levels. Generally, leases are net leases that require us to pay a
pro rata share of taxes, insurance and maintenance costs. We own 19 properties
and currently operate or license to franchisees the right to operate
restaurants on all of these properties. All 19 of these owned properties are
subject to mortgages that secure our existing senior secured credit facilities.
In addition, we lease 136 properties on which we operate restaurants.

We
lease our executive offices consisting of approximately 18,900 square feet in
Irvine, California for a term expiring in September 2007. We are currently
looking at options with regards to renewing our executive office lease, which
could include relocating our office. There could be significant capital and
moving expenses associated with such a relocation.

Locations

As
of December 27, 2006, we and our franchisees operated 359 restaurants as
follows:

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|                                  |  |                                         |     |                                |  |                           |  |  |     | 
|--------------------------------- |  | --------------------------------------- | --- | ------------------------------ |  | ------------------------- |  |  | --- | 
|Designated
  Market Area          |  | Number ofCompany-
  OperatedRestaurants |     | Number ofFranchisedRestaurants |  | TotalNumber ofRestaurants | 
|                                  |  |                                         |     |                                |  |                           | 
|Los Angeles, CA                   |  |                                         | 129 |                                |  | 129                       |  |  | 258 | 
|San Diego, CA                     |  |                                         |    |                                |  | 22                        |  |  | 22  | 
|Phoenix, AZ                       |  |                                         |    |                                |  | 11                        |  |  | 11  | 
|San Francisco/San Jose, CA        |  |                                         |    |                                |  | 10                        |  |  | 10  | 
|Sacramento/Stockton/Modesto,
  CA |  |                                         |    |                                |  | 9                         |  |  | 9   | 
|Las Vegas, NV                     |  |                                         | 8   |                                |  | 3                         |  |  | 11  | 
|San Antonio, TX                   |  |                                         | 6   |                                |  |                          |  |  | 6   | 
|Fresno/Merced, CA                 |  |                                         | 5   |                                |  | 1                         |  |  | 6   | 
|Bakersfield, CA                   |  |                                         |    |                                |  | 3                         |  |  | 3   | 
|Palm Springs, CA                  |  |                                         | 3   |                                |  | 1                         |  |  | 4   | 
|Reno, NV                          |  |                                         |    |                                |  | 3                         |  |  | 3   | 
|Rio Grande Valley, TX             |  |                                         |    |                                |  | 2                         |  |  | 2   | 
|Santa Barbara, CA                 |  |                                         |    |                                |  | 2                         |  |  | 2   | 
|El Paso, TX                       |  |                                         |    |                                |  | 2                         |  |  | 2   | 
|Salinas, CA                       |  |                                         |    |                                |  | 1                         |  |  | 1   | 
|El Centro, CA                     |  |                                         |    |                                |  | 1                         |  |  | 1   | 
|Turlock, CA                       |  |                                         |    |                                |  | 1                         |  |  | 1   | 
|Chicago, IL                       |  |                                         |    |                                |  | 2                         |  |  | 2   | 
|Denver, CO                        |  |                                         |    |                                |  | 1                         |  |  | 1   | 
|Foxwoods, CT                      |  |                                         |    |                                |  | 1                         |  |  | 1   | 
|Arizona                           |  |                                         |    |                                |  | 3                         |  |  | 3   | 
|                                  |  |                                         |     |                                |  |                           |  |  |     | 
|Total                             |  |                                         | 151 |                                |  | 208                       |  |  | 359 | 

We
use a combination of in-house development staff and outside real estate
consultants to find, evaluate and negotiate new sites using predetermined site
criteria guidelines. Sites must be qualified based on surrounding population
density, median household income, location, traffic, access, visibility,
potential restaurant size, parking and signage capability. We use in-house
demographic software to assist in our evaluation. We also selectively use
outside consultants who specialize in site evaluation to provide independent
validation of the sales potential of new sites.

The
costs of opening an El Pollo Loco restaurant varies, depending upon, among
other things, the location of the site and construction required. We generally
lease the land upon which we build our restaurants, operating both
free-standing and attached restaurants. At times, we receive landlord
development and/or rent allowances for leasehold improvements, furniture,
fixtures and equipment. The standard decor and interior design of each of our
restaurant concepts can be readily adapted to accommodate different types of
locations.

We
believe that the locations of our restaurants are critical to our long-term
success, and we devote significant time and resources to analyzing each
prospective site. As we have expanded, we have developed specific criteria by
which we evaluate each prospective site. Potential sites generally are in major
metropolitan areas. Our ability to open new restaurants, in the Los Angeles
area and elsewhere, depends upon, among other things, locating satisfactory
sites, negotiating favorable lease terms, securing appropriate government
permits and approvals, recruiting or transferring additional qualified
management personnel and access to financing. For these and other reasons, we
cannot assure you that our expansion plans will be successfully achieved or
that new restaurants will meet with consumer acceptance or can be operated
profitably.

Item 3. Legal Proceedings.

On
or about April 16, 2004, two former employees and one current employee filed a
class action suit in the Superior Court of the State of California, County of
Los Angeles, against EPL on behalf of all putative class members (former and
current general managers and restaurant managers from April 2000 to present)
alleging certain violations of California labor laws, including alleged
improper classification of general managers and restaurant managers as exempt
employees (the Elias Action). Plaintiffs requested remedies include
compensatory damages for unpaid wages, interest, certain statutory penalties,
disgorgement of alleged profits, punitive damages and attorneys fees and costs
as well as certain injunctive relief. The complaint was served on us on April
19, 2004. The court has ordered the class action stayed pending the arbitration
of one of the named putative class plaintiffs claims as a result of his
execution of a mandatory arbitration agreement with us. 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. If a class were ultimately
certified, any settlement of or judgment arising from such

-18-

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lawsuit could be material,
and we cannot give any assurance that we would have the resources available to
pay such settlement or judgment.

On
or about October 18, 2005, Salvador Amezcua, on behalf of himself and all
others similarly situated, filed a purported class action complaint against EPL
in the Superior Court of the State of California, County of Los Angeles. Carlos
Olvera replaced Mr. Amezuca as the named class representative on August 16,
2006 (the Olvera Action). 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. We were served with this complaint on December 16, 2005. The court has
ordered that the case be deemed complex and assigned it to the complex
litigation panel. While 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. This action has been designated by the court as related to
the Elias Action referenced above. 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. Any settlement of or judgment with a negative outcome
arising from such lawsuit could have an adverse material impact.

The
contractual rights to use the name El Pollo Loco® and certain related trademarks and intellectual property in Mexico
were assigned to us in 1996, pursuant to an agreement between us and a company
controlled by Jose Francisco Ochoa, the founder of the first El Pollo Loco
restaurant in Mexico and the United States. As consideration for the assignment
of such rights, we agreed, subject to the terms and conditions of the
agreement, to use commercially reasonable efforts to develop a minimum number
of restaurants in Mexico by February 2006 and to pay certain fees for each such
restaurant that we develop. On March 31, 2004, EPL-Mexico filed suit against us
in state court in Laredo, Texas alleging, among other things, that we breached
our agreement with EPL-Mexico by failing to exploit the trademarks and develop
new restaurants in Mexico and claiming that the right to use the name El Pollo
Loco® in Mexico should revert to EPL-Mexico.
EPL-Mexico is seeking return of the trademarks and damages. EPL-Mexico also
initiated an amparo proceeding, which is an administrative challenge under
Mexican law, to our ownership of the trademarks before the Mexican Intellectual
Property Institute. This proceeding was resolved in our favor by Mexicos
Supreme Court of Justice of the Nation. We successfully removed the Texas
action to federal court and we have filed a counterclaim against EPL-Mexico to
defend our rights to the trademarks in Mexico. A jury trial is expected to
occur in 2007. We believe that EPL-Mexicos claims are without merit and that,
based on the rights we possess pursuant to the agreement, we possess adequate
legal and contractual rights to use the intellectual property in question in
Mexico. However, failure to prevail in this action could result in the loss of
our ownership in Mexico of the El Pollo Loco trademarks and intellectual
property at issue, which could affect our brand in the United States and
elsewhere as well as the imposition of significant monetary damages, which
could have a material adverse impact.

On
November 1, 2006, Fall River Music, Inc. filed a lawsuit United States District
Court, Central District of California, Santa Ana Division, against El Pollo
Loco, Inc. and its advertising agency, Krueger Communications, LLC. Fall River
Music claims all rights, title and interest to the musical composition
Guantanamera, and alleges that the music used by EPL in its advertisements is
an infringement of Fall Rivers copyrights. Fall River Music, Inc. seeks
unspecified damages as a result of this alleged infringement. While EPL has
received a denial of coverage from its insurance company, Kruegers insurance
company has accepted coverage and is currently defending EPL. The action is set
for trial on February 12, 2008. 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. Any settlement of or judgment with a negative outcome
arising from such lawsuit could have an adverse material impact.

On
January 11, 2007, Veronica Blanco, on behalf of herself and all others
similarly situated, filed a purported class action complaint against EPL in the
United States District Court, Central District of California, Santa Ana
Division. Veronica
Blanco, on behalf of herself and all others similarly situated, alleges
violations of the federal Fair Credit Reporting Act and Fair and Accurate
Credit Transactions Act, which restrict the credit card information that may be
printed on customer receipts. While we intend to defend against this action
vigorously, the ultimate outcome of this case is not presently determinable as
it is in the preliminary phase.

We
are 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. A significant increase
in the number of these claims or an increase in amounts owing under successful
claims could materially adversely affect our business, financial condition,
results of operation and cash flows.

-19-

---



Item 4. Submission of Matters to a Vote of Security Holders.

On
September 28, 2006, our sole stockholder, El Pollo Loco Holdings, Inc.,
consented in writing to the election of the following persons as directors:
Steven A. Flyer, David L. Benyaminy, Douglas Ammerman and Griffin Whitney.

No
other matters were submitted to a vote of security holders in the fourth
quarter of the fiscal year ended December 27, 2006.

PART II

Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.

Our
common stock is not registered under the Securities Act of 1933, as amended
(the Securities Act). There is no established public trading market for our
common stock. On December 27, 2006, there was one holder of record of our
common stock, El Pollo Loco Holdings, Inc.

The
indentures governing the 2013 and 2014 Notes contain covenants that, among
other things, limit our ability to pay dividends on our capital stock, subject
to certain exceptions. EPL is also prohibited from paying cash dividends under
the terms of EPLs senior secured credit facility, except in certain
circumstances.

None
of our equity securities are authorized for issuance under any equity
compensation plan.

-20-

---



Item 6. Selected Financial Data.

The
following table sets forth selected consolidated financial data and is qualified
by reference to and should be read in conjunction with the consolidated
financial statements and the notes thereto and Item 7. Managements Discussion
and Analysis of Financial Condition and Results of Operations included
elsewhere in this Annual Report on Form 10-K. The selected consolidated
financial data is derived from our audited consolidated financial statements.
The discussion of the results of operations for fiscal year 2005 is based on
the combined results for the periods from December 30, 2004 through November
17, 2005, prior to our acquisition by Chicken Acquisition Corp. (CAC), and for
the period November 18, 2005 through December 28, 2005, subsequent to our
acquisition by CAC. (see Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations, Recent Transactions).

|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|--------------------------------------- |  | ---------------- | ------- | ------------- | - | ------- | - | ------------------------------------------ | ------- | ------------------------------------------ | - | -------- | - | - | ------- | - | - | ------- | 
|                                        |  | Predecessor (1)  |         | Successor (1) |  
|                                        |  |                  |         |               |  
|                                        |  | Fiscal Years (2) |         |               |   |         |   |                                            |         | Fiscal Year (2)                            |  
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |  
|                                        |  | 2002             |         | 2003          |   | 2004    |   | December 30, 2004
  to November 17,
  2005 |         | November 18, 2005
  to December 28,
  2005 |   | 2006     |  
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |  
|Income
  Statement Data:                |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|(Amounts
  in thousands)                |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Restaurant revenue                      |  | $                | 182,549 |               | $ | 193,220 |   | $                                          | 204,820 |                                            | $ | 197,267  |   | $ | 24,527  |   | $ | 242,571 | 
|Franchise revenue                       |  |                  | 12,683  |               |   | 13,226  |   |                                            | 14,216  |                                            |   | 13,661   |   |   | 1,742   |   |   | 17,317  | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Total operating revenue                 |  |                  | 195,232 |               |   | 206,446 |   |                                            | 219,036 |                                            |   | 210,928  |   |   | 26,269  |   |   | 259,888 | 
|Product cost                            |  |                  | 55,116  |               |   | 58,430  |   |                                            | 64,595  |                                            |   | 62,638   |   |   | 7,958   |   |   | 76,151  | 
|Payroll and benefits                    |  |                  | 51,983  |               |   | 53,608  |   |                                            | 55,200  |                                            |   | 50,325   |   |   | 6,746   |   |   | 61,601  | 
|Depreciation and
  amortization         |  |                  | 13,169  |               |   | 13,039  |   |                                            | 13,894  |                                            |   | 12,743   |   |   | 1,203   |   |   | 10,333  | 
|Other operating expenses                |  |                  | 54,781  |               |   | 60,967  |   |                                            | 65,979  |                                            |   | 65,340   |   |   | 7,958   |   |   | 81,281  | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Operating income                        |  |                  | 20,183  |               |   | 20,402  |   |                                            | 19,368  |                                            |   | 19,882   |   |   | 2,404   |   |   | 30,522  | 
|Interest expense, net                   |  |                  | 8,099   |               |   | 8,100   |   |                                            | 18,025  |                                            |   | 38,726   |   |   | 3,385   |   |   | 28,813  | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Income (loss) before income taxes       |  | $                | 12,084  |               | $ | 12,302  |   | $                                          | 1,343   |                                            |   | ($18,844 | ) |   | ($981   | ) | $ | 1,709   | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Net income (loss)                       |  | $                | 7,286   |               | $ | 7,370   |   | $                                          | 1,315   |                                            |   | ($11,193 | ) |   | ($588   | ) | $ | 637     | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Supplementary Income Statement
Data:    |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Restaurant other operating expense      |  | $                | 36,773  |               | $ | 38,511  |   | $                                          | 39,900  |                                            | $ | 38,153   |   | $ | 4,623   |   | $ | 51,039  | 
|Franchise expense                       |  |                  | 3,556   |               |   | 3,427   |   |                                            | 3,410   |                                            |   | 2,794    |   |   | 352     |   |   | 3,429   | 
|General and administrative expense      |  |                  | 14,452  |               |   | 19,029  |   |                                            | 22,669  |                                            |   | 24,393   |   |   | 2,983   |   |   | 26,813  | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Total other operating expenses          |  | $                | 54,781  |               | $ | 60,967  |   | $                                          | 65,979  |                                            | $ | 65,340   |   | $ | 7,958   |   | $ | 81,281  | 
|                                        |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Balance
  Sheet Data:                   |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Cash and cash equivalents               |  | $                | 2,920   |               | $ | 5,378   |   | $                                          | 5,636   |                                            | $ |          |   | $ | 3,552   |   | $ | 2,955   | 
|Net property (3)                        |  |                  | 65,090  |               |   | 64,678  |   |                                            | 64,103  |                                            |   |          |   |   | 71,307  |   |   | 75,476  | 
|Total assets                            |  |                  | 154,852 |               |   | 164,288 |   |                                            | 167,238 |                                            |   |          |   |   | 505,919 |   |   | 509,048 | 
|Total debt (4)                          |  |                  | 71,457  |               |   | 133,230 |   |                                            | 169,582 |                                            |   |          |   |   | 260,314 |   |   | 262,188 | 
|Total stockholders equity
(deficiency) |  |                  | 58,666  |               |   | (3,505  | ) |                                            | (38,875 | )                                          |   |          |   |   | 171,691 |   |   | 172,714 | 
|Other Financial Data:                   |  |                  |         |               |   |         |   |                                            |         |                                            |   |          |   |   |         |   |   |         | 
|Depreciation and amortization           |  |                  | 13,169  |               |   | 13,039  |   |                                            | 13,894  |                                            |   | 12,743   |   |   | 1,203   |   |   | 10,333  | 
|Capital expenditures (5)                |  |                  | 10,382  |               |   | 12,262  |   |                                            | 14,849  |                                            |   | 13,270   |   |   | 2,891   |   |   | 14,022  | 

| | 
| | 
| | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We refer to ourselves as
  the Predecessor for all periods prior to CACs acquisition of us and as the
  Successor for all periods subsequent to CACs acquisition of us.                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | We use a 52- or 53-week
  fiscal year ending on the last Wednesday of the calendar year. In a 52-week
  fiscal year, each quarter includes 13 weeks of operations; in a 53-week
  fiscal year, the first, second and third quarters each include 13 weeks of
  operations and the fourth quarter includes 14 weeks of operations.
  Approximately every six or seven years a 53-week fiscal year occurs. Fiscal 2003,
  which ended December 31, 2003, was a 53-week fiscal year. Fiscal years 2002,
  2004, 2005 and 2006 are 52-week fiscal years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Net property consists of
  property owned and property held under capital leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Total Predecessor debt
  consists of 2009 notes, 2010 notes, notes payable and capital lease
  obligations. Total Successor debt consists of untendered 2009 Notes, the 2013
  notes, the 2014 notes, borrowings under the existing senior secured credit
  facilities, and capital lease obligations.                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(5) | Capital expenditures
  consist of cash paid for the purchase of property as well as cash paid for
  the purchase of  restaurants from
  franchisees which amounted to $1,288,000 and $2,421,000 in fiscal 2003 and
  2004, respectively.                                                                                                                                                                                                                                                                                                            

-21-

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Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations.

The following discussion and analysis of our financial
condition and results of operations contains forward-looking statements. These
forward-looking statements are subject to numerous risks and uncertainties,
including, but not limited to, the risks and uncertainties described in the
Risk Factors section. Our actual results may differ materially from those
contained in any forward-looking statements. You should read the following
discussion together with the section entitled Risk Factors, Selected
Financial Data, and our financial statements and related notes thereto
included elsewhere in this Annual Report on Form 10-K.

Overview

We
own, operate and franchise restaurants specializing in marinated, flame-grilled
chicken. As of December 27, 2006, our restaurant system had 359 restaurants,
consisting of 151 company-operated and 208 franchised restaurants, located
principally in California, with additional restaurants in Arizona, Nevada, Texas,
Illinois, Colorado and Connecticut. During fiscal 2006, we opened nine new
company-operated and seventeen new franchised restaurants. Our typical
restaurant is a freestanding building ranging from approximately 2,200 to 2,600
square feet with seating for approximately 60 customers and offering drive-thru
convenience.

Our
revenue is derived from two primary sources, company-operated restaurant
revenue and franchise revenue, the latter of which is comprised principally of
franchise royalties and to a lesser extent franchise fees and sublease rental
income. 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 one-year
anniversary of its opening. From fiscal 2005 to fiscal 2006, same-store sales
growth for restaurants system-wide increased 5.3%. 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 new
company-operated restaurants and to increases in same store sales, which may
include price and transaction volume increases. We implemented a menu price
increase in January 2006 and a chicken meal restructuring in May 2005. The
chicken meal restructuring consisted of changing our menu to allow our
customers to select chicken meals specifying white meat, dark meat or mixed
pieces, and changing prices accordingly.

We
plan to open approximately ten company-operated restaurants per year over the
next few years, which is slightly higher than our company-operated restaurant
growth over the last few years. Many factors can influence sales at all or
specific restaurants, including increased competition, strength of marketing
promotions, the restaurant managers operational execution and changes in local
market conditions and demographics.

Franchise
revenue consists of royalties, initial franchise fees and franchise rental
income. Royalties average 4% of the franchisees net sales. Our franchisees
opened 17 new restaurants in fiscal 2006 and we believe they will open
approximately 20 new restaurants in fiscal 2007. We believe that new franchise
restaurant growth will increase as we sign development agreements with
experienced franchisees in new and existing markets. We are currently legally authorized
to market franchises in all 50 states and are pursuing opportunities in those
states. We have entered into development agreements that, beginning in the
fourth quarter of 2004, have resulted in area development fees being recognized
as the related restaurants open. We sublease facilities to certain franchisees
and the sublease rent is included in our franchise revenue. This revenue
exceeds rent payments made under the leases that are included in franchise
expense. Since we do not expect to lease or sublease new properties to our
franchisees as we expand our franchise restaurants, we expect the portion of
franchise revenue attributable to franchise rental income to decrease over
time.

Product
cost, 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. In March 2007, we renewed two chicken contracts with terms ranging
from one to two years at higher prices than the expiring contracts. One of
these contracts provides a floor and ceiling price for the chicken we buy from
the supplier. We implemented price increases in January 2006 and also
implemented the chicken meal restructuring in May 2005 that have partially
mitigated the impact of higher chicken prices on our profitability.

Payroll
and benefits make up the next largest single expense. Payroll and benefits have
been and remain subject to inflation, including salaries due to minimum wage
increases and expenses for health insurance and workers compensation
insurance. A significant number of our hourly staff are paid at rates
consistent with 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

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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 will go up to $8.00 per hour. There is also
pending legislation to raise the federal minimum wage to $7.25 per hour. The
Company implemented a menu price increase of approximately 2% at the beginning
of fiscal 2007 in order to mitigate the impact on profits of the minimum wage
increase. Workers compensation insurance costs are subject to a number of
factors, and although the state of California passed legislation designed to
reduce workers compensation insurance expense to employers, we cannot predict
whether such legislation will actually reduce our workers compensation
insurance expense. We have seen a reduction in the number of workers
compensation claims due to employee safety initiatives that we began
implementing in fiscal 2002.

Depreciation
and amortization expense changed subsequent to our acquisition by CAC, which we
refer to as the Acquisition, a result of fair values assigned to assets
acquired and liabilities assumed at the date of the Acquisition as determined
by management with the assistance of an independent valuation company.

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.

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

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, in fiscal 2004 we began to
incur additional costs associated with developing disclosure controls and
procedures and implementing the level of internal controls required for a
company with registered securities.

Our
company-operated restaurant-level cash flow margins (representing
restaurant-level revenue less product cost, payroll and benefits and restaurant
other operating expense, which is calculated as a percentage of restaurant
revenue), which averaged 23% and 22% for fiscal 2005 and fiscal 2006,
respectively, are influenced by many factors. Changes in same-store sales have
a significant impact on restaurant-level cash flow (restaurant-level revenue
less product cost, payroll and benefits, and restaurant other operating expense)
due to the fixed component of certain restaurant costs that do not fluctuate as
sales change. The addition of new restaurants period over period will lead to
increased restaurant-level revenue and costs, but is not expected to have a
significant impact on restaurant-level cash flow margins. We present
restaurant-level cash flow margin, which is calculated as a percentage of
restaurant revenue, as a further supplemental measure of the performance of our
company-operated restaurants. Restaurant level cash flow and restaurant level
cash flow margin are both financial measures that are not required by or
presented in accordance with GAAP. For a discussion of our use of
restaurant-level cash flow and restaurant-level cash flow margin and their
limitations, see Non-GAAP Financial Measures on page 1 above. The following
table reconciles restaurant-level cash flow to net income (loss) for combined
fiscal 2005 and fiscal 2006:

|                                       |  |             |         |      |   |         |  
|-------------------------------------- |  | ----------- | ------- | ---- | - | ------- | -
|                                       |  | Fiscal Year |        
|                                       |  |             |        
|                                       |  | 2005(1)     |         | 2006 |  
|                                       |  |             |         |      |  
|Net income
  (loss)                    |  | $           | (11,781 | )    | $ | 637     |  
|Provision
  (benefit) for income taxes |  |             | (8,044  | )    |   | 1,072   |  
|Interest
  expense, net                |  |             | 42,111  |      |   | 28,813  |  
|Depreciation
  and amortization        |  |             | 13,946  |      |   | 10,333  |  
|General and
  administrative expense   |  |             | 27,376  |      |   | 26,813  |  
|Franchise
  expense                    |  |             | 3,146   |      |   | 3,429   |  
|Franchise
  revenue                    |  |             | (15,403 | )    |   | (17,317 | )
|                                       |  |             |         |      |   |         |  
|Restaurant-level
  cash flow           |  | $           | 51,351  |      | $ | 53,780  |  
|                                       |  |             |         |      |   |         |  

|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Reflects
  combined results for our Predecessor period and Successor period. This
  information is not in accordance with GAAP. See Basis of Presentation for
  an explanation of this information and limitations of the usefulness of this
  information.

-23-

---



Recent Transactions

On
September 27, 2005, we entered into a stock purchase agreement with CAC and our
equity holders, which included certain members of our management. Pursuant to
the stock purchase agreement, CAC agreed to purchase all of our issued and
outstanding common stock (other than certain shares exchanged by existing
shareholders, including management). On November 18, 2005, the Acquisition was
completed. The purchase price for the stock transferred in the Acquisition was
based on a debt-free purchase price (subject to adjustment as provided in the
stock purchase agreement for debt and debt related costs, transaction expenses,
working capital and management retained equity) for all of our issued and
outstanding common stock, and totaled $435.9 million. The allocation of the
purchase price to the fair value of the assets acquired and liabilities assumed
reflected preliminary estimates and was finalized during fiscal 2006.

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

On
November 18, 2005, Intermediate Finance issued the 2014 Notes, consisting of
141/2% senior discount notes due 2014, which as of December 27, 2006 had an
accreted value of $26.3 million. In 2005 Intermediate Finance merged with and
into Intermediate, with Intermediate surviving the merger and assuming
Intermediate Finances obligations under the notes and the related indenture.
On November 18, 2005, EPL Finance issued the 2013 Notes, consisting of $125.0
million aggregate principal amount of 113/4% senior notes due 2013. The 2013
Notes are guaranteed by Intermediate. In 2005 EPL Finance merged with and into
EPL, with EPL surviving the merger and assuming EPL Finances obligations under
the notes and the related indenture.

On
November 18, 2005, EPL entered into the existing 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. Our existing senior
secured credit facilities provide for a $104.5 million term loan and $25.0
million in revolver availability. In connection therewith, Intermediates prior
credit facility with SunTrust Bank N.A. was paid off in full.

Critical Accounting Policies

This
section discusses our financial statements, which have been prepared in
accordance with GAAP. The preparation of these 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 revenue 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, insurance and contingent
liabilities. We base our estimates and judgments on historical experience and
on various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our financial statements.

-24-

---



Recoverability of Property and
Equipment

We
assess recoverability of property and equipment in accordance with SFAS 144,
Accounting for Impairment or Disposal of Long-Lived Assets. Certain events or
changes in circumstances may indicate that the recoverability of the carrying
amount of property should be assessed for impairment. Such events or changes
may include a significant change in the business climate in a particular market
or trade area or a current-period operating or cash flow loss combined with
historical loss or projected future losses. If an event occurs or changes in
circumstances are present, we estimate the future cash flows expected to result
from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount, we recognize an impairment loss. The impairment loss
recognized is the amount by which the carrying amount exceeds the fair value.
Our assessments of cash flows represent our best estimate as of the time of the
impairment review and are consistent with our internal planning. If different
cash flows had been estimated in the current period, the property and equipment
balances could have been materially impacted. Factors that we must estimate
when performing impairment tests include, among other items, sales volume,
prices, inflation, marketing spending, and capital spending. With respect to
closed restaurants, assets, if any, are reflected at their estimated net
realizable value; liabilities of closed restaurants, which consist principally
of lease obligations, are recognized at their contractual obligation, reduced
by estimated future sublease income. We have not closed any restaurants during
the periods presented except for normal lease expirations.

Goodwill and other Intangible
Assets

Intangible
assets consist primarily of goodwill and the value allocated to our trademarks
and franchise network. Goodwill represents the excess of cost over fair value
of net identified assets acquired in business combinations accounted for under
the purchase method. Goodwill results principally from our acquisition by CAC
for the Successor period November 18, 2005 through December 27, 2006 and our
acquisition by an affiliate of ASCP in 1999 for the Predecessor periods.

In
accordance with SFAS 142, Goodwill and Other Intangible Assets, we do not
amortize goodwill and certain intangible assets with an indefinite life,
including domestic trademarks. We perform an impairment test annually at our
fiscal year end, or more frequently if impairment indicators arise. No
impairment was recorded in fiscal 2004, fiscal 2005 and fiscal 2006.

The
impairment evaluation for goodwill is conducted annually coinciding with our
fiscal year end using a two-step process. In the first step, the fair value of
our reporting unit is compared with the carrying amount of the reporting unit,
including goodwill. The estimated fair value of the reporting unit is generally
determined on the basis of discounted future cash flows. If the estimated fair
value of the reporting unit is less than the carrying amount of the reporting
unit, a second step must be completed in order to determine the amount of the
goodwill impairment that should be recorded. In the second step, the implied fair
value of the reporting units goodwill is determined by allocating the
reporting units fair value to all of its assets and liabilities other than
goodwill (including any unrecognized intangible assets) in a manner similar to
a purchase price allocation. The resulting implied fair value of the goodwill
that results from the application of this second step is then compared with the
carrying amount of the goodwill and an impairment charge is recorded for the
difference.

The
evaluation of the carrying amount of other intangible assets with indefinite
lives is made annually coinciding with our fiscal year end by comparing the
carrying amount of these assets to their estimated fair value. The estimated
fair value is generally determined on the basis of discounted future cash
flows. If the estimated fair value is less than the carrying amount of the
other intangible assets with indefinite lives, then an impairment charge is
recorded to reduce the asset to its estimated fair value.

The
assumptions used in the estimate of fair value are generally consistent with
the past performance of our reporting unit and are also consistent with the
projections and assumptions that are used in current operating plans. These
assumptions are subject to change as a result of changing economic and
competitive conditions.

Intangible
assets with a definite life are amortized using the straight-line method over
their estimated useful lives as follows:

|                                 |  |                                       
|-------------------------------- |  | --------------------------------------
|Franchise
  network              |  | 17.5 years                            
|Favorable
  leasehold interest   |  | 1 to 18
  years (remaining lease term)
|Unfavorable
  leasehold interest |  | 1 to 20
  years (remaining lease term)

-25-

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Deferred Financing Costs

Deferred
financing costs are recorded at cost and amortized using the effective interest
method over the terms of the related notes.

Accrued Liabilities

We
self-insure a significant portion of our workers compensation and general
liability insurance plans. The full extent of certain claims, in many cases,
may not become fully determined for several years. We, therefore, estimate the
potential obligation for both known claims and for liabilities that have been
incurred but not yet reported based upon historical data and experience and use
an outside consulting firm to assist us in developing these estimates. Although
management believes that the amounts accrued for these obligations are
sufficient, any significant increase in the number of claims or costs
associated with claims made under these plans could have a material adverse
effect on our financial results.

Share-Based Compensation

All
of our options were granted by CAC and represent the right to purchase CAC
common stock. CACs only material asset is the stock of Intermediate and CAC
has no other material operations. In December 2004, the FASB issued SFAS 123(R)
which requires companies to expense the estimated fair value of employee stock
options and similar awards based on the grant-date fair value of the award. The
cost will be recognized over the period during which an employee is required to
provide service in exchange for the award, usually the vesting period. We
adopted the provisions of SFAS 123(R) on December 29, 2005 for fiscal 2006
using a prospective application. Under the prospective application, SFAS 123(R)
applies to new awards and any awards that are modified or cancelled subsequent
to the date of our adoption of SFAS 123(R). Prior periods are not revised for
comparative purposes. As we used the minimum value method for pro forma disclosures
under SFAS 123, the 277,608 options outstanding at December 28,2005, will
continue to be accounted for in accordance with APB Opinion No. 25 unless such
options are modified, repurchased or cancelled after December 28, 2005.

Of
the 197,023 options we granted in fiscal 2005, 195,773, or 99.4%, were granted
on December 15, 2005, which was 28 days after the Acquisition. The exercise
price of these options to purchase common stock of CAC was equal to the fair
market value of the underlying shares. The fair market value of the underlying
shares was determined by using the price a third-party purchaser, CAC, had paid
in an independent, arms-length transaction to acquire all of our outstanding
shares of common stock on November 18, 2005. We did not obtain a
contemporaneous valuation of our common stock by a third party because we
believe this arms-length transaction most appropriately reflected the fair
market value of the underlying stock on December 15, 2005. We did not obtain a
contemporaneous valuation by a third party upon grant of the remaining 1,250
options granted earlier in fiscal 2005 due to the nominal size of the grant.

The
terms of the 189,079 options granted on December 15, 2005 (that are outstanding
at December 27, 2006), provide that if an initial public offering of at least
$50,000,000 occurs before November 18, 2007, one-half of the then unvested
options will become exercisable and the remaining unvested options will be
exchanged for restricted stock. In the event of a change in control at any time
or an initial public offering after November 18, 2007, the options will become
100% vested. We account for unvested options that will be cancelled and
replaced with restricted stock upon completion of an initial public offering before
November 18, 2007 using variable accounting, which requires us to recognize
expense in future reporting periods based on the change in incremental value of
the award at each fiscal quarter. For the year ended December 27, 2006, we
recognized compensation expense of $245,000, which caused a decrease to net
income of $91,000. As of December 27, 2006, the total unamortized compensation
expense related to these options was approximately $1.4 million, which will be
amortized over the remaining vesting period of approximately 6.0 years, or
earlier in the event of an initial public offering of our common stock or a
change in control.

The
procedures used in determining the unamortized expense require valuations of
the underlying common stock at each reporting date. For purposes of determining
the value of the common stock, the Company employed an internal analysis and
calculation for the quarters ended March and June of 2006. We applied a
probability weighted analysis of the present value of returns afforded to
common shareholders under three possible future outcomes, including: (a) our
continued operation as a private company, (b) the completion of an initial
public offering and (c) a sale of our company. We did not obtain a
contemporaneous valuation of our common stock by a third party in March or June
of 2006 because we believe the

-26-

---



recent
Acquisition by CAC constituted an arms-length transaction that provided an
adequate basis, along with the other methods employed, to properly value our
common stock on June 28, 2006.

In
September 2006, we engaged an independent third-party valuation firm, Duff & Phelps, LLC, to perform valuations in order to assist us in our
determination of the common stock valuation on a quarterly basis. These valuations
are used to determine the change in the incremental value of options that are
subject to variable accounting and to assist us in determining fair market
value of CACs common stock for option grant purposes. In September and
December 2006, we obtained valuations of the estimated then-current fair values
of our stock prepared by Duff & Phelps, LLC. These valuations used a
weighted combination of the market comparable approach and the income approach
to estimate the aggregate enterprise value of our company at each valuation
date. The market comparable approach estimates the fair value of a company by
applying market multiples of publicly traded firms in similar lines of business
to the company statistics. The income approach involves applying appropriate
risk-adjusted discount rates to estimated debt-free cash flows, based on
forecasted revenue and costs. The projections used in connection with this
valuation were based on our expected operating performance over the forecast
period including the terminal year. There is inherent uncertainty in these estimates. If different discount
rates or other assumptions had been used, the valuation conclusions we reached
would have been different.

The
equity value was then allocated to outstanding options and the shares of common
stock using the Black-Scholes option-pricing method at each valuation date. The
option-pricing method involves making assumptions regarding the anticipated
timing of a potential liquidity event, such as an initial public offering, and
estimates of the volatility of our equity securities. The anticipated timing of
a potential liquidity event was based on the plans of our board of directors
and management. Estimating the volatility of the share price of a privately
held company is complex because there is no readily available market for the
shares. Duff & Phelps, LLC, with our concurrence, estimated the volatility
of our stock based on available information on the volatility of stocks of
publicly traded companies in our industry. Had different estimates of
volatility and anticipated timing of a potential liquidity event been used, the
allocations between the shares of preferred and common stock would have been
different and would have resulted in a different value being determined by us
for our common stock as of each valuation date. Due to the contemplated timing
of a potential public offering, we reduced the non-marketability discount
applied to our stock from approximately 10% in September 2006 to 7.5% in
December 2006.

At
the date of cancellation of the original award and issuance of the replacement
award upon completion of an offering, we will begin applying SFAS 123(R) to the
award. SFAS 123(R) requires recording compensation expense for the incremental
cost (the difference between the fair value of the award immediately before and
after the modification) plus any unamortized intrinsic value computed on the
modification date. As the fair value of the award will be equivalent before and
after the modification, there will be no incremental compensation expense related
to this stock award upon modification. However, compensation expense will be
recorded for the unamortized intrinsic value computed on the modification date.

Beginning
in fiscal 2006, pursuant to SFAS 123(R), we began to use the Black-Scholes
option-pricing model to value compensation expense for share-based awards
granted and developed estimates of various inputs, including, expected term of
the option grants, expected volatility of our common stock, comparable
risk-free interest rate and expected dividend rate. The forfeiture rate is
based on historical rates of option grants and reduces the compensation expense
recognized. The expected term of options granted is derived from both
historical and forecasted exercise activity for options granted within a
specified date range. The comparable risk-free interest rate is based on the
implied yield on a U.S. Treasury constant maturity with a remaining term equal
to the expected term of stock options. Expected volatility is based on the
stock price volatility for companies in our industry. We do not anticipate
paying any cash dividends in the foreseeable future and therefore we use an
expected dividend rate of zero. Under the prospective method of SFAS 123(R),
compensation expense was recognized during the year ended December 27, 2006 for
all stock based payments granted after December 28, 2005 based on the grant
date fair value estimated in accordance with the provisions of SFAS 123(R).

There
were 32,153 options granted in fiscal 2006, of which 17,778 were granted on
January 11, 2006. The exercise price of these options was $86.43 per share and
was determined to be equal to the fair market value of the underlying shares on
the grant date. The fair market value of the underlying shares of the options
granted on January 11, 2006 was determined by using the price a third-party
purchaser, CAC, had paid in an independent, arms-length transaction to acquire
all of our outstanding shares of common stock on November 18, 2005. We did not
obtain a contemporaneous valuation of our common stock by a third party because
we believe this arms-length transaction most appropriately reflected the fair
market value of the underlying stock on the grant date. In our determination of
the exercise price for the remaining 14,375 options that were granted later in
fiscal 2006, we incorporated the contemporary valuations performed by Duff & Phelps.

-27-

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Results of Operations

Our
operating results for 2004, 2005 and 2006 are expressed as a percentage of
restaurant revenue below:

|                                     |  |              |       |         |  |      |       |   |  | 
|------------------------------------ |  | ------------ | ----- | ------- |  | ---- | ----- | - |  | 
|                                     |  | Fiscal Years |      
|                                     |  |              |      
|                                     |  | 2004         |       | 2005(1) |  | 2006 |      
|                                     |  |              |       |         |  |      |      
|Income Statement Data:               |  |              |       |         |  |      |       |   |  | 
|Restaurant
  revenue                 |  |              | 100.0 | %       |  |      | 100.0 | % |  | 
|Product cost                         |  |              | 31.5  |         |  |      | 31.8  |   |  | 
|Payroll and
  benefits               |  |              | 27.0  |         |  |      | 25.7  |   |  | 
|Depreciation
  and amortization      |  |              | 6.8   |         |  |      | 6.3   |   |  | 
|Other
  operating expenses           |  |              | 32.2  |         |  |      | 33.0  |   |  | 
|Operating
  income                   |  |              | 9.5   |         |  |      | 10.0  |   |  | 
|Interest
  expense                   |  |              | 8.8   |         |  |      | 19.0  |   |  | 
|Income
  (loss) before income taxes  |  |              | 0.7   |         |  |      | (8.9  | ) |  | 
|Net income
  (loss)                  |  |              | 0.6   |         |  |      | (5.3  | ) |  | 
|Supplementary Income Statement Data: |  |              |       |         |  |      |       |   |  | 
|Restaurant
  other operating expense |  |              | 19.5  |         |  |      | 19.3  |   |  | 
|Franchise
  expense                  |  |              | 1.7   |         |  |      | 1.4   |   |  | 
|General and
  administrative expense |  |              | 11.0  |         |  |      | 12.3  |   |  | 
|Total other
  operating expenses     |  |              | 32.2  |         |  |      | 33.0  |   |  | 
|                                     |  |              |       |         |  |      |       |   |  | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Reflects
  combined results for our Predecessor period and Successor period. This
  information is not in accordance with GAAP. See Basis of Presentation for
  an explanation of this information and limitations of the usefulness of this
  information.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                               
|Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|The
  discussion of the results of operations for the twelve months ended December
  28, 2005 is based on the combined results for the Predecessor period from
  December 30, 2004 through November 17, 2005, and the Successor period
  November 18, 2005 through December 28, 2005. This combined presentation is
  not in accordance with GAAP; however, we believe it is useful in analyzing
  and comparing certain of our operation trends from fiscal 2005 to fiscal 2006
  and fiscal 2004 to fiscal 2005. Because of purchase accounting adjustments
  related to our acquisition by CAC in November 2005, certain amounts might not
  be comparable between the periods.                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Fiscal Year Ended December 27, 2006
  Compared to Fiscal Year Ended December 28, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Restaurant
  revenue increased $20.8 million, or 9.4%, to $242.6 million for fiscal 2006
  from $221.8 million from fiscal 2005. This increase was partially due to an
  additional $7.9 million in restaurant revenue resulting from a 3.6% increase
  in company-operated same-store sales for fiscal 2006 from fiscal 2005.
  Restaurants enter the comparable restaurant base for same-store sales the
  first full week after that restaurants one-year anniversary. The components
  of the company-operated comparable sales growth increase were a price
  increase of 2.2%, a transaction increase of 2.6%, and a menu mix decrease of
  1.2%. The increase in restaurant revenue was also due in part to $6.2 million
  from six restaurants opened in fiscal 2005 and $6.7 million from nine
  restaurants opened in fiscal 2006.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Franchise
  revenue increased $1.9 million, or 12.4%, to $17.3 million for fiscal 2006
  from $15.4 million for fiscal 2005. This increase is primarily due to an
  increase in royalties resulting from a 6.7% increase in franchise same-store
  sales and also to an increase of $0.6 million in franchise fees due to the
  increase in franchise store openings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Product
  cost increased $5.6 million, or 7.9%, to $76.2 million for fiscal 2006 from
  $70.6 million for fiscal 2005. These costs as a percentage of restaurant
  revenue were 31.4% for fiscal 2006 compared to 31.8% for fiscal 2005. This
  0.4% decrease resulted primarily from the menu price increases taken in
  January 2006 and the chicken meal restructuring in May 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Payroll
  and benefit expenses increased $4.5 million, or 7.9%, to $61.6 million for
  fiscal 2006 from $57.1 million for fiscal 2005. As a percentage of restaurant
  revenue, these costs decreased 0.3% to 25.4% for fiscal 2006 from 25.7% for
  fiscal 2005. This decrease was primarily due to margin leverage from the menu
  price increases taken in January 2006 and the chicken meal restructuring in
  May 2005.                                                                                                                                                                                                                                                                                                                                                                                                                 

-28-

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Depreciation
and amortization decreased $3.6 million, or 25.9% to $10.3 million for fiscal
2006 from $13.9 million for fiscal 2005. These costs as a percentage of
restaurant revenue decreased to 4.3% for fiscal 2006 from 6.3% for fiscal 2005.
The decrease in depreciation expense is due to the revaluation of the Companys
assets and the new useful lives determined in connection with the sale of the Company to CAC.

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

Restaurant
other operating expense, which includes utilities, repair and maintenance,
advertising, property taxes, occupancy and other operating expenses, increased
$8.3 million, or 19.3%, to $51.0 million for fiscal 2006 from $42.8 million for
fiscal 2005. These costs as a percentage of revenue increased 1.7% to 21.0% for
fiscal 2006 from 19.3% for fiscal 2005. The increase in operating costs as a
percentage of revenue was due in part to a 1.0% increase in occupancy costs as
a percentage or revenue, which was primarily a result of the revaluation of the
fair market value of leases assumed in the Acquisition by CAC and a reduction
in the annual amortization of the unfavorable leasehold interest liability. The
increase in operating costs was also due to an increase in utilities as a percentage
of revenue of 0.2%, primarily electricity, increased repair and maintenance
fees as a percentage of revenue of 0.4%, partially due to fryer maintenance
which was completed on all Company stores in 2006, and higher than normal
outside vendor expenses due to understaffing in our facilities technician
positions.

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 is to some degree based on
rents that are tied to a percentage of sales calculation. Franchise expense
increased $0.3 million, or 9.0%, to $3.4 million for fiscal 2006 compared to
$3.1 million for fiscal 2005. This increase is primarily attributed to
increased occupancy expenses as a result of the change in amortization of the
favorable leasehold interest subsequent to the Acquisition by CAC.

General
and administrative expense decreased $0.6 million, or 2.1%, to $26.8 million
for fiscal 2006 from $27.4 million from fiscal 2005. General and administrative
expense as a percentage of revenue was 11.1% and 12.3% for the fiscal 2006 and
2005, respectively. The decrease in expenses in 2006 was due to the following 2005
expenses which did not recur in 2006: (i) $3.1 million in expenses related to
the sale of the Company to CAC (ii) a $1.1 million asset impairment charge and
(iii) bonus expense related to the revaluation of stock options of $0.4
million. These decreases were partially offset by increased travel expenses of
$0.4 million, a $0.5 million gain on sale of assets that occurred in 2005,
increased salaries and wages expense of $0.9 million, primarily attributed to
increased headcount and annual raises, $0.4 million of expense related to stock
options and $1.8 million of costs related to a proposed public offering which
was withdrawn in October 2006.

Interest
expense, net of interest income, decreased $13.3 million, or 31.6%, to $28.8
million in fiscal 2006 from $42.1 million for fiscal 2005. Excluding the tender
premium related to the retirement of the 2009 and 2010 Notes, in the amount of
$15.7 million, and the write-off of deferred finance cost related to prior
financing activities, in the amount of $6.0 million, both of which occurred in
fiscal 2005, interest expense, net of interest income increased $8.4 million,
or 41.2%, to $28.8 million for fiscal 2006 from $20.4 million for fiscal 2005.
Our average debt balances for fiscal 2006 increased to $259.2 million compared
to $166.9 million for fiscal 2005 and our average interest rate increased to
10.68% for fiscal 2006 compared to 9.06% for fiscal 2005. Our average debt
balances for fiscal 2005 (post acquisition) were $260.1 million and our average
interest rate was 10.19%.

Our
provision for income taxes consisted of an income tax expense of $1.1 million
and an income tax benefit of $8.0 for fiscal 2006 and 2005, respectively, for
an effective tax rate of 62.7 % for 2006 and (40.6)% for 2005. Our 2006 tax
rate was affected by disqualified interest expense in 2006. We  expect our tax
rate in future years to fluctuate based upon the percentage of our disqualified
interest expense to our taxable income.

As
a result of the factors above, we had net income or $0.6 million, or 0.3% as a
percentage of restaurant revenue, for fiscal 2006 compared to a net loss of
$11.8 million, or (5.3%), for fiscal 2005.

Fiscal Year Ended
December 28, 2005 Compared to Fiscal Year Ended December 29, 2004

Restaurant
revenue increased $17.0 million, or 8.3%, to $221.8 million for fiscal 2005
from $204.8 million from fiscal 2004. This increase was partially due to an
additional $14.0 million in restaurant revenue resulting from a 7.0% increase
in company-operated same-store sales for fiscal 2005 from fiscal 2004.
Restaurants enter the comparable restaurant base for same-store sales the first
full week after that restaurants one-year anniversary. The increase in
restaurant revenue was also due in part to $4.3 million from four restaurants
opened and two restaurants acquired from a franchisee in fiscal 2004 and $3.1
million from six restaurants opened in fiscal 2005. Restaurant revenue was
reduced $0.8 million by the closure of a restaurant in 2005 and $3.6 million by
the sale to franchisees of two restaurants and the closure of three restaurants
in fiscal 2004.

-29-

---



Franchise
revenue increased $1.2 million, or 8.4%, to $15.4 million for fiscal 2005 from
$14.2 million for fiscal 2004. This increase is primarily due to an increase in
royalties resulting from a 9.3% increase in franchise same-store sales.

Product
cost increased $6.0 million, or 9.3%, to $70.6 million for fiscal 2005 from
$64.6 million for fiscal 2004. These costs as a percentage of restaurant
revenue were 31.8% for fiscal 2005 compared to 31.5% for fiscal 2004. This 0.3%
increase resulted primarily from chicken prices increasing as EPLs new chicken
contracts took effect in March 2004 and February 2005. This increase was
partially offset by the menu price increases taken in November 2004 and the
chicken meal restructuring in May 2005.

Payroll
and benefit expenses increased $1.9 million, or 3.4%, to $57.1 million for
fiscal 2005 from $55.2 million for fiscal 2004. As a percentage of restaurant
revenue, these costs decreased 1.3% to 25.7% for fiscal 2005 from 27.0% for
fiscal 2004. This decrease was primarily due to margin leverage from the menu
price increases taken in November 2004 and the chicken meal restructuring in
May 2005 and also in part to labor savings from the installation of chicken
marinating tumblers in all company-operated restaurants.

Depreciation
and amortization remained the same at $13.9 million for fiscal 2005 and 2004.
These costs as a percentage of restaurant revenue decreased to 6.3% for fiscal
2005 from 6.8% for fiscal 2004.

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
$2.9 million, or 7.2%, to $42.8 million for fiscal 2005 from $39.9 million for
fiscal 2004. These costs as a percentage of restaurant revenue decreased 0.2%
to 19.3% for fiscal 2005 from 19.5% for fiscal 2004. The increase in operating
costs is due to increased credit card fees of $0.3 million due to higher fees
and increased volume, increased occupancy expenses of $0.6 million, increased
utilities expenses of $0.6 million primarily attributed to higher gas prices,
increased pre-opening expenses of $0.3 million and increased repair,
maintenance and janitorial expenses of $0.5 million.

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 is to some degree based on
rents that are tied to a percentage of sales calculation. Franchise expense
decreased $0.3 million, or 7.7%, to $3.1 million for fiscal 2005 compared to $3.4
million for fiscal 2004. This decrease is primarily attributed to $0.3 million
in expenses incurred in fiscal 2004 to participate in certain Chicago food
festivals to support our national franchise effort.

General
and administrative expense increased $4.7 million, or 20.8%, to $27.4 million
for fiscal 2005 from $22.7 million from fiscal 2004. General and administrative
expense as a percentage of revenue was 12.3% and 11.0% for the fiscal 2005 and
2004, respectively. The increase is due to a $1.5 million increase in outside
services expense which is primarily attributed to the implementation costs of
the Sarbanes-Oxley Act of 2002 and to increased audit and filing fees, to an
increase of $1.2 million in salaries and wages due to an increase in the number
of employees and annual salary increases, an increase in meetings expenses of
$0.4 million and also $3.1 million in expenses incurred as a result of the
Acquisition by CAC. These increases were partially offset by a decrease in
stock option bonus expense of $1.8 million for option holders related to the
revaluation of stock options in fiscal 2004.

Interest
expense, net of interest income and excluding the tender premium related to the
retirement of the 2009 and 2010 Notes, in the amount of $15.7 million, and the
write-off of deferred finance cost related to prior financing activities, in
the amount of $6.0 million, increased $2.4 million, or 13.14%, to $20.4 million
for fiscal 2005 from $18.0 million for fiscal 2004. Our average debt balances
for fiscal 2005 (pre-acquisition) increased to $166.9 million compared to
$159.0 million for fiscal 2004 and our average interest rate decreased to 9.06%
for fiscal 2005 compared to 9.65% for fiscal 2004. Our average debt balances
for fiscal 2005 (post acquisition) increased to $260.1 million and our average
interest rate was 10.19%.

Our
provision for income taxes consisted of an income tax benefit of $8.0 million
and an income tax expense of $28,000 for fiscal 2005 and 2004, respectively, for
an effective tax rate of (40.6)% for 2005 and 2.1% for 2004. The 2004 periods
effective tax rate was impacted by the reversal of a prior year reserve in the
amount of $0.6 million related to the resolution of uncertainty regarding
certain outstanding tax items that had given rise to a reserve.

As
a result of the factors above, we had a net loss of $11.8 million, or (5.3%) as
a percentage of restaurant revenue, for fiscal 2005 compared to net income of
$1.3 million, or 0.6%, for fiscal 2004.

-30-

---



Liquidity and Capital Resources

Our
principal liquidity requirements are to service our debt and meet our capital
expenditure needs. At December 27, 2006, our total debt was $262.2 million. See
Debt and Other Obligations below. 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 the
approximately $14.6 million that EPL had available at December 27, 2006, under
the revolving portion of its senior secured credit facilities will be adequate
to meet our liquidity needs for at least the next 12 months.

In
fiscal 2006, our capital expenditures totaled $14.0 million, consisting of
$10.0 million for new restaurants, $1.5 million for capitalized repairs of existing
sites, and $2.5 million for miscellaneous capital projects.

Cash
and cash equivalents decreased $0.6 million from $3.6 million at December 28,
2005 to $3.0 million at December 27, 2006. During fiscal 2006, we made $0.8
million in principal repayments on EPLs term loan, $6.3 million in payments to
pay off borrowings under our revolving credit facility, and $24.4 million in
interest payments. The interest payments related primarily to the 2013 Notes
and the term loan, $14.6 million and $8.6 million, respectively. 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 restaurants
from franchisees, our debt service requirements could increase. In addition, we
may fund restaurant openings through credit received by trade suppliers and
landlord contributions. If our cash flow from operations is inadequate to meet
our obligations under our indebtedness we may need to refinance all or a
portion of our indebtedness, including the notes, on or before maturity. We
cannot assure you that we will be able to refinance any of our indebtedness on
commercially reasonable terms or at all.

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 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 that may severely restrict or prohibit the making
of distributions, the payment of dividends or the making of loans by EPL.

Working Capital and Cash Flows

Fiscal
2005 amounts in this section reflect the combination of amounts for the
Predecessor period December 30, 2004 to November 17, 2005 and the Successor
period November 18, 2005 to December 28, 2005.

We
presently have, in the past have had, and may have in the future, negative
working capital balances. The working capital deficit principally is the result
of our investment to build new restaurants, remodel and replace or improve
equipment in company-operated restaurants, and to acquire new restaurant
information systems. We do not have significant receivables or inventories and
we receive trade credit based upon negotiated terms in purchasing food and
supplies. Funds available from cash sales and franchise revenue not needed
immediately to pay for food and supplies or to finance receivables or
inventories typically have been used for the capital expenditures referenced
above and/or debt service payments under our existing indebtedness. As
discussed above, we spent cash on a number of items directly or indirectly
related to our debt financings and the Acquisition of the Company by CAC. 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 $20.7 million for fiscal 2006
compared with $36.0 million for fiscal 2005. The decrease in cash provided by
operating activities of $15.3 million in 2006 compared to 2005 was primarily
attributable to decreased amortization of deferred financing costs of $6.2
million, primarily due to the early payment of the 2009 and 2010 Notes in 2005,
decreased other accrued expenses of $22.9 million primarily due to accrued
interest in 2005 which was also due to the early payoff of the 2009 and 2010
Notes, partially offset by a change in deferred income taxes of $8.8 million
and by an increase in net income of $12.4 million.

Investing
Activities.We had net cash used in investing
activities of $19.1 million for fiscal 2006 compared with net cash used in investing
activities of $229.7 million for fiscal 2005. The decrease in cash used in
investing activities of $210.6 million includes $208.8 million related to the
Acquisition by CAC and a decrease in expenditures of $2.1 million due to a
decrease in remodel spending of $0.9 million and a decrease in point-of-sale
spending of $1.2 million.

Financing
Activities.We had net cash used in financing
activities of $2.2 million for fiscal 2006 compared with net cash provided by
financing activities of $211.3 million for fiscal 2005. The increase in cash
used in financing activities in 2006

-31-

---



was attributable to the new term loan entered into in
2005 of $104.5 million, the issuance of the 2013 Notes of $123.4 million and
the 2014 Notes of $22.5 million and the proceeds from a capital contribution of
$155.5 million, partially offset by the payment of the 2009 Notes and the 2010
Notes of $157.5 million and the payment in full of our previous term loan of
$7.3 million, all completed in 2005. The term loan had an effective rate of
8.37% at December 27, 2006 and 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.

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. Of this senior secured revolving credit facility, EPL
drew down $2.8 million and issued $8.1 million of letters of credit to replace
existing letters of credit. As of December 27, 2006, 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.

As
of December 27, 2006, all of the 2010 Notes have been purchased for cash, and
all except for $250,000 in aggregate principal amount of the 2009 Notes have
been purchased for cash.

On
November 18, 2005, Intermediate Finance issued $39,342,000 aggregate principal
amount at maturity of 14 1⁄2% senior discount notes due 2014. In
2005 Intermediate Finance merged with and into Intermediate, with Intermediate
surviving the merger and assuming Intermediate Finances obligations under the
notes and the related indenture. On November 18, 2005, EPL Finance issued
$125,000,000 aggregate principal amount of 11 3⁄4% senior notes
due 2013 (see Note 11 to our Consolidated Financial Statements). The 2013 Notes
are guaranteed by Intermediate. EPL Finance merged with and into EPL, with EPL
surviving the merger and assuming EPL Finances obligations under the 2013
Notes and the related indenture.

At
December 27, 2006, we had $26,319,000 outstanding in aggregate principal amount
of the 2014 Notes. No cash interest will accrue on the 2014 Notes prior to
November 15, 2009. Instead, the principal value of the 2014 Notes will increase
(representing accretion of original issue discount) from the date of original
issuance until but not including November 15, 2009 at a rate of 14 1⁄2%per annum compounded annually, so that
the accreted value of the 2014 Notes on November 15, 2009 will be equal to the
full principal amount of $39,342,000 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.

The
following table represents our contractual commitments (which includes expected
interest expense) to make future payments pursuant to our debt and other
obligations disclosed above and pursuant to our restaurant operating leases
outstanding as of December 27, 2006 (amounts in thousands):

|                                                                       |  |      |        |      |   |        |  |      |        |      |   |            |  |       |         |  |   |         |  |   |         | 
|---------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------- |  | - | ------- |  | - | ------- | 
|                                                                       |  | 2007 |        | 2008 |   | 2009   |  | 2010 |        | 2011 |   | Thereafter |  | Total |        
|                                                                       |  |      |        |      |   |        |  |      |        |      |   |            |  |       |        
|Existing Senior
  Secured Credit FacilitiesTerm Loan                  |  | $    | 9,881  |      | $ | 9,533  |  | $    | 9,446  |      | $ | 9,359      |  | $     | 106,568 |  | $ |        |  | $ | 144,787 | 
|2009 Notes                                                             |  |      | 23     |      |   | 23     |  |      | 273    |      |   |           |  |       |        |  |   |        |  |   | 319     | 
|2013 Notes                                                             |  |      | 14,687 |      |   | 14,687 |  |      | 14,687 |      |   | 14,687     |  |       | 14,687  |  |   | 154,375 |  |   | 227,810 | 
|2014 Notes                                                             |  |      |       |      |   |       |  |      |       |      |   | 5,705      |  |       | 5,705   |  |   | 56,456  |  |   | 67,866  | 
|Capital leases
  (see Note 6 to our consolidated financial statements) |  |      | 1,935  |      |   | 1,601  |  |      | 1,005  |      |   | 661        |  |       | 465     |  |   | 2,467   |  |   | 8,134   | 
|Purchase
    obligations (2)                                           |  |      | 2,470  |      |   | 2,838  |  |      | 3,224  |      |   | 2,203      |  |       | 273     |  |   |        |  |   | 11,008  | 
|                                                                       |  |      |        |      |   |        |  |      |        |      |   |            |  |       |         |  |   |         |  |   |         | 
|Subtotal                                                               |  |      | 28,996 |      |   | 28,682 |  |      | 28,635 |      |   | 32,615     |  |       | 127,698 |  |   | 213,298 |  |   | 459,924 | 
|Restaurant
  operating leases net(1)                                   |  |      | 15,477 |      |   | 14,870 |  |      | 14,540 |      |   | 13,906     |  |       | 13,437  |  |   | 80,161  |  |   | 152,391 | 
|                                                                       |  |      |        |      |   |        |  |      |        |      |   |            |  |       |         |  |   |         |  |   |         | 
|Total                                                                  |  | $    | 44,473 |      | $ | 43,552 |  | $    | 43,175 |      | $ | 46,521     |  | $     | 141,135 |  | $ | 293,459 |  | $ | 612,315 | 
|                                                                       |  |      |        |      |   |        |  |      |        |      |   |            |  |       |         |  |   |         |  |   |         | 



---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Does not reflect the impact of renewals of operating
  leases that are scheduled to expire during the periods indicated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | In determining purchase obligations for this table
      we used our interpretation of the definition set forth in the SEC Final
      Rule, Disclosure in Managements Discussion and Analysis about Off-Balance
    Sheet Arrangements and Aggregate Contractual Obligations, which states, a purchase
    obligation is defined as an agreement to purchase goods or services
    that is enforceable and legally binding on the registrant and that specifies
    all significant terms, including: fixed minimum quantities to be purchased;
    fixed, minimum or variable/price provisions, and the approximate timing of
    the transaction.

At
December 27, 2006, we had outstanding letters of credit totaling $7.4 million,
which served as collateral for our various workers compensation insurance
programs.

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

As
of December 27, 2006, EPL was in compliance with all of the financial covenants
contained in its senior credit facility. As of such date we calculated all
relevant ratios under its senior credit facility as follows:

| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | EPLs fixed charge coverage ratio (as such term is
  defined in the senior credit agreement) was 1.21 to 1; and
| |   |                                                                                                                  
| |  | EPLs leverage ratio (as such term is defined in
  the senior credit agreement) was 5.02 to 1.                 

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

In
addition, as of December 27, 2006, we calculated our fixed charge coverage
ratio and our consolidated leverage ratio (as such terms are defined in the
indenture governing the 2014 Notes) at 1.56 to 1 and 5.85 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.

Recent
Accounting Pronouncements

In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108, Financial Statements  Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial
Statements (SAB 108). This new guidance addresses how a registrant should
quantify the effect of errors on the financial statements based on their impact
to both the balance sheet and the income statement in order to determine
materiality. The guidance provides for a one-time cumulative effect adjustment
to correct for misstatements and errors that were not deemed material under a
prior approach but are material under the SAB 108 approach. The application of
SAB 108 as of December 27, 2006 did not have an effect on the Companys consolidated financial
position, results of operations or cash flows.

In
September 2006, the Financial Accounting Standards Board (the FASB) issued SFAS No. 157, Fair Value Measurements (SFAS
157). This new standard provides guidance for using fair value to measure
assets and liabilities and information about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value, and the effect of fair value measurements on earnings. This
framework is intended to provide increased consistency in how fair value
determinations are made under various existing accounting standards which
permit, or in some cases require, estimates of fair market value. SFAS 157 also
expands financial statement disclosure requirements about a companys use of
fair value measurements, including the effect of such measures on earnings. The
provisions of SFAS 157 are effective for financial statements issued for fiscal
years beginning after November 15, 2007. The Company is currently evaluating
the impact, if any, that SFAS 157 will have on its consolidated financial
position, results of operations and cash flows.

In
June 2006, the FASB issued
Interpretation No. 48, Accounting for Uncertainty in Income (FIN 48). FIN
48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in the Companys tax return. FIN 48 also provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements for uncertain tax positions. FIN 48 is
effective for fiscal years ending after December 15, 2006. The Company is in
the process of evaluating the effect, if any, the adoption of FIN 48 will have
on its consolidated financial position, results of operations and cash flows.

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Inflation

Over
the past five years, inflation has not significantly affected operating
results. However, the impact of inflation on labor, food and occupancy costs
could, in the future, significantly affect our operations. We pay many of our
employees hourly rates related to the applicable federal or state minimum wage.
In March 2007, we renewed our chicken contracts with terms ranging from one to
two years at higher prices than the expiring contracts. We had implemented
price increases in 2006 to partially mitigate the impact of higher chicken
prices on our profitability. Our workers compensation and health insurance
costs have been and are subject to continued inflationary pressures. 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 will go up to $8.00 per hour. There is also pending legislation to
raise the federal minimum wage to $7.25 per hour. We have mitigated significant
potential increases in our workers compensation insurance costs by switching
from a guaranteed cost insurance program to a high deductible insurance program
in 2003. Costs for construction, taxes, repairs, maintenance and insurance all
impact our occupancy costs. We believe that our current practice of maintaining
operating margins through a combination of menu price increases, cost controls,
careful evaluation of property and equipment needs, and efficient purchasing
practices is our most effective tool for dealing with inflation.

Item 7A.
Quantitative and Qualitative Disclosure 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 $104.5 million as of December 27, 2006 would result in an increase or
decrease in interest expense of approximately $0.5 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 December
27, 2006 to be material.

Item 8.
Financial Statements and Supplementary Data

The
consolidated financial statements, including the Independent Registered Public
Accounting Firms Report thereon, are listed under Item 15(a) and filed as part
of this Annual Report on Form 10-K. See Item 15.

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.

None.

Item 9A.
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 December 27, 2006. 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 fiscal year ended December 27, 2006, that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

Item 9B.
Other Information.

None.

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PART
III

Item 10.
Directors and Executive Officers of the Company.

The
following table sets forth certain information regarding our board of directors
and executive officers:

|                    |  |        |  |                                                                                
|------------------- |  | ------ |  | -------------------------------------------------------------------------------
|Name                |  | Age(1) |  | Position                                                                       
|                    |  |        |  |                                                                                
|Stephen E. Carley   |  | 54     |  | President, Chief Executive Officer and Director                                
|Karen B. Eadon      |  | 53     |  | Senior Vice President of Marketing and Chief
  Marketing Officer               
|Joseph N. Stein     |  | 46     |  | Senior Vice President of Finance, Chief Financial
  Officer and Treasurer      
|Brian Berkhausen    |  | 51     |  | Senior Vice President of Development                                           
|Jeanne A. Scott     |  | 59     |  | Senior Vice President of Human Resources and
  Training and Assistant Secretary
|Pamela R. Milner    |  | 51     |  | Senior Vice President, General Counsel and Secretary                           
|Stephen J. Sather   |  | 59     |  | Senior Vice President of Operations                                            
|Andrew R. Heyer     |  | 49     |  | Director                                                                       
|Dean C. Kehler      |  | 50     |  | Director                                                                       
|Glenn B. Kaufman    |  | 39     |  | Director                                                                       
|Dennis Lombardi     |  | 59     |  | Director                                                                       
|Douglas K. Ammerman |  | 55     |  | Director                                                                       
|Griffin Whitney     |  | 31     |  | Director                                                                       



---

|    |                     
|--- | --------------------
|(1) | As of March 1, 2007.

Stephen
E. Carleyhas been the President, Chief Executive Officer and
a director of EPL since April 2001. He has been our President since June 2004
and was elected a director of the Company in February 2007. Mr. Carley has over
12 years of experience in the restaurant and food-service industries, including
from 1993 to November 1996 when Mr. Carley served in various capacities,
including National Vice President of Development, for Taco Bell Corporation.
From November 1996 to October 1998, Mr. Carley was President of Universal
Studios Hollywood Theme Park and Citywalk, a division of Universal Studios,
Inc. From January 1999 to April 2001, Mr. Carley served as President of
OnRadio.com, a website hosting and design business, Chief Executive Officer of
JoePix.com, and President of PhotoPoint Corporation, two digital-imaging
companies. Previously in his career, Mr. Carley spent several years in brand
management and operations with General Mills, Inc., the Pillsbury Company and
PepsiCo, Inc.

Karen
B. Eadonhas been Senior Vice President of Marketing and
Chief Marketing Officer of EPL since January 2006, previously serving as Vice
President and Chief Marketing Officer from October 2002 to January 2006. She
was elected our Senior Vice President of Marketing in February 2007. From
November 2000 to October 2002, Ms. Eadon served as Vice President, U.S.
Marketing for McDonalds Corporation. From March 1999 to October 2000, she
served as Senior Vice President, Marketing, for Applebees International, Inc.
From April 1995 to March 1999, she served as Vice President, Retail Marketing
for Arco Products Company, the refining and marketing division of ARCO.

Joseph
N. Stein was elected our Senior Vice President of Finance and
Chief Financial Officer in February 2007 and he has held these positions at EPL
since January 2006. Mr. Stein served as Vice President of Finance and Chief
Financial Officer of EPL from April 2002 to January 2006 and as our Treasurer
and Vice President since 2002 and 2004, respectively. From April 1999 to April
2002, Mr. Stein served as Vice President and Chief Strategic and Financial
Officer for Rubios Restaurants, Inc. From January 1997 to April 1999, he
served as Executive Vice President and Chief Administrative Officer for
Checkers Drive-In Restaurants, Inc.

Brian
Berkhausenwas elected our Senior Vice President of
Development in February 2007 and has held that position at EPL since January
2006. He served as Vice President of Development of EPL from December 1997 to
January 2006. From May 1996 to November 1997, Mr. Berkhausen served as
Director, Market Team Operations and Systems for Allied Domecq Retailing, a QSR
operator of the Togos Eateries, Inc., Dunkin Donuts Inc. and Baskin-Robbins
Incorporated brands. From May 1993 to May 1996, Mr. Berkhausen served as
Director, Market Development and Strategy for Baskin-Robbins Incorporated.

Jeanne
A. Scottwas elected our Senior Vice President of Human
Resources and Training in February 2007 and has held that position at EPL since
January 2006. She served as Vice President of Human Resources and Training of
EPL from February 2003 to January 2006. From January 1999 to January 2003, Ms.
Scott served as Senior Vice President, Human

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Resources Alliance for Sodexho, a worldwide food
service management company. From December 1995 to November 1998, she served as
Vice President Human Resources and Training for Koo Koo Roo, Inc.

Pamela
R. Milnerwas elected our Senior Vice President and General
Counsel in February 2007 and has held that position at EPL since January 2006.
She served as Vice President and General Counsel of EPL from January 2000 to
January 2006 and has been Corporate Secretary of EPL since February 2000. From
August 1999 to December 1999, Ms. Milner was General Counsel for Capital
Pacific Holdings, Inc., a publicly traded real estate development company. Ms.
Milner served as Assistant General Counsel for Advantica Restaurant Group, Inc.
(ARG), from September 1998 to August 1999 and Senior Corporate Counsel of ARG
from October 1997 to September 1998. From September 1994 to October 1997, Ms.
Milner was Senior Attorney for the casual dining divisions of California Pizza
Kitchen, Chevys and East Side Marios and Director of Acquisitions and
Divestitures for Taco Bell Corporation.

Stephen
J. Satherwas elected our Senior Vice President of Operations
in February 2007 and has held that position at EPL since January 2006. From
March 2002 to December 2005, he served as Senior Vice President Retail
Operations for Great Circle Family Foods, LLC and from December 1996 to
December 2001, he served as Chief Operating Officer for Rubios Restaurants Inc.

Andrew
R. Heyerhas been a director of the Company since February
2007 and of EPL since November 2005. He also served as a Vice President of the
Company from November 2005 to February 2007. Mr. Heyer has been a Managing
Partner of Trimaran Capital Partners, L.L.C. since 2000 and a member of the
Investment Committee of Trimaran Advisors, L.L.C., the investment advisor to
Caravelle Investment Fund, L.L.C. since 1997. From 1995 to 2006, Mr. Heyer
served as vice chairman of CIBC World Markets Corp. and as co-head of the CIBC
Argosy Merchant Banking Funds (Fund I). Prior thereto, Mr. Heyer was a founder
and Managing Director of The Argosy Group L.P. Mr. Heyer currently serves on
the Boards of Directors of Niagara Corporation, Hain Celestial Group, Inc.,
Village Voice Media, LLC, Brite
Media Group LLC and Charlie Browns Acquisition Corp.

Dean
C. Kehlerwas elected a director of the Company in February
2007 and served as a Vice President of the Company from November 2005 until February 2007. He has
served as a director of EPL since November 2005. He has been a Managing Partner
of Trimaran Capital Partners, L.L.C. since 2000 and a member of the Investment
Committee of Trimaran Advisors, L.L.C., the investment advisor to Caravelle
Investment Fund, L.L.C. since 1997. From 1995 to 2006, Mr. Kehler served as
vice chairman of CIBC World Markets Corp. and as co-head of the CIBC Argosy
Merchant Banking Funds (Fund I). Prior thereto, Mr. Kehler was a founder and
Managing Director of The Argosy Group L.P. Mr. Kehler currently serves on the
Boards of Directors of Booth Creek Ski Holdings, Inc., Fortunoff, Inviva, Inc.,
PrimeCo Wireless Communications LLC, Urban Brands, Inc. and Charlie Browns Acquisition
Corp.

Glenn
B. Kaufmanwas elected a director of the Company in February
2007 and has been a director of EPL since December 1999. Mr. Kaufman was our
Vice President from December 1999 to May 2004. He is a Managing Director of
American Securities Capital Partners, L.P., having joined that company in
October 1997. Mr. Kaufman has also been a Managing Director of American
Securities Capital Partners, LLC since September 2000. From October 1993 to
October 1997, Mr. Kaufman served as a corporate attorney with the firm of
Cravath, Swaine & Moore in New York, New York, where he focused on private
equity and related transactions. Previously, he worked in the small business
consulting group of Price Waterhouse. He is Chairman of the Board of Press,
Ganey Associates, Inc. and a director of Potbelly Sandwich Works, Inc.

Dennis
Lombardiwas elected a director of the Company in February
2007 and has been a director of EPL since February 2000. He has been Executive
Vice President of WD Partners, a multi-unit design and development company,
since January 2005. He served as Executive Vice President of Technomic Inc., a
leading food service consulting and research firm, from February 1991 through
December 2004. Mr. Lombardi serves on the Board of Directors of Abuelos
Mexican Food Embassy, a casual dining concept.

Douglas
K. Ammerman has been a director of the Company since
September 2006. He held numerous positions with KPMG, LLP, an international
accounting firm, including Managing Partner, from 1973 until his retirement in
2002. Mr. Ammerman holds a Masters in Business Taxation from the University of
Southern California, is a Certified Public Accountant and is a member of the
California Society of CPAs. He is a director and Chairman of the Audit
Committee of Fidelity National Financial, Inc. and Quiksilver, Inc.

Griffin
Whitney has been a director of the Company since September
2006. He has been an Associate at Trimaran Capital Partners, L.L.C. since June
2005. From August 2003 to May 2005, Mr. Whitney attended the University of

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Pennsylvania Wharton School of Business, where he
received a Masters in Business Administration. Prior thereto he was an
Associate at AEA Investors, LLC from August 2001 to July 2003.

Directors
serve until the next annual meeting of stockholders or until their successors
are elected. Officers serve at the pleasure of the Board of Directors.

Audit
Committee Financial Expert

Our
Board of Directors has determined that Douglas K. Ammerman qualifies as an
audit committee financial expert as defined in the SECs rules and that Mr.
Ammerman is independent under the applicable rules of The Nasdaq National
Market. See Item 13. Certain Relationships and Related Transactions and
Director Independence  Director Independence.

EPL Code
of Ethics

EPL
has adopted a Code of Business Ethics & Conduct that applies to all of
EPLs employees, including our executive officers since they are also employees
of EPL. The Code of Business Ethics & Conduct is filed as an exhibit to
this Annual Report on Form 10-K.

Item 11. Executive Compensation.

Compensation
Discussion and Analysis

Overview of Compensation Program

The
primary purposes of the Compensation Committee (the Committee) of our board
of directors are: (1) to establish and maintain competitive, fair and equitable
compensation practices designed to attract and retain key management employees
throughout the Company and to establish appropriate incentives to motivate and
reward key management employees for achieving or exceeding established
performance goals; and (2) to oversee the competency and qualifications of
senior management personnel and the provisions of senior management succession
planning.

The
Companys compensation policies with respect to its executive officers are
based on the principles that compensation should, to a significant extent, be
reflective of the financial performance of the Company, and that a significant
portion of executive officers compensation should provide long-term
incentives. The Compensation Committee seeks to have executive compensation set
at levels that are sufficiently competitive so that the Company may attract,
retain and motivate high quality executives to contribute to the Companys
success. In assessing overall compensation for executive officers, the
Committee may consider, among other factors, the Companys performance,
relative shareholder return and industry position, general industry data and
awards given to the Companys executives in past years.

Throughout
this discussion, the individuals who served as the Companys Chief Executive
Officer and Chief Financial Officer during fiscal 2006, as well as the other
individuals included in the Summary Compensation Table below are referred to as
the Named Executive Officers.

Employment
and Related Agreements

The
nature and terms of our executive compensation program have been influenced
significantly by the fact that we are a privately owned company and that
Trimaran Pollo Partners, LLC (the LLC), our principal indirect shareholder,
is actively involved in establishing and overseeing our compensation program.
In connection with the Acquisition by CAC in November 2005, we entered into
employment agreements with our executive officers and CAC entered into other
agreements with the executive officers that established the basic parameters of
our compensation program. The employment agreements, which are further
described below under Employment Agreements, provide for the salary, annual
bonus and benefits to executive officers described below. CAC adopted a Stock
Option Plan pursuant to which it granted our executive officers options to
purchase CAC common stock. In connection with the Acquisition, as a condition
to permitting our officers and other employees to exchange their existing
Company shares and stock options for shares and stock options of CAC, CAC
required such officers and employees to become parties to a Stockholders Agreement
with the LLC. All persons who acquire shares or options to purchase shares of
CAC are required to become parties to the Stockholders Agreement. The
Stockholders Agreement provides for the put and call options described below
under Payments Upon Termination or

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Change in Control. This Agreement also generally
provides for restrictions on the ability of the parties to transfer any shares
of CAC stock held by them and contains other provisions governing their rights
as stockholders of CAC. See Item 13. Certain Relationships and Related
Transactions and Director Independence.

Setting
Compensation

Overall,
the total compensation opportunity is intended to create an executive
compensation program that is fair, reasonable and competitive when compared to
the median compensation levels of comparable limited service restaurant
companies. In setting compensation, the Company informally considers
competitive market practices derived from various sources, such as recruiting
firms, SEC filings of comparable companies and data available from the Economic
Research Institute, which provides a database of executive compensation
statistics regarding other limited service restaurant companies of comparable
size and revenue and similar geographic location. Generally, we believe that
executive salaries should be targeted near the median of the range of salaries
for executives in similar positions and with similar responsibilities at
comparable companies but we do not engage in a formal benchmarking process.

Because
most of the components of compensation are pre-established by the terms of our
executives employment agreements and stock option agreements, salary and
discretionary bonuses, if any, are the only variable components of compensation
that are established annually. Our Chief Executive Officer is significantly
involved in determining salaries and discretionary bonuses, if any, of the
other Named Executive Officers. He confers with representatives of the LLC, our
Senior Vice President of Human Resources and the Compensation Committee in
setting annual salaries or recommending discretionary bonuses for senior
executives.

Compensation Components

Executive
compensation consists of the following components:

Base
Salary. The Company provides Named Executive Officers
with base salary to compensate them for services rendered during the fiscal
year. The base salaries for our executives set forth in their respective
employment agreements were initially established based on their experience and
responsibilities, taking into account competitive market compensation paid by
other companies for similar positions, and negotiations with the LLC. Salary
levels are typically considered annually as part of the Companys annual
performance review process as well as upon a promotion or other change in job
responsibility. Annual salary increases are determined based upon each
executives performance review rating and the aggregate annual salary increases
for all executive officers are subject to a merit increase pool approved by the
Board annually. Merit-based increases to executive salaries are based on the
Chief Executive Officers assessment of the individuals performance. Specific
factors considered by the Chief Executive Officer in evaluating executive
performance and recommending salary increases are achievement of previously
established performance accountabilities for the prior year and demonstration
of certain Good to Great behaviors outlined in the performance review
document.. The Chief Executive Officers salary increase is determined using
the same performance review process and is set by the Compensation Committee of
the Board. The Compensation Committee reviews the performance of the Chief
Executive Officer on an annual basis.

Annual
Bonus. Executive officers are eligible for annual
incentive bonuses pursuant to the terms of their respective employment
agreements based upon our achievement of budgeted EBITDA as approved by the
board of directors for each fiscal year. This element of compensation serves to
motivate and challenge the executive to achieve superior short-term
performance, while stock option awards are designed to motivate long-term
performance and tenure at the Company.

Our
annual incentive bonus plan provides for a cash bonus, dependent upon the level
of achievement of EBITDA, calculated as a percentage of the officers base
salary, with higher ranked officers compensated at a higher percentage of base
salary to reflect their greater level of responsibility for the implementation
and achievement of the annual plan. The percentages for Named Executive
Officers reflect our objective of ensuring that a substantial portion of the
compensation opportunity depends on the achievement of specific performance goals.
For fiscal 2006, the target bonus awards (as a percentage of base salary) were
as follows: Chief Executive Officer, 100%; Chief Financial Officer, 75%; Senior
Vice Presidents, 75%; and Vice Presidents, 35%. In addition, all of our support
center employees are eligible for an annual bonus as reflected in the Support
Center Annual Incentive Plan at a pre-established percentage of their base
salary determined by their position in the Company.

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Depending
on the achievement of EBITDA targets, the annual bonus for executive officers
ranges from 25% to 150% of the target bonus, and no bonus is paid if actual
EBITDA for the year is less than 90% of budgeted EBITDA. The bonus calculation
for executive officers is scaled to decline at a significantly greater rate if
actual EBITDA is less than budgeted EBITDA, compared to the increase if actual
EBITDA exceeds budgeted EBITDA. For example, if actual EBITDA equals 95% of
budgeted EBITDA, the bonus is equal to 62.5% of target bonus, whereas if actual
EBITDA equals 110% of budgeted EBITDA, the bonus equals 120% of target bonus.
This scaling is designed to reward executive officers only if the Company
substantially achieves or exceeds its annual plan for EBITDA. Further
information regarding the 2006 bonus opportunities for our Named Executive
Officers is set forth under Grants of Plan Based Awards in Fiscal 2006.

EBITDA
is defined as the income of the Company before, without duplication, interest
expense, amortization of deferred financing fees and acquisition-related
bank/financing fees, income taxes, depreciation and amortization expense,
before gains (or losses) on the sale of company-operated restaurants or other
significant assets, after all bonuses and profit sharing expenses of the Company
of any kind. We believe that this is the best measure of our financial
performance to use for purposes of executive bonuses because we utilize a
similar measure to establish our budgets and to analyze our operations as
compared to our budgets. The adjustments to income that define EBITDA
facilitate our ability to measure operating performance by eliminating certain
items which do not reflect managements ability to impact the business and
which we believe should not be taken into account for incentive compensation
purposes. EBITDA is also an important non-GAAP valuation tool that is
frequently used by securities analysts, investors and others to evaluate
companies in our industry.

Budgeted
EBITDA is established each year by our Board based upon the Companys five-year
strategic plan and the annual operating plan developed by management and is
designed to represent a strong year-over-year combined annual growth rate in
the overall profitability of the Company. In the last five years, the Company
has achieved or exceeded budgeted EBITDA in every year except 2002 and 2006. As
a result of the 2005 Acquisition by CAC, 2006 budgeted EBITDA represented a
higher growth rate than in prior years. It is the Boards goal to set budgeted
EBITDA at a level that is achievable, but sufficiently ambitious to provide a
meaningful incentive.

Discretionary
Bonuses. In addition to the annual bonus provided for in
the employment agreements, we may also, from time to time, decide to award
discretionary bonuses to executives upon the occurrence of extraordinary
events, such as a significant financing, acquisition or sale. No discretionary
bonuses were awarded in 2006.

Long-Term
Stock Option Incentive Program. We believe that long-term
performance is achieved through an ownership culture that encourages long-term
performance by our executive officers through the use of option-based awards.
Stock option awards enable the Company to enhance the link between the creation
of shareholder value and long-term executive incentive compensation and
maintain competitive levels of total compensation.

Our
historical practice has been to grant non-qualified stock options to an
eligible employee either upon hire or upon promotion to a management level in
the Company. Newly hired or promoted eligible employees typically receive their
award at the first scheduled board meeting following their hire or promotion
date. We do not have a program for the periodic grant of stock options to our
employees. Except for Mr. Sather (who was granted options upon his promotion to
Senior Vice President), our Named Executive Officers were granted
performance-based options shortly after the Acquisition by CAC in December
2005. In
connection with the Acquisition, the LLC and our Chief Executive Officer
established an initial option pool and allocated option grants among the
executive officers based on their positions and responsibilities in the
Company. Thereafter, awards have been determined by the Compensation Committee,
in its discretion, taking into account the range of initial option grants.

Our
stock options are both performance-based and time-based awards. Employee
option grants are subject to vesting at 20% per year upon achievement of annual
or cumulative EBITDA goals (determined on the same basis as the annual
incentive bonus) or 100% vesting on the seventh anniversary of the option
grant, with accelerated vesting upon the event of an initial public offering of
at least $50 million or change in control. Because budgeted EBITDA was not
achieved in 2006, none of the options vested in 2006.

For
the first five years after the grant of an option, vesting is based on
achievement of annual or cumulative EBITDA goals to motivate management to
achieve our financial goals. However, even if the financial goals are not
achieved, we provide for full vesting after seven years to encourage and reward
loyalty and long-term commitment to the Company. We provide for accelerated
vesting upon an initial public offering of at least $50,000,000 or a change in
control because these

-39-

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events result in the creation of shareholder value and
we want to motivate our officers to achieve these goals by permitting them to
participate in the increased shareholder value which results.

Other
Compensation. The Company provides named executive
officers with perquisites and other personal benefits that the Company and the
Committee believe are reasonable and consistent with its overall compensation
program to better enable the Company to attract and retain superior employees
for key positions. The Named Executive Officers are provided automobile expense
allowances and gasoline credit cards, supplemental ExecuCare health insurance
and payment of other health insurance premiums. The Chief Executive Officer is
also entitled to a leased automobile and other perquisites as approved by the
Committee, including certain family travel expenses. We intend to continue to
maintain these modest executive benefits and perquisites for officers; however,
the Compensation Committee in its discretion may revise, amend or add to the
officers executive benefits and perquisites if it deems it advisable.

We
maintain a 401(k) Plan for our employees, including our Named Executive Officers,
because we wish to encourage our employees to save some percentage of their
cash compensation, through voluntary deferrals, for their eventual retirement.
The 401(k) Plan permits employees to contribute up to 15% of their qualified
compensation and we match 100% of the first 3% of the
employees contribution and 50% of the next 2% of their contribution. The Companys matching contribution
vests ratably over three years.

Payments Upon Termination or Change in
Control

Various
agreements provide for payments to the Named Executive Officers in the event of
a termination of employment or a change in control of CAC. The types of
payments and estimated amounts payable are described below under Potential
Payments upon Termination or Change in Control. We believe that these
severance provisions are consistent with general practice among our peers,
although we have not conducted a study to confirm this.

We
provide severance payments to our executive officers only if their employment
is terminated by the Company without cause or by the officer for good reason,
or in the event of the officers death or disability. The aggregate amount of
an executives severance is subject to reduction by the amounts of any other
cash severance or termination benefits payable to him under any other plans,
programs or arrangements of the Company or its affiliates. There are currently
no other formal severance or termination benefits plans or arrangements in
place. Executive officers other than the Chief Executive Officer receive
continued salary for twelve months and a pro rata portion of their bonus. Upon
death or disability the officer receives only a pro-rata bonus. The severance
benefits reflect the fact that it may be difficult for executive officers to
find comparable employment within a short period of time. In addition, except
in the case of severance payments to our Chief Executive Officer, the Company
receives a benefit from the payments since they are linked to the officers
compliance with the non-competition, non-solicitation and confidentiality
covenants contained in their employment agreements.

Stephen
Carleys employment agreement provides for a lump sum payment of two times his
base salary on the date of termination and two times the average of his annual
bonus in the two completed fiscal years prior to the date of termination. Mr.
Carleys severance package and method of payment were negotiated between the
LLC and Mr. Carley in connection with the Acquisition and we believe it is
consistent with industry standards for chief executive officers in the
restaurant industry, although we have not conducted studies to confirm this.

The
Stockholders Agreement provides that in the event of a termination without
cause or for good reason, a Named Executive Officer has the right (put right)
to require CAC to purchase all of his shares of CAC stock (including shares
underlying vested options) at their fair market value as determined by the
board of CAC. Upon the officers termination for any reason, CAC has the right
(call right) to purchase all of the officers CAC stock (including shares
underlying vested options) at (i) the lower of cost or fair market value if
termination is for cause or without good reason, or (ii) fair market value if
termination is for any other reason. CAC and the Company are privately owned
and there is no public market for CAC stock. The principal purpose of CACs
call option is to enable it to keep CAC shares closely held and out of the
hands of former employees who may become employed by competitors or have
interests adverse to the Company. The ability to repurchase these shares also
enables CAC to issue shares or options to new management personnel without
further dilution to its stockholders. Because there is no public market for the
CAC stock, the officers put option enables the officers to liquidate their
interest in CAC when they leave the Company and to realize on any gains
resulting from an appreciation in the value of CAC shares during their tenure
as officers.

The
CAC stock option agreements provide for automatic vesting of options upon the
occurrence of a change in control of CAC. If the options are not exercised,
they will automatically terminate on the effectiveness of the change in control
unless

-40-

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the surviving or acquiring
company agrees to assume the options or to substitute new options. We believe
that the interests of our stockholders are best served if the interests of our
senior management are aligned with them, and providing for acceleration of
options in the event of a change in control should eliminate, or at least
reduce, the reluctance of senior management to pursue potential change in
control transactions that may be in the best interests of our stockholders.

Tax and Accounting Implications

Under
Section 162(m) of the Internal Revenue Code, a public company may not deduct
compensation of more than $1,000,000 that is paid to certain individuals.
Sections 280G and 4999 of the Internal Revenue Code limit the ability of
certain companies to take a tax deduction for excess parachute payments (as
defined therein) and impose excise taxes on each executive that receives
excess parachute payments in connection with his or her severance in
connection with a change in control. These provisions of the Internal Revenue
Code are not applicable to the Company because our equity securities are not
publicly traded. When we become subject to these provisions, the Compensation
Committee will consider the impact of these provisions on our compensation
structure.

Various
rules under generally accepted accounting practices determine the manner in
which the Company accounts for grants of equity-based compensation to our
employees in our financial statements. Beginning on December 29, 2005, the
Company began accounting for stock-based payments, such as stock option awards,
in accordance with the requirements of SFAS 123(R) as discussed in Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Critical Accounting Policies  Share-Based Compensation.

Compensation
Committee Report

The
Compensation Committee of the Board of Directors oversees our compensation
program on behalf of the Board. In fulfilling its oversight responsibilities,
the Compensation Committee reviewed and discussed with management the
Compensation Discussion and Analysis set forth in this Form 10-K. Based upon
the review and discussions referred to above, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be
included in this Form 10-K.

| |                        
| | -----------------------
| | Compensation Committee:
| |                        
| | Andrew
  Heyer         
| |                        
| | Dennis
  Lombardi      

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Summary Compensation Table

The
following table provides compensation information for fiscal 2006 with respect
to our principal executive officer, our principal financial officer, and our
three other most highly compensated executive officers (the Named Executive
Officers).

|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                 |        
|--------------------------------------------------------------------------------- |  | ---- |  | ------------ |  | --------------------------- |  | ------------------------------------------------------ | ------- | ------------------------------------ | ------ | --------------- | -------
|Name and
  Principal Position                                                     |  | Year |  | Salary
  ($) |  | Option
  Awards
  ($)
  (a) |  | Non-Equity
  Incentive Plan
  Compensation
  ($)
  (b) |         | All Other
  Compensation
  ($)
  (c) |        | Total ($)
  (d)
|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                
|Stephen E. Carley,
  President and Chief
  Executive Officer                      |  | 2006 |  | 359,136      |  | 287,657                     |  |                                                        | 251,884 |                                      | 61,456 |                 | 960,133
|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                 |        
|Joseph N. Stein,
  Senior Vice President,
  Finance and Chief Financial
  Officer |  | 2006 |  | 242,034      |  | 95,866                      |  |                                                        | 127,314 |                                      | 25,392 |                 | 490,606
|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                 |        
|Karen B. Eadon,
  Senior Vice President,
  Marketing                              |  | 2006 |  | 256,547      |  | 95,866                      |  |                                                        | 134,949 |                                      | 36,277 |                 | 523,639
|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                 |        
|Brian Berkhausen,
  Senior Vice President,
  Development                          |  | 2006 |  | 237,049      |  | 76,708                      |  |                                                        | 125,193 |                                      | 33,177 |                 | 472,127
|                                                                                  |  |      |  |              |  |                             |  |                                                        |         |                                      |        |                 |        
|Stephen J. Sather,
  Senior Vice President,
  Operations                          |  | 2006 |  | 214,615      |  | 106,080                     |  |                                                        | 114,787 |                                      | 23,364 |                 | 458,846

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | These options represent the right to purchase common
  stock of CAC. The amounts in this column represent the compensation expense
  relating to stock options recognized in 2006 for financial statement
  reporting purposes, with certain adjustments prescribed by the SECs rules.
  These amounts do not correspond to the actual amounts that may be recognized
  upon exercise of the options. The assumptions used in these calculations,
  excluding the forfeiture rate, are described in Item 7. Managements
  Discussion and Analysis of Financial Condition and Results of Operations 
  Critical Accounting Policies  Share-Based Compensation and Note 18 to our
  Consolidated Financial Statements.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | These amounts represent bonuses earned in fiscal
  2006. For a description of the terms of the bonuses, see Compensation
  Discussion and Analysis and the table Grants of Plan-Based Awards in Fiscal
  2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |     |                                                            
| | --- | -----------------------------------------------------------
| | (c) | The following table sets forth these amounts by
  category:

|                  |  |                                             |  |                                       |  |                           |        |                         |  |  |   |        |  |  |  |   |       |  | 
|----------------- |  | ------------------------------------------- |  | ------------------------------------- |  | ------------------------- | ------ | ----------------------- |  |  | - | ------ |  |  |  | - | ----- |  | 
|                  |  | Medical and Other
  Insurance
  Premiums(1) |  | Company 401K
  Matching Contributions |  | Auto
  Allowance/Lease(3) |        | Other Perquisites(2)(3) | 
|                  |  |                                             |  |                                       |  |                           |        |                         | 
|Stephen E. Carley |  | 18,505                                      |  |                                       |  | $                         | 12,570 |                         |  |  | $ | 22,476 |  |  |  | $ | 8,360 |  | 
|Joseph N. Stein   |  | 6,308                                       |  |                                       |  |                           | 9,681  |                         |  |  |   | 6,000  |  |  |  |   | 3,403 |  | 
|Karen B. Eadon    |  | 20,715                                      |  |                                       |  |                           | 7,845  |                         |  |  |   | 6,000  |  |  |  |   | 1,717 |  | 
|Brian Berkhausen  |  | 17,454                                      |  |                                       |  |                           | 8,685  |                         |  |  |   | 4,800  |  |  |  |   | 2,238 |  | 
|Stephen J. Sather |  | 10,211                                      |  |                                       |  |                           | 1,731  |                         |  |  |   | 6,923  |  |  |  |   | 4,499 |  | 

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | These amounts represent premiums for medical, dental, vision
          and long-term care insurance paid by the Company that exceed the level
          of premiums the Company pays for its other employees and 2006 reimbursements
          under a supplemental health insurance plan.                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (2) | Other perquisites consist of auto fuel and
          maintenance costs and personal travel.                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (3) | We have stated the full cost of these to the Company since
          we do not obtain the information necessary to calculate the percentage
          of these costs that represents a personal benefit.                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | Based on the total compensation amounts, each Named Executive
          Officers bonus represented approximately one­-quarter of
          his or her total compensation. The salaries of the Named Executive
          Officers as a percentage of total compensation ranged from 37.2% for
          Mr. Carley to 50% for Mr. Berkhausen, reflecting the higher portion
          of Mr. Carleys compensation that is incentive-based.

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Grants of Plan-Based Awards in Fiscal
2006

During
fiscal 2006, the Named Executive Officers were entitled to bonuses in
accordance with the terms of their respective employment agreements. These
bonuses are described in the following table as non-equity incentive plan
awards. In addition, in 2006 Mr. Sather was granted a stock option (equity
incentive plan award). The following table describes the estimated future
payouts under these awards.

|                  |  |              |                 |                                                                           |              |                                                        |               |                                                          |                 |     |            |                 |               |                 |  |  |   |       |     |  |  |   |         |     | 
|----------------- |  | ------------ | --------------- | ------------------------------------------------------------------------- | ------------ | ------------------------------------------------------ | ------------- | -------------------------------------------------------- | --------------- | --- | ---------- | --------------- | ------------- | --------------- |  |  | - | ----- | --- |  |  | - | ------- | --- | 
|                  |  | Grant
  Date |                 | Estimated Future Payouts Under
  Non-Equity Incentive Plan
  Awards
  (a) |              |                                                        |               |                                                          |                 |     |           
|                  |  |              |                 | Estimated Future Payouts Under Equity
  Incentive Plan Awards
  (b)       |              | Exercise or
  Base Price of
  Option
  Awards
  ($/Sh) |               | Grant Date
  Fair Value of
  Stock and
  Option
  Awards |                
|                  |  |              |                 |                                                                           |              |                                                       
|                  |  |              |                 |                                                                           |              |                                                       
|                  |  |              |                 |                                                                           |              |                                                        |               |                                                         
|Name              |  |              | Threshold
  ($) |                                                                           | Target
  ($) |                                                        | Maximum
  ($) |                                                          | Threshold
  (#) |     | Target (#) |                 | Maximum
  (#) |                 |  | 
|                  |  |              |                 |                                                                           |              |                                                        |               |                                                          |                 |     |            |                 |               |                 |  |  |   |       |    
|Stephen E. Carley |  | 1/11/06      |                 | 89,784                                                                    |              | 359,136                                                |               | 538,704                                                  |                 |    |            |                |               |                |  |  |   |      |     |  |  |   |        |     | 
|Joseph N. Stein   |  | 1/11/06      |                 | 45,381                                                                    |              | 181,523                                                |               | 272,288                                                  |                 |    |            |                |               |                |  |  |   |      |     |  |  |   |        |     | 
|Karen B. Eadon    |  | 1/11/06      |                 | 48,103                                                                    |              | 192,410                                                |               | 288,615                                                  |                 |    |            |                |               |                |  |  |   |      |     |  |  |   |        |     | 
|Brian Berkhausen  |  | 1/11/06      |                 | 44,447                                                                    |              | 177,787                                                |               | 266,680                                                  |                 |    |            |                |               |                |  |  |   |      |     |  |  |   |        |     | 
|Stephen J. Sather |  | 1/11/06      |                 | 40,240                                                                    |              | 160,961                                                |               | 241,442                                                  |                 |    |            |                |               |                |  |  |   |      |     |  |  |   |        |     | 
|                  |  | 1/11/06      |                 |                                                                          |              |                                                       |               |                                                         |                 | (c) |            | 17,778
  shares |               | 17,778
  shares |  |  | $ | 86.43 | (d) |  |  | $ | 774,996 | (e) | 

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | These awards represent annual performance bonuses
  provided for in each officers employment agreement. In the first quarter of
  each fiscal year, the board of directors establishes budgeted EBITDA for
  such fiscal year following its review of the Companys annual operating plan
  with management. The date that budgeted EBITDA is approved by the board is
  the grant date. The amount of bonus for any fiscal year is calculated on
  the basis of how the Companys actual EBITDA for the fiscal year compares to
  budgeted EBITDA. The target bonus (Target column) is 75% of each officers
  base salary (100% in the case of Mr. Carley). The amount of the bonus ranges
  from 25% of the officers target bonus if actual EBITDA is 90% of budgeted
  EBITDA (Threshold column) to 150% of target bonus if actual EBITDA equals
  125% or more of budgeted EBITDA (Maximum column). No bonus is paid if
  actual EBITDA is less than 90% of budgeted EBITDA and in no event may the bonus
  amount exceed 150% of the officers target bonus. See Compensation
  Discussion and Analysis above for an explanation of budgeted EBITDA. For the
  actual amount of bonus earned in 2006 pursuant to these awards, see the
  column Non-Equity Incentive Plan Compensation in the Summary Compensation
  Table above.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (b) | These awards are options to purchase CAC common
  stock that vest upon the achievement of certain performance targets or after
  seven years. See CAC Stock Option Plan and the table Outstanding Equity
  Awards at Fiscal Year-End 2006 for a description of the terms of these
  options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (c) | Upon the occurrence of a public offering of at least
  $50 million before November 18, 2007, the minimum amount receivable under the
  option would be the vesting of 50% of the option shares (8,889 shares) and
  the issuance of a number of restricted shares having an aggregate economic
  value equal to the fair market value of the 8,889 unvested option shares on
  such date less the exercise price thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (d) | The common stock of CAC is not publicly traded. The
  exercise price was determined to be equal to the fair market value of CAC
  common stock on the grant date, based on the price paid by CAC, a third-party
  purchaser in an independent, arms-length negotiated transaction, when it
  acquired all of our outstanding shares of common stock on November 18,
  2005. We did not obtain a contemporaneous third party valuation of our common
  stock because we believe this arms-length transaction most appropriately
  reflected the fair market value of the underlying stock on the grant date.
  See Item 7. Managements Discussion and Analysis of Financial Condition and
  Results of Operations  Critical Accounting Policies  Share-Based
  Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

-44-

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| |     |                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (e) | This amount represents the amount that the Company
  expenses in its financial statements over the vesting term of the option,
  determined in accordance with SFAS 123R. See Note 18 to our Consolidated
  Financial Statements.

Employment
Agreements

EPL
has employment agreements with each Named Executive Officer.

Term.
Mr. Carleys employment agreement is dated September 27, 2005 and has a
three-year term. Commencing on January 1, 2007, and each January 1 thereafter,
Mr. Carleys employment term is automatically extended for an additional year
unless either party gives 60 days prior notice of its intention not to extend
the term. As a result of the timing of these extensions, the term of Mr. Carleys
employment is a rolling three-year period which currently expires November 18,
2009. Mr. Steins employment agreement is dated September 27, 2005 and runs for
three years from November 18, 2005. Mr. Berkhausens employment agreement is
dated November 1, 2005 and runs through December 31, 2008. Ms. Eadons
employment Agreement is dated October 10, 2005 and runs through December 31,
2008. Mr. Sathers employment agreement is dated January 9, 2006 and runs
through December 31, 2008. Each of these employment agreements (other than Mr.
Carleys) has an automatic one-year renewal unless either party provides
termination notice at least 60 days prior to the end of the then applicable
term.

Base
Salary. Each agreement provides for a
base annual salary that may be increased at the sole discretion of the board of
directors. The Named Executive Officers base annual salaries for fiscal 2006
are set forth in the Summary Compensation Table above.

Bonus.
Contingent on our meeting certain
financial goals, the target bonus for each Named Executive Officer is 75% of
the officers base salary, except for Mr. Carley, whose target bonus is 100% of
his base salary. The terms of the bonus are described in the table Grants of
Plan  Based Awards in Fiscal 2006 above.

Employee
Benefits. Each Named Officer is
entitled to receive health insurance, retirement benefits and fringe benefits
on the same basis as those benefits are made available to other senior
executives. In addition, EPL provides Mr. Carley with a leased vehicle and pays
the routine operating, maintenance and fuel costs for such vehicle.

Termination.
If EPL terminates a Named Executive Officer for cause or a Named Executive
Officer resigns without good reason or dies or suffers from a disability, that
executive officer is entitled to accrued base annual salary for the then
current year to date, earned unpaid bonus from prior years, accrued expenses
meriting reimbursement and accrued unpaid benefits. If a Named Executive
Officer dies or suffers from a disability, the officer is also entitled to a
pro rata bonus for the then current year. If we terminate a named Executive
Officer without cause or a Named Executive Officer resigns for good reason,
that executive officer is entitled to all of the above compensation plus one
year additional base salary payable over 12 months, except that Mr. Carley is
entitled to two years of base salary payable in a lump sum on termination.
These termination provisions and additional information regarding the payments
the Named Executive Officers are entitled to receive upon termination or a
change in control are described under Potential Payments Upon Termination or
Change in Control below.

CAC
Stock Option Plan

All
of our stock options are granted by CAC pursuant to its 2005 Stock Option Plan
and represent the right to purchase CAC common stock. All options granted
pursuant to the plan are intended to be non-qualified stock options under the
Internal Revenue Code of 1986. Of the 302,772 options outstanding at December
27, 2006, 81,540 fully vested options were granted in connection with the
Acquisition by CAC in November 2005 in exchange for previously outstanding
options to purchase common stock of EPL Holdings, Inc. which were fully vested.
Subsequent to the Acquisition through December 27, 2006, an aggregate of
227,926 options have been granted. Such options vest upon the achievement of
certain performance-based and time-based conditions as described in
footnote (b) to the table Outstanding Equity Awards at Fiscal Year-End
2006 below. The options terminate upon the optionees termination of service
with the Company subject to the optionees right to exercise the vested portion
of the option for a period of three to nine months after termination, depending
on the cause of termination; provided, however, that if an optionee is
terminated by the Company for cause, his options are forfeited. The options are
subject to accelerated vesting in the event of an initial public offering of at
least $50,000,000 or a change in control, as described under Potential
Payments Upon Termination or Change in Control. Upon the payment of a dividend
with respect to CAC common stock, the optionee is entitled to receive the
economic equivalent of such dividend as if all his options had been exercised
prior to payment of the dividend. The compensation committee of CAC, which is

-45-

---



responsible for administering the option plan, has the
right to waive any conditions or rights under, or amend any terms of,
outstanding options, including the exercise price, vesting provisions and term.
Options are not transferable except with the prior consent of the Compensation
Committee.

Outstanding
Equity Awards at Fiscal Year-End 2006

|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|----------------- |  | ---------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | - | ------------------------ |  |  | ----------
|                  |  | Option Awards                                                                     
|                  |  |                                                                                   
|Name              |  | Number
  of Securities
  Underlying Unexercised
  Options 
  (#) Exercisable
  (a) |  | Equity
  Incentive Plan
  Awards: Number of
  Securities Underlying
  Unexercised Unearned
  Options
  (#)
  (b) |  | Option
  Exercise Price
  ($) |   | Option
  Expiration Date
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                         
|Stephen E. Carley |  | 22,845                                                                             |  |                                                                                                                  |  |                               | $ | 7.56                     |  |  | 4/9/2011  
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|                  |  |                                                                                    |  | 66,741                                                                                                           |  |                               | $ | 86.43                    |  |  | 12/14/2016
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|Joseph N. Stein   |  | 10,158                                                                             |  |                                                                                                                  |  |                               | $ | 9.68                     |  |  | 4/9/2012  
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|                  |  |                                                                                    |  | 22,247                                                                                                           |  |                               | $ | 86.43                    |  |  | 12/14/2016
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|Karen B. Eadon    |  | 15,356                                                                             |  |                                                                                                                  |  |                               | $ | 11.03                    |  |  | 10/12/2012
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|                  |  |                                                                                    |  | 22,247                                                                                                           |  |                               | $ | 86.43                    |  |  | 12/14/2016
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|Brian Berkhausen  |  | 8,977                                                                              |  |                                                                                                                  |  |                               | $ | 2.98                     |  |  | 12/28/2009
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|                  |  |                                                                                    |  | 17,778                                                                                                           |  |                               | $ | 86.43                    |  |  | 12/14/2016
|                  |  |                                                                                    |  |                                                                                                                  |  |                               |   |                          |  |  |           
|Steve J. Sather   |  |                                                                                    |  | 17,778                                                                                                           |  |                               | $ | 86.43                    |  |  | 12/14/2016

|    |                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | These options were initially granted prior to the
  Acquisition by CAC on November 18, 2005 and were fully vested as of the date
  of the Acquisition. These options were exchanged for CAC options in
  connection with the Acquisition.
|    |                                                                                                                                                                                                                                          
|(b) | These options vest in the following ways:                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                           |  | These options will vest 20% per year over the five
  years following the grant date if the Company achieves its budgeted EBITDA
  target. If the options do not vest in a specific year, they will vest on
  cumulative basis if cumulative budged EBITDA is achieved. See footnote (a) to
  Grants of Plan-Based Awards in Fiscal 2006 for an explanation of budgeted
  EBITDA. None of these options vested in 2006.                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                           |  | Even if the performance targets are not met, these
  options will vest in full seven years after the grant date as long as the
  employee is still with the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                           |  | Upon an initial public offering of at least $50
  million before November 18, 2007, 50% of the then unvested options will vest.
  All vested options will then be converted into options to purchase shares of
  the public companys common stock and will remain exercisable in accordance
  with the terms of the original grant. The remaining unvested options will
  automatically terminate and the optionees will be entitled to receive grants
  of the public companys restricted stock with an aggregate economic value
  equal to the fair market value of the unvested shares minus the aggregate
  exercise price thereof.
|    |                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                           |  | If an initial public offering of at least $50
  million occurs after November 18, 2007, or if a change in control occurs at
  any time, 100% of the options will vest immediately upon consummation
  thereof.                                                                                                                                                                                                                                                                                                                                                                                                                           

-46-

---



Potential
Payments Upon
Termination or Change in Control

The
Company has entered into employment agreements and maintains certain plans and
arrangements that require certain payments to the Named Executive Officers in
the event of a termination of employment with EPL or a change in control of
CAC. The amounts payable to each Named Executive Officer in each situation is
listed in the tables below. These amounts do not include any payments or
benefits to which the officer is entitled irrespective of a termination or
change in control, such as accrued unpaid salary or employee benefits. The
amounts payable are calculated on the assumptions that the event which triggers
the payments took place on December 27, 2006 (our fiscal year end), that the
employee was employed during the entire fiscal year, and, where applicable,
that the per share price of CACs common stock on that date was $104.08. See Item
7. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Critical Accounting Policies  Share-Based Compensation for a
description of the manner in which we determine the fair market value of CAC
common stock.

|                                  |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|--------------------------------- |  | --------------------------------------------------------------------- |  | -------------------------------------------------- |  | ---------------------------------------------------------------------- |  | -------------------------
|Type of
  Payment/Recipient       |  | Termination for
  Cause or by
  Officer Without
  Good Reason
  $ |  | Termination
  Due to
  Death or
  Disability
  $ |  | Termination
  Without Cause
  or by Officer With
  Good Reason
  $ |  | Change in
  Control
  $
|                                  |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|Base Salary                       |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|Stephen E.
  Carley               |  | 0                                                                     |  | 0                                                  |  | 718,272 (1)                                                            |  | 0                        
|Joseph N. Stein                   |  | 0                                                                     |  | 0                                                  |  | 242,034 (2)                                                            |  | 0                        
|Karen B. Eadon                    |  | 0                                                                     |  | 0                                                  |  | 256,547 (2)                                                            |  | 0                        
|Brian Berkhausen                  |  | 0                                                                     |  | 0                                                  |  | 237,049 (2)                                                            |  | 0                        
|Stephen J.
  Sather               |  | 0                                                                     |  | 0                                                  |  | 214,615 (2)                                                            |  | 0                        
|Bonus                             |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|Stephen E.
  Carley               |  | 0                                                                     |  | 256,569 (3)                                        |  | 538,177(4)                                                             |  | 0                        
|Joseph N. Stein                   |  | 0                                                                     |  | 129,683 (3)                                        |  | 129,683 (3)                                                            |  | 0                        
|Karen B. Eadon                    |  | 0                                                                     |  | 137,459 (3)                                        |  | 137,459 (3)                                                            |  | 0                        
|Brian Berkhausen                  |  | 0                                                                     |  | 127,522 (3)                                        |  | 127,522 (3)                                                            |  | 0                        
|Stephen J.
  Sather               |  | 0                                                                     |  | 116,923 (3)                                        |  | 116,923 (3)                                                            |  | 0                        
|Gain on Sale of CAC Stock (5)     |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|Stephen E.
  Carley               |  | 0                                                                     |  | 403,214                                            |  | 403,214                                                                |  | 0                        
|Joseph N. Stein                   |  | 0                                                                     |  | 200,133                                            |  | 200,133                                                                |  | 0                        
|Karen B. Eadon                    |  | 0                                                                     |  | 291,454                                            |  | 291,454                                                                |  | 0                        
|Brian Berkhausen                  |  | 0                                                                     |  | 158,444                                            |  | 158,444                                                                |  | 0                        
|Stephen J.
  Sather               |  | 0                                                                     |  | 10,202                                             |  | 10,202                                                                 |  | 0                        
|Acceleration of Stock Options (6) |  |                                                                       |  |                                                    |  |                                                                        |  |                          
|Stephen E.
  Carley               |  | 0 (7)                                                                 |  | 0                                                  |  | 0                                                                      |  | 1,177,975                
|Joseph N. Stein                   |  | 0 (7)                                                                 |  | 0                                                  |  | 0                                                                      |  | 392,658                  
|Karen B. Eadon                    |  | 0 (7)                                                                 |  | 0                                                  |  | 0                                                                      |  | 392,658                  
|Brian Berkhausen                  |  | 0 (7)                                                                 |  | 0                                                  |  | 0                                                                      |  | 314,127                  
|Stephen J.
  Sather               |  | 0 (7)                                                                 |  | 0                                                  |  | 0                                                                      |  | 313,778                  

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Lump-sum payment equal to two times base salary on
  the date of termination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (2) | Unless termination is due to voluntary resignation
  after reaching age 60, the officer receives continued salary for 12 months
  subject to compliance with non-competition, non-solicitation and
  confidentiality covenants, which are described below.                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (3) | The officer is entitled to a pro-rated bonus based
  on the percentage of the year the officer was employed, payable when the
  bonus would have otherwise been paid. The estimated payment above assumes
  that the officer was employed the entire fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (4) | Lump-sum payment equal to two times average bonus in
  prior two fiscal years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (5) | Pursuant to the terms of a Stockholders Agreement
  described in Item 13. Certain Relationships and Related Transactions and
  Director Independence, in the event of termination without cause or for good
  reason, the officer has the right to require CAC to purchase all of his or
  her shares of CAC stock (including shares underlying vested options) at their
  fair market value as determined by the board of CAC. Upon the officers
  termination for any reason, CAC has the right to purchase all of the officers
  CAC stock (including shares underlying vested options) at (i) the lower of
  cost or fair market value if termination is for cause or without good

-47-

---



| |     |                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | reason, or (ii) fair market value if termination is
  for any other reason. This table assumes the sale of all CAC stock held by
  the officer (including shares underlying vested options) and the amount
  represents the difference between the officers cost (exercise price in the
  case of option shares) and $104.08, the fair market value of CAC stock at
  December 27, 2006.
| |     |                                                                                                                                                                                                                                                                                                                                                                                          
| | (6) | Upon a change in control of CAC (defined below),
  options become 100% vested. The dollar amount represents the difference
  between the exercise price of the accelerated options and $104.08, the fair
  market value of CAC stock on December 27, 2006. See the table Outstanding
  Equity Awards at Fiscal Year-End 2006.                                                          
|
| | (7) | The officer forfeits his or her options in the event
  of termination for cause.                                                                                                                                                                                                                                                                                                         

Our
employment agreements with the Named Executive Officers contain definitions of
the terms cause, good reason and disability as used in the foregoing
table.

The
term cause means any action by a Named Executive Officer that constitutes:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Misconduct, dishonesty or failure to comply with
  specific directions of the board of directors (after a 20 day period to cure
  such misconduct or failure);                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | A deliberate and premeditated act against the
  Company or its affiliates;                                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | The commission of a felony;                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Substance abuse or alcohol abuse which renders the
  officer unfit to perform his duties;                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | A breach by the officer of non-competition and
  non-solicitation obligations contained in the employment agreement; or                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Voluntary termination of employment in anticipation
  of being terminated for cause.                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   | A Named Executive Officer may terminate his or her
  employment for good reason if:                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | The officer is relocated outside of Orange County,
  California, and the Company fails to cure within 30 days of notice;                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | The officers title is reduced and the Company fails
  to cure within 30 days of notice;                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | The Company fails to provide the officer with any of
  the employee benefits he is entitled to pursuant to his employment agreement
  and, except in the case of the CEO, the Company fails to cure within 30 days
  of notice;                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In the case of Mr. Carley only, (i) he is
  removed from the board of directors or is not re-elected to the board of
  directors at any time during his employment term; or (ii) the Company
  elects not to extend the term of his employment agreement for an additional
  year, provided that he will not have good reason to terminate his employment
  in this case until the expiration of the employment term in effect at the
  time that the Company elects not to extend the employment term; or
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In the case of all Named Executive Officers other
  than Mr. Carley, the officers base salary (as increased from time to time)
  is reduced or there is a change in his reporting relationship and the Company
  fails to cure within 30 days of notice, or the officer resigns after reaching
  age 60.                                                                                                                                                                                                 

A
disability exists if an officer becomes physically or mentally incapacitated
and is therefore unable to perform his duties for a period of six (6)
consecutive months or for an aggregate of nine (9) months in any twenty-four
(24) consecutive month period. If the Company and officer cannot agree, a
qualified independent physician will decide whether a disability exits.

Except
with respect to Mr. Carley, each Named Executive Officers right to receive
base salary payments for 12 months after termination by the Company without
cause or by the officer with good reason, is subject to the officers
compliance with non-competition, non-solicitation and confidentiality covenants
contained in his or her employment agreement. The non-competition provision
generally prohibits the officer for one year after termination from engaging
in, working for, or owning a financial interest in, any business that operates
quick-service restaurants that compete directly with EPL or its affiliates in
any market in which EPL or its affiliates operate restaurants or have targeted
operating restaurants at the time of the officers termination. The
non-solicitation covenant generally prohibits the officer from soliciting any
employee or consultant of the Company or its affiliates to cease working for
the Company or its affiliates, for a period of one year after the officer
terminates employment. The confidentiality provision prohibits the officer from
disclosing or using Company trade secrets or confidential information at any
time.

Pursuant
to the terms of our stock option agreements, upon the occurrence of a change in
control of CAC, options become fully vested and exercisable by the officer
immediately prior to the change in control, but contingent upon the
effectiveness of the change in control. If the options are not exercised, they
will automatically terminate on

-48-

---



the effectiveness of the change in control unless the
surviving or acquiring company agrees to assume the options or to substitute new
options. A change in control of CAC exists when:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Trimaran Fund II, LLC, Trimaran Parallel Fund II,
  LP, Trimaran Capital, LLC, CIBC Employee Private Equity Fund (Trimaran)
  Partners, CIBC Capital Corp., Trimaran Pollo Partners, LLC (or any investment
  fund or other entity directly or indirectly controlled by or under common
  control with such entities) (the Permitted Holders) collectively fail to
  beneficially own at least 40% of the outstanding shares of CAC common stock,
  unless such failure occurs as a result of a public offering with an aggregate
  cash offering price of at least $50,000,000;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | There is a sale of all or substantially all of the
  assets of CAC and its subsidiaries to a party other than a Permitted Holder;
  or                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | The CAC stockholders approve a complete liquidation
  or dissolution of CAC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Fiscal
2006 Director Compensation

Only
directors who our board has determined are independent are compensated by us
for their services as directors of the Company and EPL. We pay our independent
directors a fee of $2,500 per day for attendance at meetings of the board of
directors and an additional annual fee of $2,000 to the chairman of the audit
committee. In connection with his joining the board in September 2006, Mr.
Ammerman was granted an option for 1,027 shares of CAC stock. All directors are
reimbursed their reasonable expenses for attending meetings and, pursuant to a
Monitoring and Management Services Agreement between CAC and Trimaran Fund
Management, LLC, the Company reimburses Trimaran the travel and related
expenses of its designees to our and CACs board of directors. See Item 13.
Certain Relationships and Related Transactions and Director Independence.

|                                                                                                           |  |                                   |  |                     |  |            
|---------------------------------------------------------------------------------------------------------- |  | --------------------------------- |  | ------------------- |  | -----------
|Name                                                                                                       |  | Fees Earned or Paid in Cash
  ($) |  | Option Awards
  ($) |  | Total
  ($)
|                                                                                                           |  |                                   |  |                     |  |            
|Dennis J. Lombardi (a)                                                                                     |  | 12,500                            |  | 9,589               |  | 22,089     
|                                                                                                           |  |                                   |  |                     |  |            
|Douglas K. Ammerman (b)                                                                                    |  | 2,500                             |  | 2,491               |  | 4,991      
|                                                                                                           |  |                                   |  |                     |  |            
|David Benyaminy, Steven A. Flyer, Andrew Heyer,
  Glenn B. Kaufman, Dean C. Kehler and Griffin Whitney (c) |  | 0                                 |  | 0                   |  | 0          

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Mr. Lombardi has served as a director of EPL since
  2000 and was elected to our board in February 2007. Mr. Lombardis options
  were granted prior to December 29, 2005, the date on which we adopted SFAS
  123R. Therefore, to calculate the compensation expense we used the modified
  prospective transition approach of SFAS 123R, by which the compensation
  expense represents a proportionate share of grant date value (determined per
  SFAS 123 using the minimum method) over the remaining vesting period. See
  Note 18 of Notes to our Consolidated Financial Statements for the assumptions
  used in these calculations. At December 27, 2006, Mr. Lombardi had 472
  options with an exercise price of $2.98 which were initially granted prior to the Acquisition by CAC on November 18, 2005, were fully vested as of the date of the Acquisition, and were exchanged for CAC options in connection with the Acquisition. At December 27, 2006, Mr. Lombardi also had 2,225 options with an exercise price of $86.43, which vest 20% per year
  over the first five years after grant and 100% in the event of a public
  offering of at least $50 million or a change in control (grant date value of $67,120).
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | Mr. Ammerman was elected a Company director in
  September 2006. His options were granted on September 28, 2006 and vest 20%
  per year over the first five years after grant and 100% in the event of a
  public offering of at least $50 million or change in control. The fair value
  of the options on the date of grant ($49,981) and the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | fiscal 2006 compensation expense ($2,491) were
  calculated using the guidance of SFAS 123R. The assumptions used in these
  calculations,  are described in Note 18 to our
  Consolidated Financial Statements. At December 27, 2006, Mr. Ammerman had
  1,027 options with an exercise price of $108.92.                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Messrs. Benyaminy and Flyer resigned on January 31,
  2007. Mr. Whitney was elected a Company director in September 2006. Messrs.
  Heyer, Kehler and Kaufman were directors of EPL during 2006. All of these
  persons, except Mr. Kaufman, are designees of Trimaran and are compensated as
  employees of Trimaran affiliates for their services to such affiliates and
  not for their services to us. Mr. Kaufman is the designee of ASP EPL L.L.C.

Compensation
Committee Interlocks and Insider Participation

In
fiscal 2006, our compensation committee was comprised of Steven Flyer, Andrew
Heyer and Dennis Lombardi. In 2006, Messrs. Flyer and Heyer were Vice
Presidents, but not employees, of the Company. Messrs. Flyer and Heyer served
on the board of directors during 2006 as the designees of Trimaran Capital, LLC
(Trimaran), pursuant to the LLC operating agreement described below.

Certain
Relationships

The
Company and EPL are indirect wholly owned subsidiaries of CAC. The principal
stockholder of CAC is Trimaran Pollo Partners, LLC (the LLC). The remaining
common stock of CAC and options to purchase stock of CAC are held by the
Companys executive officers, directors Douglas Ammerman and Dennis Lombardi,
and certain other EPL employees (the Management Stockholders). The LLC is
controlled by Trimaran.

Company
directors Andrew Heyer and Dean Kehler are Managing Partners of Trimaran
Capital Partners, L.L.C., an affiliate of the LLC and Trimaran. They are also
each one-third beneficial owners of Trimaran and Trimaran Fund Management, LLC.
Former director Steven Flyer has a minority indirect equity interest in the
LLC.

The
stockholders agreement, LLC operating agreement and monitoring and management
services agreement described below were each entered into in connection with
the LLCs acquisition of the Company through CAC.

Stockholders
Agreement

CAC,
the LLC and the Management Stockholders are parties to a stockholders agreement
dated November 18, 2005. The stockholders agreement generally restricts the
transfer of shares of CAC common stock and options by the parties, except for
certain transfers of shares for estate planning purposes and certain
involuntary transfers in connection with a default, foreclosure, forfeiture,
divorce, court order or otherwise than by a voluntary decision of the
stockholder (so long as CAC, and if CAC does not exercise its right, the other
stockholders, have been given the opportunity to purchase, pro rata, the common
stock subject to such involuntary transfer).

In
addition, the parties to the stockholders agreement have tag-along rights to
sell their shares, on a pro rata basis with the LLC, in significant sales by
the LLC to third parties. The LLC has drag-along rights to cause the other
parties to the stockholders agreement to sell their shares, on a pro rata basis
with the LLC, in significant sales by the LLC to third parties. Management
Stockholders are subject to put and call rights, which entitle these
persons to require CAC to purchase their shares or options, and which entitle
CAC to require these persons to sell their shares or options to CAC, upon
certain terminations of the partys employment with the Company, at differing
prices, depending upon the circumstances of the termination. For a description
of these provisions, see Item 11. Executive Compensation  Potential Payments
Upon Termination or Change in Control. The stockholders agreement also
includes pre-emptive rights in favor of the LLC and the Management Stockholders
with respect to the issuance of certain equity securities by CAC or its
subsidiaries, including the Company.

The
LLC has the right to require CAC to effect a public offering of the Companys,
or any other CAC subsidiarys, common stock at an aggregate offering price of
at least $50,000,000. In such event, the LLC will have the right to designate
all material terms of such offering, including the underwriters to be retained.
The stockholders agreement also gives the LLC the right to make an unlimited
number of requests that CAC use its best efforts to register the LLCs shares

-50-

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under the Securities Act of 1933. In demand
registrations, subject to certain exceptions, the other parties to the
stockholders agreement have certain rights to participate on a pro rata basis,
subject to certain conditions.

The stockholders agreement terminates upon the
consummation of (1) an initial public offering by CAC or its subsidiaries
at an aggregate offering price of at least $50,000,000 or (2) a sale of
all or substantially all of the assets or equity interests in CAC to a third
party (whether by merger, consolidation, sale of assets or securities or
otherwise). The registration rights provisions of the agreement, and certain
other provisions, survive termination.

LLC
Operating Agreement

Pursuant
to the terms of the LLCs Second Amended and Restated Limited Liability Company
Operating Agreement, dated March 8, 2006,

| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the LLC and its affiliates have the right to
  designate at least a majority of the directors of CAC (Trimaran directors),                                                                               
| |   |                                                                                                                                                                                                            
| |  | ASP EPL L.L.C. (American Securities) and each
  member of the LLC that holds at least a 15% interest in the LLC has the right
  to designate a director to the board of CAC, and                         
| |   |                                                                                                                                                                                                            
| |  | the chief executive officer of El Pollo Loco
  Holdings, Inc. (our parent company), currently Stephen Carley (also the
  Companys and EPLs chief executive officer), must be elected a director of
  CAC.

The
operating agreement requires that the board of directors of each material
subsidiary of CAC consist of the same proportion of Trimaran directors and
non-Trimaran directors as that of the CAC board of directors and that such
directors be elected and appointed in the same manner as the CAC board.
Accordingly, pursuant to the operating agreement, Andrew Heyer, Dean Kehler and Griffin Whitney have been elected to the Companys and EPLs board of
directors as Trimaran directors, Glenn Kaufman has been elected a director as
the designee of American Securities, and Stephen Carley has been elected as a
non-Trimaran director.

The
operating agreement also requires the LLC to use its reasonable best efforts to
provide that directors and officers liability insurance maintained by CAC and
indemnification rights applicable to CAC directors are similarly maintained and
applicable to directors of CACs subsidiaries. The operating agreement will
terminate and the LLC will dissolve on the earlier of the election of the
managing member of the LLC or six years following an initial public offering by
CAC or any of its subsidiaries, such as the Company.

Monitoring
and Management Services Agreement

Under
the terms of a Monitoring and Management Services Agreement entered into on
November 18, 2005, between CAC and Trimaran Fund Management, LLC
(Management), CAC pays Management an annual fee of $500,000, payable in
quarterly installments, for Management to be available to provide advisory and
monitoring services to CAC and its subsidiaries, including the Company and EPL,
as requested by CAC. In addition, CAC must reimburse Management for all
reasonable out of pocket expenses incurred by it in connection with its
services, including fees and expenses paid to third parties and travel and
related expenses of designees of Trimaran who serve on the board of CAC. The
Company paid Management $570,000 in fiscal 2006 on behalf of CAC.

Management has a right of first offer to serve as
financial advisor in connection with any initial public offering, merger, sale
of stock or substantially all the assets, recapitalization, reorganization or
similar transaction by CAC or any of its subsidiaries, including the Company
and EPL. If Management serves as a financial advisor in connection with any
such transaction, Management will receive a fee equal to 2% of the gross
transaction value and reimbursement of reasonable out-of-pocket expenses. If
this agreement is terminated in connection with an initial public offering by
CAC or any of its subsidiaries, including the Company or EPL, Management will
be entitled to an additional one-time fee of $2,500,000. CAC and its
subsidiaries, including the Company and EPL, must indemnify Management and its
affiliates and their respective partners, members, directors, officers,
employees and agents from any claims or liabilities arising in connection with
their services to CAC under the agreement, unless such claims or liabilities
result primarily from the gross negligence, willful misconduct or fraud of any
such person. This agreement continues in effect until Management elects to
terminate it.

Development
Agreement

Trimaran
and certain of its affiliates that are members of the LLC are also majority
benefical owners of Fiesta Brands, Inc. We entered into a development agreement
with Fiesta Brands on August 10, 2006. This development

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agreement gives Fiesta Brands the right to develop 25
restaurants, with an option for 25 additional restaurants, in Atlanta, Georgia
and surrounding counties. Fiesta Brands paid a $250,000 fee upon execution of
the agreement and must pay an additional $250,000 fee to exercise the option. This
development agreement is, and the franchise agreements to be executed when each
restaurant is opened will be, on substantially the same terms and conditions as
those with non-affiliated franchisees and we believe that the terms and
conditions are no less favorable that we could have obtained from an
unaffiliated third party.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

We
hold all of the outstanding common stock of EPL. All of our 100 outstanding
common shares are held by El Pollo Loco Holdings, Inc., which is indirectly
wholly owned by CAC.

Due
to its ownership of 99% of the outstanding common stock of CAC and its right,
pursuant to its limited liability company operating agreement (described in
Item 13 below), to appoint a majority of the directors of CAC, Trimaran Pollo
Partners, LLC (the LLC) is deemed to be the beneficial owner of 100% of our
common stock. The address of the LLC is 622 Third Avenue, 35th
Floor, New York, New York 10017.

The
managing member of the LLC, which has complete voting and management authority
for the LLC, is Trimaran Capital, LLC (Trimaran). Trimaran is beneficially
owned one-third by each of Andrew Heyer and Dean Kehler, directors of the
Company.

None
of our equity securities are authorized for issuance under any equity
compensation plan.

Item 13.
Certain Relationships and Related Transactions and Director Independence

The
information set forth in Item 11. Executive Compensation  Compensation
Committee Interlocks and Insider Participation is incorporated herein by
reference.

Policy
Regarding Approval of Related Party Transactions

The
Companys board of directors has adopted a written policy regarding approval of
related party transactions which requires that all interested transactions
with related parties shall be subject to approval or ratification by the
Companys audit committee. In determining whether to approve an interested
transaction, the audit committee will take into account, among other factors it
deems appropriate, whether the transaction is on terms no less favorable than
terms generally available to an unaffiliated third party under the same or
similar circumstances, the extent of the related persons interest in the
transaction, the benefits to the Company, and the impact, if any, of the
transaction on the independence of any director. No member of the audit
committee who has a direct or indirect interest in an interested transaction
may participate in the discussion or approval of such transaction.

The
policy defines an interested transaction as any transaction, arrangement or
relationship (or series of similar transactions, arrangements or
relationships), including indebtedness or guarantees of indebtedness, in which

| |  |   |                                                                                                                                                                                                                                                          
| |  | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | The aggregate amount involved will or may be
  expected to exceed $100,000 in any calendar year,                                                                                                                                                         
| |  |   |                                                                                                                                                                                                                                                          
| |  |  | The Company or any of its subsidiaries is a participant,
  and                                                                                                                                                                                           
| |  |   |                                                                                                                                                                                                                                                          
| |  |  | Any related party has or will have a direct or
  indirect interest (other than solely as a result of being a director or,
  together with all other related parties, being in the aggregate a less than
  10% beneficial equity owner of another entity).

A related party is an executive officer, a director
or nominee for election as a director, a greater than five percent (5%)
beneficial owner of the Companys common stock, and any immediate family member
(as such term is defined in the SECs rules) of any of the foregoing.

The policy provides that the following interested
transactions are deemed to be pre-approved by the audit committee without
further action:

| |  |   |                                                                                                                                                                                                       
| |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Any director or executive officer compensation
  required to be disclosed in our SEC reports or that has been approved (or
  recommended to the board for approval) by our compensation committee; and

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| |  |   |                                                                                                                                         
| |  | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Any transaction that has been approved by El Pollo
  Loco Holdings, Inc. or CAC, our direct and indirect parent companies, respectively.

The
agreements described in Item 11. Executive Compensation  Compensation
Committee Interlocks and Insider Participation were entered into prior to the
adoption of this policy. However, the audit committee has ratified each of such
transactions.

Director
Independence

In
determining the independence of our directors, we use the definition of
independence under the applicable rules of The Nasdaq National Market
(Nasdaq); however, our common stock is not listed on such exchange. Under
these rules, we would be considered a controlled company since more than 50%
of our voting power is held by another company. As a controlled company, we
would be exempt from the Nasdaq requirements that we have a nominating
committee and that a majority of our board and compensation committee be
comprised of independent directors. The Nasdaq rules would also require us to
have an audit committee comprised of at least three members, all of whom are
independent and meet certain other requirements.

Based
on the Nasdaq definition of independence, our board of directors has determined
that Douglas Ammerman and Dennis Lombardi are independent. Dean C. Kehler, who
is not independent, and Messers. Ammerman and Lombardi currently serve on our
audit committee. During fiscal 2006, our audit committee was comprised of Mr.
Ammerman, who was independent, and David Benyaminy and Steven Flyer (each of
whom resigned on January 31, 2007), who were not independent. Our compensation
committee is currently comprised of Mr. Lombardi, who is independent, and
Andrew Heyer, who is not independent. During fiscal 2006, our compensation
committee was comprised of Mr. Lombardi, who was independent, and Messrs. Heyer
and Flyer, who were not independent. We do not have a nominating committee.

Item 14.
Principal Accounting Fees and Services

The
following fees were billed by Deloitte & Touche LLP (Deloitte) in
fiscal 2006 and 2005:

Audit Fees

Audit
fees for the audit of our 2006 annual financial statements and the review of
the financial statements included in our Quarterly Reports on Form 10-Q and
services related to our registration statements in 2006 totaled $950,000.

Audit
fees for the audit of our 2005 annual financial statements, the review of the
financial statements included in our Quarterly Reports on Form 10-Q and
services related to our registration statements in 2005 totaled $676,000.

Audit-Related Fees

Audit-related
fees billed to us by Deloitte totaled $0 in fiscal 2006 and $625,000 in fiscal
2005. Such audit-related fees typically consist of fees billed for assurance
and related services that are reasonably related to the performance of the
audit or review of our consolidated financial statements and are not reported
under Audit Fees. These services may include consultations related to the
Sarbanes-Oxley Act and consultations concerning financial accounting and
reporting standards.

Tax Fees

Fees
billed to us by Deloitte for professional services for tax compliance, tax
advice and tax planning totaled $22,000 in fiscal 2006 and $349,000 in fiscal
2005.

The
fees disclosed under this category are comprised by services that include
assistance related to state tax incentives.

All Other Fees

We
did not incur any other fees billed to us by Deloitte during fiscal 2006 and
fiscal 2005.

Pre-Approval Policies and Procedures

The
Audit Committees policy is to pre-approve all audit and permissible non-audit
services performed by the independent auditors. These services may include
audit services, audit-related services, tax services and other services. For
audit services, the independent auditor provides an engagement letter in
advance of the February meeting of the Audit

-53-

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Committee, outlining the scope of the audit and
related audit fees. If agreed to by the Audit Committee, this engagement letter
is formally accepted by the Audit Committee at its February Audit Committee
meeting.

For
non-audit services, our senior management submits from time to time to the
Audit Committee for pre-approval non-audit services that it recommends the
Audit Committee engage the independent auditor to provide for the fiscal year.
Our senior management and the independent auditor each confirms to the Audit
Committee that each non-audit service is permissible under all applicable legal
requirements. A budget, estimating non-audit service spending for the fiscal
year, is provided to the Audit Committee along with the request. The Audit
Committee must pre-approve both permissible non-audit services and the budget
for such services. The Audit Committee is informed routinely as to the
non-audit services actually provided by the independent auditor pursuant to
this pre-approval process.

The
Audit Committee approved all of the services provided by Deloitte described
above and determined that the provision of the non-audit services listed above
was compatible with maintaining the independence of Deloitte & Touche
L.L.P.

PART
IV

Item 15.
Exhibits, Financial Statement Schedules

(a)
1. and 2. Financial Statements and Schedules

The
financial statements listed below are filed as part of this annual report on
the pages indicated. Financial statement schedules are omitted because they are
not required or are not applicable or the required information is provided in
the financial statements or notes thereto.

Index
to Financial Statements

|                                                                                                                                                                                                                                                                                                 |  |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | 
|                                                                                                                                                                                                                                                                                                 |  | Page
|                                                                                                                                                                                                                                                                                                 |  |     
|Report
  of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                        |  | F-1  | 
|                                                                                                                                                                                                                                                                                                 |  |      | 
|Consolidated
  Balance Sheets as of December 28, 2005 and December 27, 2006                                                                                                                                                                                                                      |  | F-2  | 
|                                                                                                                                                                                                                                                                                                 |  |      | 
|Consolidated
  Statements of Operations for the Predecessor Year Ended December 29,
  2004, the Predecessor Period December 30, 2004 to November 17, 2005 and the
  Successor Period November 18, 2005 to December 28, 2005, the Successor Year
  Ended December 27, 2006                        |  | F-4  | 
|                                                                                                                                                                                                                                                                                                 |  |      | 
|Consolidated
  Statements of Stockholders Equity (Deficiency) for the Predecessor Year
  Ended December 29, 2004, the Predecessor Period December 30, 2004 to
  November 17, 2005 and the Successor Period November 18, 2005 to December 28,
  2005, the Successor Year Ended December 27, 2006 |  | F-5  | 
|                                                                                                                                                                                                                                                                                                 |  |      | 
|Consolidated
  Statements of Cash Flows for the Predecessor Year Ended December 29,
  2004, the Predecessor Period December 30, 2004 to November 17, 2005 and the
  Successor Period November 18, 2005 to December 28, 2005, the Successor Year
  Ended December 27, 2006                        |  | F-6  | 
|                                                                                                                                                                                                                                                                                                 |  |      | 
|Notes
  to Consolidated Financial Statements                                                                                                                                                                                                                                                     |  | F-8  | 

3.
Exhibits

|            |  |                                                                                                                                                                                                                                                                             
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                             
|(1) 2.1     |  | Stock Purchase Agreement, dated as of September 27,
  2005, among Chicken Acquisition Corp., EPL Holdings, Inc., EPL Intermediate,
  Inc., EL Pollo Loco, Inc, the equityholders of the EPL Holdings, Inc. parties
  thereto, and American Securities Capital Partners, L.P.
|            |  |                                                                                                                                                                                                                                                                             
|(6) 2.2     |  | Agreement and Plan of Merger, dated November 18,
  2005, of EPL Intermediate Finance Corp., to be merged with and into EPL
  Intermediate, Inc.                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                             
|(2) 3.1     |  | Certificate of Incorporation of EPL Intermediate,
  Inc.                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                             
|(2) 3.2     |  | Certificate of Designations, Preferences and Rights
  of 6% Series A Preferred Stock                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                             
|(2) 3.3     |  | Bylaws of EPL Intermediate, Inc. relating to the
  2014 Notes                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                             
|(6) 4.1     |  | Indenture relating to the 2014 Notes, dated November
  18, 2005, between EPL Intermediate, Inc. (as successor                                                                                                                                                               

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|            |  |                                                                                                                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  | by merger to EPL Intermediate Finance Corp.) and The
  Bank of New York Trust Company, N.A.                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                        
|(6) 4.2     |  | Form of Note (included as Exhibit A to Exhibit 4.1)                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                        
|(6) 4.3     |  | Registration Rights Agreement relating to the 2014
  Notes, dated November 18, 2005, among EPL Intermediate, Inc. (as successor by
  merger to EPL Intermediate Finance Corp.), Merrill Lynch, Pierce, Fenner
  & Smith Incorporated and Banc of America Securities LLC
|            |  |                                                                                                                                                                                                                                                                        
|(3) 4.4     |  | Indenture relating to the 2009 Notes, dated as of
  December 19, 2003, among El Pollo Loco, Inc., EPL Intermediate, Inc. and The
  Bank of New York, as Trustee                                                                                                        
|            |  |                                                                                                                                                                                                                                                                        
|(6) 4.5     |  | Indenture relating to the 2013 Notes, dated November
  18, 2005, among El Pollo Loco, Inc. (as successor by merger to EPL Finance
  Corp.), EPL Intermediate, Inc. and The Bank of New York Trust Company, N.A.                                                        
|            |  |                                                                                                                                                                                                                                                                        
|(6) 4.6     |  | Registration Rights Agreement relating to the 2013
  Notes, dated November 18, 2005, among El Pollo Loco, Inc. (as successor by
  merger to EPL Finance Corp.), Merrill Lynch, Pierce, Fenner & Smith Incorporated
  and Banc of America Securities LLC                
|            |  |                                                                                                                                                                                                                                                                        
|(7) 4.7     |  | Supplemental Indenture, dated November 2, 2005,
  between El Pollo Loco, Inc. and The Bank of New York as Trustee                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.1 +  |  | Employment Agreement, dated September 27, 2005,
  between El Pollo Loco, Inc. and Stephen E. Carley                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.2 +  |  | Employment Agreement, dated September 27, 2005,
  between El Pollo Loco, Inc. and Joseph Stein                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.3 +  |  | Amendment No. 1 to Stein Employment Agreement, dated
  October 10, 2005, between El Pollo Loco, Inc. and Joseph Stein                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.4 +  |  | Employment Agreement, dated November 1, 2005,
  between El Pollo Loco, Inc. and Brian Berkhausen                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.5 +  |  | Employment Agreement, dated October 10, 2005,
  between El Pollo Loco, Inc. and Karen Eadon                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.6 +  |  | Employment Agreement, dated September 30, 2005, as
  amended October 10, 2005, between El Pollo Loco, Inc. and Pamela Milner                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.7 +  |  | Amendment No. 1 to Milner Employment Agreement,
  dated October 10, 2005, between El Pollo Loco, Inc. and Pamela Milner                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.8 +  |  | Employment Agreement, dated October 10, 2005,
  between El Pollo Loco, Inc. and Jeanne Scott                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.9 +  |  | Employment Agreement, dated January 9, 2006, between
  El Pollo Loco, Inc. and Stephen Sather                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.10 + |  | Form of Exchange Agreement, entered into between
  Chicken Acquisition Corp. and certain executive officers                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.11 + |  | Amendment No. 1 to Form of Exchange Agreement,
  entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.12 + |  | Form of Exchange Stock Option Agreement, entered
  into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.13 + |  | Amendment No. 1 to Form of Exchange Stock Option
  Agreement, entered into between Chicken Acquisition Corp. and certain
  executive officers                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.14 + |  | Amendment No. 2 to Form of Exchange Stock Option
  Agreement, entered into between Chicken Acquisition Corp. and certain
  executive officers                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.15   |  | Stockholders Agreement, dated November 18, 2005,
  among Chicken Acquisition Corp., Trimaran Pollo Partners, LLC and certain
  continuing investors                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                        
|(8) 10.16   |  | Second Amended and Restated Limited Liability
  Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated March
  8, 2006, among affiliates of Trimaran Fund Management, L.L.C. and certain
  other third party investors                                  
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.17   |  | Monitoring and Management Services Agreement, dated
  November 18, 2005, between Chicken Acquisition Corp. and Trimaran Fund
  Management, L.L.C.                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                        
|(6) 10.18   |  | Credit Agreement, dated November 18, 2005, among El
  Pollo Loco, Inc., EPL Intermediate, Inc., Merrill Lynch Capital Corporation,
  Bank of America, N.A., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
  & Smith                                               

-55-

---



|            |  |                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------
|            |  | Incorporated, CIT Lending Services Corporation and
  the other lenders party thereto                               
|            |  |                                                                                                                    
|(6) 10.19   |  | Security Agreement, dated as of November 18, 2005,
  with Merrill Lynch Capital Corporation                        
|            |  |                                                                                                                    
|(6) 10.20   |  | Securities Pledge Agreement, dated as of November
  18, 2005, with Merrill Lynch Capital Corporation               
|            |  |                                                                                                                    
|(6) 10.21   |  | Guaranty, dated as of November 18, 2005, with
  Merrill Lynch Capital Corporation                                  
|            |  |                                                                                                                    
|10.22 +     |  | Form of Non-Qualified Stock Option Agreement for
  directors with Chicken Acquisition Corp.                        
|            |  |                                                                                                                    
|(6) 10.23 + |  | Form of Non-Qualified Stock Option Agreement for
  officers with Chicken Acquisition Corp.                         
|            |  |                                                                                                                    
|(6) 10.24 + |  | Chicken Acquisition Corp. 2005 Stock Option Plan                                                                   
|            |  |                                                                                                                    
|(3)* 10.25  |  | Letter Agreement, dated February 23, 2005, between
  Gold Kist Inc. and El Pollo Loco, Inc.                        
|            |  |                                                                                                                    
|(3)* 10.26  |  | Letter Agreement, dated February 15, 2005, between
  Pilgrims Pride Corporation and El Pollo Loco, Inc.            
|            |  |                                                                                                                    
|(6)* 10.27  |  | Amendment to Letter Agreement, dated January 21,
  2006, between Gold Kist Inc. and El Pollo Loco, Inc.            
|            |  |                                                                                                                    
|(6)* 10.28  |  | Amendment to Letter Agreement, dated January 11,
  2006, between Pilgrims Pride Corporation and El Pollo Loco, Inc.
|            |  |                                                                                                                    
|(3) 10.29   |  | Form of Franchise Development Agreement                                                                            
|            |  |                                                                                                                    
|(3) 10.30   |  | Form of Franchise Agreement                                                                                        
|            |  |                                                                                                                    
|10.31 +     |  | Compensation of Independent Directors                                                                              
|            |  |                                                                                                                    
|10.32       |  | Fiesta Brands Development Agreement dated August 10,
  2006.                                                       
|            |  |                                                                                                                    
|12.1        |  | Computation of Ratio of Earnings to Fixed Charges                                                                  
|            |  |                                                                                                                    
|(4) 14.1    |  | El Pollo Loco, Inc. Code of Business Ethics &
  Conduct                                                            
|            |  |                                                                                                                    
|(5) 21.1    |  | Subsidiaries of EPL Intermediate, Inc.                                                                             
|            |  |                                                                                                                    
|23.1        |  | Consent of Duff & Phelps                                                                                           
|            |  |                                                                                                                    
|31.1        |  | Certification Pursuant to Rule 13a-14(a) or Rule
  15d-14(a) of the Securities Exchange Act of 1934                
|            |  |                                                                                                                    
|31.2        |  | Certification Pursuant to Rule 13a-14(a) or Rule
  15d-14(a) of the Securities Exchange Act of 1934                
|            |  |                                                                                                                    
|32.1        |  | Certification Pursuant to Rule 13a-14(b) or Rule
  15d-14(b) of the Securities Exchange Act of 1934                
|            |  |                                                                                                                    
|32.2        |  | Certification Pursuant to Rule 13a-14(b) or Rule
  15d-14(b) of the Securities Exchange Act of 1934                

|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Incorporated by reference to EPL Intermediate,
  Inc.s Quarterly Report on Form 10-Q for the quarterly period ended
  September 28, 2005 (File No. 333-115644) as filed on
  November 14, 2005.
|    |                                                                                                                                                                                                 
|(2) | Incorporated by reference to EPL Intermediate,
  Inc.s Registration Statement on Form S-4 (File No. 333-115644) as filed
  on May 19, 2004.                                                    
|    |                                                                                                                                                                                                 
|(3) | Incorporated by reference to El Pollo Loco, Inc.s
  Registration Statement on Form S-4 (File No. 333-115486) as filed on
  May 14, 2004.                                                       
|    |                                                                                                                                                                                                 
|(4) | Incorporated by reference to El Pollo Loco, Inc.s
  Annual Report on Form 10-K for the fiscal year ended December 29, 2004
  (File No. 333-115486) as filed on March 28, 2005.                 
|    |                                                                                                                                                                                                 
|(5) | Incorporated by reference to EPL Intermediate,
  Inc.s Registration Statement on Form S-4 (File No. 333-115644) as filed
  on May 19, 2004.                                                    
|    |                                                                                                                                                                                                 
|(6) | Incorporated by reference to EPL Intermediate,
  Inc.s Form 10-K for the year ended December 27, 2005 (File
  No. 333-115644) filed on April 10, 2006.                                         
|    |                                                                                                                                                                                                 
|(7) | Incorporated by reference to El Pollo Loco, Inc.s
  Form 8-K filed on November 4, 2005.                                                                                                        
|    |                                                                                                                                                                                                 
|(8) | Incorporated by reference to EPL Intermediate Inc.s
  Registration Statement on Form S-4 (File No. 333-133318) filed on April 14,
  2006.                                                      

|  |                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|+ | Management contracts and compensatory plans and
  arrangements.                                                                                            
|  |                                                                                                                                                            
|* | Certain confidential portions of this exhibit have
  been redacted and filed separately with the Commission pursuant to a Confidential
  Treatment Request.

| |     |                                       
| | --- | --------------------------------------
| | (b) | Exhibits. See
  Item 15(a)(3) above.  
| |     |                                       
| | (c) | Financial Statement Schedules.
  None.

-56-

---



SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities and 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.
| |                          |                   
| | By:                      | /s/ Joseph
  Stein
| |                          |                   
| |                          | Joseph Stein      
| |                          | Vice President    

Pursuant
to the requirements of the Securities and Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.

|                          |  |                                                               |  |                 
|------------------------- |  | ------------------------------------------------------------- |  | ----------------
|Signature                 |  | Title                                                         |  | Date            
|                          |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Stephen
  E. Carley   |  | President (Principal Executive Officer),
  Director           |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Stephen E.
  Carley       |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Joseph
  Stein        |  | Vice President (Principal Financial and
  Accounting Officer) |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Joseph Stein              |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Douglas
  K. Ammerman |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Douglas K.
  Ammerman     |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Andrew
  Heyer        |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Andrew Heyer              |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Dean C.
  Kehler      |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Dean C.
  Kehler          |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Glenn B.
  Kaufman    |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Glenn B.
  Kaufman        |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Dennis
  Lombardi     |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Dennis
  Lombardi         |  |                                                               |  |                 
|                          |  |                                                               |  |                 
|/s/ Griffin
  Whitney     |  | Director                                                      |  | March 23,
  2007
|                          |  |                                                               |  |                 
|Griffin
  Whitney         |  |                                                               |  |                 

-57-

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board
of Directors and Stockholders of
EPL Intermediate, Inc.
Irvine, CA

We have
audited the accompanying consolidated balance sheets of EPL Intermediate, Inc.
and its subsidiary (the Company), a wholly owned subsidiary of El Pollo Loco
Holdings, Inc., as of December 27, 2006, and December 28, 2005, and the related
consolidated statements of operations, stockholders equity (deficiency), and
cash flows for the year ended December 27, 2006 and the period from November
18, 2005 to December 28, 2005 (the Successor Periods), subsequent to the
acquisition of the Company by Chicken Acquisition Corp. We have also audited
the consolidated statements of operations, stockholders equity (deficiency),
and cash flows for the year ended December 29, 2004 and for the period from
December 30, 2004 to November 17, 2005 (the Predecessor Periods), prior to
the acquisition of the Company by Chicken Acquisition Corp. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 27, 2006, and
December 28, 2005, and the related consolidated statements of operations,
stockholders equity (deficiency), and cash flows for the Predecessor Periods
and the Successor Periods, in conformity with accounting principles generally
accepted in the United States of America.

As discussed
in Notes 3 and 18 to the consolidated financial statements, the Company changed
its method of accounting for share-based compensation in 2006 as a result of
adopting Statement of Financial Accounting Standards No. 123(R), Share-based
Payment.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California
March 23, 2007

F-1

---



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

|                                          |  |                     |         |                     |   |         | 
|----------------------------------------- |  | ------------------- | ------- | ------------------- | - | ------- | 
|                                          |  | DECEMBER 28,
  2005 |         | DECEMBER 27,
  2006 |  
|                                          |  |                     |         |                     |  
|ASSETS                                    |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|CURRENT ASSETS:                           |  |                     |         |                     |   |         | 
|Cash and cash equivalents                 |  | $                   | 3,552   |                     | $ | 2,955   | 
|Notes and accounts
receivablenet         |  |                     | 2,998   |                     |   | 3,564   | 
|Inventories                               |  |                     | 1,372   |                     |   | 1,560   | 
|Prepaid expenses and other current
assets |  |                     | 3,189   |                     |   | 3,835   | 
|Income taxes receivable                   |  |                     | 3,825   |                     |   | 68      | 
|Deferred income taxes                     |  |                     | 1,520   |                     |   | 799     | 
|                                          |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|Total current assets                      |  |                     | 16,456  |                     |   | 12,781  | 
|                                          |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|PROPERTY OWNEDNet                        |  |                     | 69,121  |                     |   | 73,842  | 
|                                          |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|PROPERTY HELD UNDER CAPITAL
  LEASESNet  |  |                     | 2,186   |                     |   | 1,634   | 
|                                          |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|GOODWILL                                  |  |                     | 272,204 |                     |   | 277,514 | 
|                                          |  |                     |         |                     |   |         | 
|DOMESTIC TRADEMARKS                       |  |                     | 120,700 |                     |   | 120,700 | 
|                                          |  |                     |         |                     |   |         | 
|OTHER INTANGIBLE ASSETSNet               |  |                     | 13,698  |                     |   | 11,982  | 
|                                          |  |                     |         |                     |   |         | 
|OTHER ASSETS                              |  |                     | 11,554  |                     |   | 10,595  | 
|                                          |  |                     |         |                     |   |         | 
|                                          |  |                     |         |                     |   |         | 
|TOTAL ASSETS                              |  | $                   | 505,919 |                     | $ | 509,048 | 
|                                          |  |                     |         |                     |   |         | 

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

F-2

---



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

|                                                                                           |  |                     |         |                     |   |         | 
|------------------------------------------------------------------------------------------ |  | ------------------- | ------- | ------------------- | - | ------- | 
|                                                                                           |  | DECEMBER 28,
  2005 |         | DECEMBER 27,
  2006 |  
|                                                                                           |  |                     |         |                     |  
|LIABILITIES AND STOCKHOLDERS
EQUITY                                                       |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|CURRENT LIABILITIES:                                                                       |  |                     |         |                     |   |         | 
|Revolving credit facility                                                                  |  | $                   | 2,775   |                     | $ | 3,000   | 
|Current portion of note
payable                                                            |  |                     | 1,045   |                     |   | 1,306   | 
|Current portion of obligations under
capital leases                                        |  |                     | 1,264   |                     |   | 1,313   | 
|Accounts payable                                                                           |  |                     | 10,215  |                     |   | 9,821   | 
|Accrued salaries                                                                           |  |                     | 4,184   |                     |   | 3,665   | 
|Accrued vacation                                                                           |  |                     | 1,728   |                     |   | 1,834   | 
|Accrued insurance                                                                          |  |                     | 3,539   |                     |   | 3,869   | 
|Accrued interest                                                                           |  |                     | 2,631   |                     |   | 2,709   | 
|Accrued advertising                                                                        |  |                     | 911     |                     |   | 1,358   | 
|Other accrued expenses and current
liabilities                                             |  |                     | 3,683   |                     |   | 4,307   | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|Total current liabilities                                                                  |  |                     | 31,975  |                     |   | 33,182  | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|NONCURRENT LIABILITIES:                                                                    |  |                     |         |                     |   |         | 
|Senior secured notes (2009
Notes)                                                          |  |                     | 250     |                     |   | 250     | 
|Senior unsecured notes (2013
Notes)                                                        |  |                     | 123,425 |                     |   | 123,646 | 
|PIK notes (2014 Notes)                                                                     |  |                     | 22,889  |                     |   | 26,319  | 
|Note payableless current
portion                                                          |  |                     | 103,455 |                     |   | 102,410 | 
|Obligations under capital leasesless
current portion                                      |  |                     | 5,211   |                     |   | 3,943   | 
|Deferred income taxes                                                                      |  |                     | 34,383  |                     |   | 34,247  | 
|Other intangible
liabilitiesnet                                                           |  |                     | 9,037   |                     |   | 7,434   | 
|Other noncurrent liabilities                                                               |  |                     | 3,603   |                     |   | 4,903   | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|Total noncurrent liabilities                                                               |  |                     | 302,253 |                     |   | 303,152 | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|COMMITMENTS AND CONTINGENCIES                                                              |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|STOCKHOLDERS EQUITY                                                                       |  |                     |         |                     |   |         | 
|Common stock, $.01 par value20,000
shares authorized;
  100 shares issued and outstanding |  |                     |        |                     |   |        | 
|Additional paid-in-capital                                                                 |  |                     | 172,279 |                     |   | 172,665 | 
|Retained earnings / (accumulated
deficit)                                                  |  |                     | (588    | )                   |   | 49      | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|Total stockholders
equity                                                                 |  |                     | 171,691 |                     |   | 172,714 | 
|                                                                                           |  |                     |         |                     |   |         | 
|                                                                                           |  |                     |         |                     |   |         | 
|TOTAL                                                                                      |  | $                   | 505,919 |                     | $ | 509,048 | 
|                                                                                           |  |                     |         |                     |   |         | 

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

F-3

---



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

|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | ------------------------------------------ | - | ------------------------------------ | - | ------------------- | ------ | - | - | ------- | 
|                                                                                                                                                                                         |  | Predecessor         |         | Successor                                  |  
|                                                                                                                                                                                         |  |                     |         |                                            |  
|                                                                                                                                                                                         |  | December 29,
  2004 |         | December 30, 2004
  to November 17,
  2005 |   | November 18 to
  December 28,
  2005 |   | December 27,
  2006 |       
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |       
|                                                                                                                                                                                        
|OPERATING REVENUE:                                                                                                                                                                       |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|Restaurant revenue                                                                                                                                                                       |  | $                   | 204,820 |                                            | $ | 197,267                              |   | $                   | 24,527 |   | $ | 242,571 | 
|Franchise revenue                                                                                                                                                                        |  |                     | 14,216  |                                            |   | 13,661                               |   |                     | 1,742  |   |   | 17,317  | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|Total operating revenue                                                                                                                                                                  |  |                     | 219,036 |                                            |   | 210,928                              |   |                     | 26,269 |   |   | 259,888 | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|OPERATING EXPENSES:                                                                                                                                                                      |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|Product cost                                                                                                                                                                             |  |                     | 64,595  |                                            |   | 62,638                               |   |                     | 7,958  |   |   | 76,151  | 
|Payroll and benefits                                                                                                                                                                     |  |                     | 55,200  |                                            |   | 50,325                               |   |                     | 6,746  |   |   | 61,601  | 
|Depreciation and amortization                                                                                                                                                            |  |                     | 13,894  |                                            |   | 12,743                               |   |                     | 1,203  |   |   | 10,333  | 
|Other operating expenses                                                                                                                                                                 |  |                     | 65,979  |                                            |   | 65,340                               |   |                     | 7,958  |   |   | 81,281  | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|Total operating expenses                                                                                                                                                                 |  |                     | 199,668 |                                            |   | 191,046                              |   |                     | 23,865 |   |   | 229,366 | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|OPERATING INCOME                                                                                                                                                                         |  |                     | 19,368  |                                            |   | 19,882                               |   |                     | 2,404  |   |   | 30,522  | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|INTEREST EXPENSENet of interest income of $107, $369,
  $0, and $413 for the periods ended December 29, 2004, November 17, 2005,
  December 28, 2005 and December 27, 2006 respectively |  |                     | 18,025  |                                            |   | 38,726                               |   |                     | 3,385  |   |   | 28,813  | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME
TAXES                                                                                                                                |  |                     | 1,343   |                                            |   | (18,844                              | ) |                     | (981   | ) |   | 1,709   | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|PROVISION (BENEFIT) FOR INCOME TAXES                                                                                                                                                     |  |                     | 28      |                                            |   | (7,651                               | ) |                     | (393   | ) |   | 1,072   | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 
|NET INCOME (LOSS)                                                                                                                                                                        |  | $                   | 1,315   |                                            | $ | (11,193                              | ) | $                   | (588   | ) | $ | 637     | 
|                                                                                                                                                                                         |  |                     |         |                                            |   |                                      |   |                     |        |   |   |         | 

See notes
to consolidated financial statements.

F-4

---



|                                                                                    
|------------------------------------------------------------------------------------
|EPL INTERMEDIATE, INC.
  (A Wholly Owned Subsidiary of El Pollo Loco Holdings, Inc.)
|                                                                                    
|STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)                                      
|(Amounts in thousands, except share data)                                           
|                                                                                    

|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|------------------------------------------------------- |  | ------------ | --- | ------ |  | ------------------------ |  | ------------------------------------ | ------- | ----- |  | ------- | - |  | ------- | -
|Predecessor                                             | 
|                                                        | 
|                                                        |  | CommonShares |     | Amount |  | AdditionalPaid-inCapital |  | RetainedEarnings(AccumulatedDeficit) |         | Total | 
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|BALANCE, DECEMBER 31, 2003                              |  |              | 100 |        |  |                         |  |                                      |        |       |  | (3,505  | ) |  | (3,505  | )
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|Dividend distribution to El Pollo Loco
  Holdings, Inc. |  |              |     |        |  |                         |  |                                      |        |       |  | (37,000 | ) |  | (37,000 | )
|Tax benefit from exercise of stock options              |  |              |     |        |  |                         |  |                                      | 315     |       |  |         |   |  | 315     |  
|Net income                                              |  |              |     |        |  |                         |  |                                      |        |       |  | 1,315   |   |  | 1,315   |  
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|BALANCE, DECEMBER 31, 2004                              |  |              | 100 |        |  |                         |  |                                      | 315     |       |  | (39,190 | ) |  | (38,875 | )
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|Deemed dividend to El Pollo Loco Holdings,
  Inc.       |  |              |     |        |  |                          |  |                                      | (10,538 | )     |  |         |   |  | (10,538 | )
|Tax benefit from exercise of stock options              |  |              |     |        |  |                          |  |                                      | 2,988   |       |  |         |   |  | 2,988   |  
|Net loss                                                |  |              |     |        |  |                         |  |                                      |        |       |  | (11,193 | ) |  | (11,193 | )
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  
|BALANCE, NOVEMBER 17, 2005                              |  |              | 100 |        |  |                         |  |                                      | (7,235  | )     |  | (50,383 | ) |  | (57,618 | )
|                                                        |  |              |     |        |  |                          |  |                                      |         |       |  |         |   |  |         |  

|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|-------------------------- |  |  | --- |  |  | - |  |  | ------- | - |  | ---- | - |  | ------- | -
|Successor                  | 
|                           | 
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|BALANCE, NOVEMBER 18, 2005 |  |  | 100 |  |  |  |  |  | 172,279 |   |  |     |   |  | 172,279 |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|Net loss                   |  |  |     |  |  |  |  |  |        |   |  | (588 | ) |  | (588    | )
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|BALANCE, DECEMBER 28, 2005 |  |  | 100 |  |  |  |  |  | 172,279 |   |  | (588 | ) |  | 171,691 |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|Stock-based compensation   |  |  |     |  |  |   |  |  | 358     |   |  |      |   |  | 358     |  
|Exercise of stock options  |  |  |     |  |  |   |  |  | 50      |   |  |      |   |  | 50      |  
|Repurchase of common stock |  |  |     |  |  |   |  |  | (22     | ) |  |      |   |  | (22     | )
|Net income                 |  |  |     |  |  |  |  |  |        |   |  | 637  |   |  | 637     |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  
|BALANCE, DECEMBER 27, 2006 |  |  | 100 |  |  |  |  |  | 172,665 |   |  | 49   |   |  | 172,714 |  
|                           |  |  |     |  |  |   |  |  |         |   |  |      |   |  |         |  

See notes to consolidated financial
statements.

F-5

---



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

|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|------------------------------------------------------------------------------------------ |  | ---------------- | ------- | ------------------------------------ | - | ------------------------------ | - | ---------------- | -------- | - | - | ------- | -
|                                                                                           |  | Predecessor      |         | Successor                            |  
|                                                                                           |  |                  |         |                                      |  
|                                                                                           |  | December 29,2004 |         | December 30, 2004to November 17,2005 |   | November 18 toDecember 28,2005 |   | December 27,2006 |         
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                      |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Net income (loss)                                                                          |  | $                | 1,315   |                                      | $ | (11,193                        | ) | $                | (588     | ) | $ | 637     |  
|Adjustments to reconcile net income
(loss) to net cash
  provided by operating activities: |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Depreciation and amortization of
property and intangible
  assets                          |  |                  | 13,894  |                                      |   | 12,743                         |   |                  | 1,202    |   |   | 10,333  |  
|Stock-based compensation
expense                                                           |  |                  |        |                                      |   |                               |   |                  |         |   |   | 358     |  
|Interest accretion                                                                         |  |                  | 3,661   |                                      |   | 4,762                          |   |                  | 389      |   |   | 3,651   |  
|(Gain) loss on disposal of
assets                                                          |  |                  | (337    | )                                    |   | (494                           | ) |                  | 3        |   |   | 4       |  
|Asset impairment                                                                           |  |                  | 588     |                                      |   | 1,047                          |   |                  |         |   |   |        |  
|Amortization of deferred financing
costs                                                   |  |                  | 1,536   |                                      |   | 7,426                          |   |                  | 152      |   |   | 1,367   |  
|Amortization of negative leasehold
interest                                                |  |                  | (1,344  | )                                    |   | (1,345                         | ) |                  | (9       | ) |   | (344    | )
|Deferred income taxes                                                                      |  |                  | 1,210   |                                      |   | (7,847                         | ) |                  | (393     | ) |   | 585     |  
|Tax benefit of exercise of stock
options                                                   |  |                  | 315     |                                      |   | 2,988                          |   |                  |         |   |   |        |  
|Changes in operating assets and
liabilities:                                               |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Notes and accounts
receivablenet                                                          |  |                  | (126    | )                                    |   | (97                            | ) |                  | (187     | ) |   | (566    | )
|Inventories                                                                                |  |                  | 89      |                                      |   | (252                           | ) |                  | 16       |   |   | (188    | )
|Prepaid expenses and other current
assets                                                  |  |                  | 72      |                                      |   | 452                            |   |                  | (1,111   | ) |   | (646    | )
|Income taxes receivable /
payable                                                          |  |                  | (1,415  | )                                    |   | (1,701                         | ) |                  |         |   |   | 3,757   |  
|Other assets                                                                               |  |                  | 92      |                                      |   | (150                           | ) |                  | 154      |   |   | 67      |  
|Accounts payable                                                                           |  |                  | 552     |                                      |   | 1,080                          |   |                  | 3,377    |   |   | (638    | )
|Accrued salaries and vacation                                                              |  |                  | (1,008  | )                                    |   | 5,379                          |   |                  | (5,451   | ) |   | (413    | )
|Accrued insurance                                                                          |  |                  | 1,045   |                                      |   | 146                            |   |                  | 100      |   |   | 330     |  
|Other accrued expenses and current and
noncurrent
  liabilities                            |  |                  | 1,512   |                                      |   | 22,948                         |   |                  | 2,421    |   |   | 2,449   |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Net cash provided by operating
activities                                                  |  |                  | 21,651  |                                      |   | 35,892                         |   |                  | 75       |   |   | 20,743  |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|CASH FLOW FROM INVESTING ACTIVITIES:                                                       |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Proceeds from asset
disposition                                                            |  |                  | 1,316   |                                      |   | 1,363                          |   |                  |         |   |   | 2       |  
|Purchase of other assets                                                                   |  |                  |        |                                      |   | (1,086                         | ) |                  |         |   |   |        |  
|Purchase of franchise restaurantsnet
of cash acquired                                     |  |                  | (2,421  | )                                    |   |                               |   |                  |         |   |   |        |  
|Purchase of property                                                                       |  |                  | (12,428 | )                                    |   | (13,270                        | ) |                  | (2,891   | ) |   | (14,022 | )
|Acquisition of El Pollo Loco Holdings,
Inc., net of
  $19,591 of cash acquired             |  |                  |        |                                      |   |                               |   |                  | (213,841 | ) |   | (5,073  | )
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Net cash used in investing
activities                                                      |  |                  | (13,533 | )                                    |   | (12,993                        | ) |                  | (216,732 | ) |   | (19,093 | )
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                      |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Proceeds from exercise of stock
option                                                     |  |                  |        |                                      |   |                               |   |                  |         |   |   | 50      |  
|Repurchase of common stock                                                                 |  |                  |        |                                      |   |                               |   |                  |         |   |   | (22     | )
|Capital contribution                                                                       |  |                  |        |                                      |   |                               |   |                  | 155,525  |   |   |        |  
|Incurrence of new debt                                                                     |  |                  | 39,049  |                                      |   |                               |   |                  | 253,200  |   |   | 6,500   |  
|Payment of obligations under capital
leases                                                |  |                  | (1,230  | )                                    |   | (1,058                         | ) |                  | (193     | ) |   | (1,219  | )
|Payments on debt                                                                           |  |                  | (4,900  | )                                    |   | (7,886                         | ) |                  | (178,749 | ) |   | (7,059  | )
|Distribution to El Pollo Loco Holdings,
Inc.                                               |  |                  | (37,000 | )                                    |   |                               |   |                  |         |   |   |        |  
|Deferred financing costs                                                                   |  |                  | (3,779  | )                                    |   |                               |   |                  | (9,574   | ) |   | (497    | )
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  
|Net cash (used in) provided by financing
activities                                        |  |                  | (7,860  | )                                    |   | (8,944                         | ) |                  | 220,209  |   |   | (2,247  | )
|                                                                                           |  |                  |         |                                      |   |                                |   |                  |          |   |   |         |  

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

F-6

---



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

|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | ------------------------------------ | - | ------------------------------ |  | ---------------- | ------ |  | - | ------ | -
|                                                                                                                          |  | Predecessor      |        | Successor                            |  
|                                                                                                                          |  |                  |        |                                      |  
|                                                                                                                          |  | December 29,2004 |        | December 30, 2004to November 17,2005 |   | November 18 toDecember 28,2005 |  | December 27,2006 |       
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |       
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS                                                                          |  | $                | 258    |                                      | $ | 13,955                         |  | $                | 3,552  |  | $ | (597   | )
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|CASH AND CASH EQUIVALENTSBeginning of period                                                                             |  |                  | 5,378  |                                      |   | 5,636                          |  |                  |       |  |   | 3,552  |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|CASH AND CASH EQUIVALENTSEnd of period                                                                                   |  | $                | 5,636  |                                      | $ | 19,591                         |  | $                | 3,552  |  | $ | 2,955  |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash
  paid during the period for: Interest (net of amounts capitalized) |  | $                | 12,132 |                                      | $ | 6,460                          |  | $                | 20,307 |  | $ | 24,401 |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  
|                                                                                                                          |  |                  | .      |                                      |   |                                |  |                  |        |  |   |        |  
|Income taxes                                                                                                              |  | $                | 197    |                                      | $ | 65                             |  | $                |       |  | $ | 125    |  
|                                                                                                                          |  |                  |        |                                      |   |                                |  |                  |        |  |   |        |  

In 2004, the Company acquired two
restaurants from a franchisee for total consideration of $2,400,000.

In November 2005, Chicken
Acquisition Corp. acquired El Pollo Loco Holdings, Inc (the Acquisition). The
purchase price was $435.9 million and consisted of $213.8 million cash, net of
$19.6 million cash acquired, $185.7 million of assumed and refinanced debt, and
$16.8 million of contributed stock and options. In fiscal 2006, goodwill was adjusted by $5,037,000 for various liabilities that were identified during the current period, directly attributed to the Acquisition, and accordingly were accounted for as adjustments to the purchase price allocation during the fiscal year ended December 27, 2006. Such adjustments consisted of the following: $3,166,000 (amount due predecessor from Income Tax refunds), $1,495,000 (adjustment in purchase price of Holdings related to reconciliation of working capital escrow fund and finalization of valuation); $361,000 (valuation consultants and auditors fees in excess of the original estimate); and $51,000 (in other acquisition costs).

During 2005, the Predecessor
recorded an $10.5 million deemed distribution to shareholders for expenses
assumed on their behalf. The deemed distribution had not been paid at November
17, 2005.

As of December 29, 2004, November
17, 2005, December 28, 2005 and December 27, 2006, the Company had included in
accounts payable $126,000, $1,247,000, $783,000 and $1,027,000, respectively,
for the purchase of property and equipment.

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

F-7

---



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

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION
OF BUSINESS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | EPL Intermediate, Inc. (Intermediate) and
  subsidiary (collectively, the Company) is a Delaware corporation
  headquartered in Irvine, California. The Companys activities are performed
  principally through its subsidiary, El Pollo Loco, Inc. (EPL), which
  develops, franchises, licenses and operates quick-service restaurants under
  the name El Pollo Loco. The restaurants, which are located principally in
  California but also in Texas, Nevada, Arizona, Illinois, Colorado and
  Connecticut, specialize in flame-grilled chicken in a wide variety of
  contemporary Mexican-influenced entrees, including specialty chicken
  burritos, chicken quesadillas, chicken tortilla soup, Pollo Bowls and Pollo
  Salads. At December 27, 2006, the Company operated 151 (129 in the
  greater Los Angeles area) and franchised 208 (129 in the greater Los Angeles
  area) El Pollo Loco restaurants. The Company is a wholly owned subsidiary of
  El Pollo Loco Holdings, Inc. (Holdings).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 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. Intermediate has no independent assets or
  operations; Intermediates guarantee of EPLs 11 3/4% Senior Notes due 2013 is full and unconditional and
  Intermediate has no subsidiaries other than EPL. 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 currently has
  restrictions that limit distributions or dividends to be paid by EPL to
  Intermediate.                                                                                                                                                                                                               

2.
ACQUISITION OF THE COMPANY

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On September 27, 2005, Holdings entered into a
  stock purchase agreement (the Stock Purchase Agreement) among Chicken
  Acquisition Corp. (CAC), Holdings, Intermediate, EPL, the equity holders of
  Holdings, and American Securities Capital Partners, L.P. (ASCP). Pursuant
  to the Stock Purchase Agreement, CAC, an affiliate of Trimaran Fund II,
  L.L.C., agreed to purchase (the Acquisition) all of Holdings issued and
  outstanding common stock (other than certain shares exchanged by existing
  shareholders, including management, representing approximately 7.3% of
  Holdings). On November 18, 2005, Holdings, CAC, and the other parties to
  the Stock Purchase Agreement completed the Acquisition. The Company prior to
  the Acquisition is referred to as the Predecessor and after the Acquisition
  is referred to as the Successor. As a result of the Acquisition, CAC expects to be the owner of the nation's leading restaurant
  company specializing in flame-grilled chicken.                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The Acquisition was accounted for as purchase of
  Holdings by CAC in accordance with Statement of Financial Accounting
  Standards (SFAS) No. 141, Business Combinations. The initial aggregate
  purchase price was $435.9 million, consisting of $204.5 million of cash, net
  of $19.6 million cash acquired, $16.8 million of stock and options in
  Holdings, $9.3 million of direct acquisition costs (which included $7.0
  million paid to Trimaran Management, LLC, an entity related to CAC, for
  services performed and expenses incurred in connection with the Acquisition),
  and $185.7 million of debt that was refinanced or assumed in connection with
  the Acquisition. In fiscal 2006, goodwill was adjusted by $5,037,000 for various liabilities that were identified during the current period, directly attributed to the Acquisition, and accordingly were accounted for as adjustments to the purchase price allocation during the fiscal year ended December 27, 2006. Such adjustments consisted of the following: $3,166,000 (amount due predecessor from Income Tax refunds), $1,495,000 (adjustment in purchase price of Holdings related to reconciliation of working capital escrow fund and finalization of valuation); $361,000 (valuation consultants and auditors fees in excess of the original estimate); and $51,000 (in other acquisition costs).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The following table summarizes the estimated fair
  values of the assets acquired and liabilities assumed at the date of
  Acquisition based on the initial aggregate purchase price of $435.9 million. The purchase price allocation was based on estimates of the fair
  value of the assets acquired and liabilities assumed as determined by management with the assistance of an
  independent valuation company. The valuation was finalized in fiscal 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                            |  |                |         | 
|--------------------------- |  | -------------- | ------- | 
|                            |  | (in thousands) |        
|                            |  |                |        
|Current assets              |  | $              | 31,213  | 
|Property                    |  |                | 68,424  | 
|Other assets                |  |                | 2,282   | 
|Intangible assets, net      |  |                | 125,405 | 
|Goodwill                    |  |                | 272,204 | 
|                            |  |                |         | 
|Total assets
  acquired     |  |                | 499,528 | 
|                            |  |                |         | 
|Current liabilities         |  |                | 25,379  | 
|Other liabilities           |  |                | 38,296  | 
|                            |  |                |         | 
|Total
  liabilities assumed |  |                | 63,675  | 
|                            |  |                |         | 
|Net assets
  acquired       |  |                | 435,853 | 
|                            |  |                |         | 

| |                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The net intangible assets consist of a $120.7
  million domestic trademark, an $8.0 million franchise network and a net
  unfavorable lease intangible liability of $3.3 million. The goodwill recorded as part of the purchase accounting is not deductible for income tax purposes.

F-8

---



| |                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following pro forma information presents the
  Companys results of operations for the year ended December 29, 2004 as
  if the Acquisition had occurred at the beginning of fiscal 2004 and for the
  period ended December 28, 2005 as if the Acquisition had occurred at the
  beginning of fiscal 2005 (in thousands).

|                        |  |                   |         |                   |   |         |  
|----------------------- |  | ----------------- | ------- | ----------------- | - | ------- | -
|                        |  | December 29, 2004 |         | December 28, 2005 |  
|                        |  |                   |         |                   |  
|Total operating revenue |  | $                 | 219,036 |                   | $ | 237,197 |  
|Pro forma net loss      |  | $                 | (4,846  | )                 | $ | (2,443  | )

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

|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                               |  | a cash investment made by CAC totaling $155.5
  million                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | a contribution of shares and options of Holdings
  with a fair value of $16.8 million                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | the execution of a credit agreement governing new
  senior secured credit facilities providing for a $104.5 million term loan,
  drawn at closing, and a $25.0 million revolving credit facility, of which
  $2.8 million was drawn down at closing (see further description below)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | $123.4 million received related to the issuance and
  sale of $125.0 in aggregate principal amount at maturity 113/4% senior notes
  (see description of 2013 Notes below)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | $22.5 million received related to the issuance and
  sale of $39.3 million in aggregate principal amount at maturity 14.5% senior
  discount notes (see description of 2014 Notes below)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | $9.6 million of deferred financing fees incurred in
  connection with the borrowings described above                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The following activities occurred with respect to the
  existing indebtedness of the Predecessor and its subsidiary that was
  refinanced by the Successor and its subsidiary:
|                                                                                                                                                                              
|                                                                                                                                                                               |  | In October 2005, EPL commenced a tender offer to
  purchase for cash any and all outstanding 91/4% Senior
  Secured Notes due 2009 (the 2009 Notes), and Intermediate commenced a
  tender offer to purchase for cash any and all outstanding 121/2% Senior
  Discount Notes due 2010 (the 2010 Notes). EPL and Intermediate also
  solicited consents to amend the indentures governing the 2009 and 2010 Notes
  to eliminate substantially all of the restrictive covenants and certain
  events of default and modify other provisions contained in such indentures.
  As of December 28, 2005, all of the 2010 Notes had been purchased for
  cash, and all except for $250,000 in aggregate principal amount of the 2009
  Notes had been purchased for cash. In connection therewith, substantially all
  of the restrictive covenants and events of default in the related indentures
  were eliminated.
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | On November 18, 2005, EPL Intermediate Finance
  Corp., a Delaware corporation (Intermediate Finance) issued $39,342,000
  aggregate principal amount at maturity of 141/2% Senior
  Discount Notes due 2014 (the 2014 Notes). Intermediate Finance merged with
  and into Intermediate, with Intermediate surviving the merger and assuming
  Intermediate Finances obligations under the notes and the related indenture.
  On November 18, 2005, EPL Finance Corp., a Delaware corporation (EPL
  Finance), issued $125,000,000 aggregate principal amount at maturity of 113/4% Senior Notes
  due 2013 (the 2013 Notes). The 2013 Notes are guaranteed by Intermediate.
  EPL Finance merged with and into EPL, with EPL surviving the merger and
  assuming EPL Finances obligations under the notes and the related indenture.                                                                     
|                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                               |  | On November 18, 2005, EPL entered into senior
  secured credit facilities with 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 a
  $104.5 million term loan and $25.0 million in revolving availability. In
  connection therewith, EPLs prior credit facility with SunTrust Bank was paid
  off in full.                                                                                                                                                                                                                                              

3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basis of
  PresentationThe Companys fiscal year end is the last
  Wednesday of the calendar year, which in 2004 was December 29, 2004, in
  2005 was December 28, 2005 and in 2006 was December 27, 2006. The
  accompanying consolidated balance sheets present the Companys financial
  position as of December 28, 2005 and December 27, 2006. The
  accompanying consolidated statements of operations, stockholders equity
  (deficiency) and cash flows present the 52 week period ended
  December 29, 2004, the Predecessor period from December 30, 2004 to
  November 17, 2005 the Successor period from November 18, 2005 to
  December 28, 2005, and the 52 week period ended December 27, 2006.

F-9

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Principles of
  ConsolidationThe accompanying consolidated financial
  statements include the accounts of the Company and its wholly owned
  subsidiary. All significant intercompany balances and transactions have been
  eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Cash and Cash
  EquivalentsThe Company considers all highly liquid
  debt instruments with a maturity of three months or less at the date of
  purchase to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Notes and
  Accounts ReceivableNotes and accounts receivable
  consist primarily of royalties, advertising and sublease rent and related
  amounts receivable from franchisees, which are due on a monthly basis that
  may differ from the Companys month-end dates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | InventoriesInventories
  consist principally of food, beverages and paper supplies and are valued at
  the lower of average cost or market                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | PropertyNetProperty is stated at cost and
  is depreciated using the straight-line method over the estimated useful lives
  of the assets. Leasehold improvements and property held under capital leases
  are amortized over the shorter of their estimated useful lives or the
  remaining lease terms. For leases with renewal periods at the Companys
  option, the Company generally uses the original lease term, excluding the
  option periods, to determine estimated useful lives; if failure to exercise a
  renewal option imposes an economic penalty on the Company, such that
  management determines at the inception of the lease that renewal is
  reasonably assured, the Company includes the renewal option period in the
  determination of appropriate estimated useful lives.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | The estimated useful service lives are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |                        |  |                                                 | 
| | ---------------------- |  | ----------------------------------------------- | 
| | Buildings              |  | 30 years                                        | 
| |                        |  |                                                 | 
| | Land improvements      |  | 330 years                                      | 
| |                        |  |                                                 | 
| | Building improvements  |  | 310 years                                      | 
| |                        |  |                                                 | 
| | Restaurant equipment   |  | 310 years                                      | 
| |                        |  |                                                 | 
| | Other equipment        |  | 210 years                                      | 
| |                        |  |                                                 | 
| | Leasehold improvements |  | Estimated useful life limited by the lease term | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company capitalizes certain costs in conjunction
  with site selection that relate to specific sites for planned future
  restaurants. The Company also capitalizes certain costs, including interest,
  in conjunction with constructing new restaurants. These costs are included in
  property and amortized over the shorter of the life of the related buildings
  and leasehold improvements or the lease term. Costs related to abandoned
  sites and other site selection costs that cannot be identified with specific
  restaurants are charged to operations. The Predecessor capitalized $125,000
  and $69,000 of internal costs related to site selection and construction
  activities during the year ended December 29, 2004 and the period from
  December 30, 2004 to November 17, 2005, respectively. The
  Predecessor also capitalized $95,000 and $84,000 of interest expense during
  the year ended December 29, 2004 and the period from December 30,
  2004 to November 17, 2005, respectively. The Successor capitalized
  $16,000 and $47,000 of internal costs related to site selection and
  construction activities during the period from November 18, 2005 to December
  28, 2005 and the year ended December 27, 2006, respectively. The Successor
  also capitalized $106,000 and $166,000, of interest expense during the period
  from November 18, 2005 to December 28, 2005 and the year ended
  December 27, 2006, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Goodwill and Other
  Intangible AssetsNetIntangible assets consist
  primarily of goodwill and the value allocated to the Companys trademarks,
  franchise network and favorable and unfavorable leasehold interests. Goodwill
  represents the excess of cost over fair value of net identified assets
  acquired in business combinations accounted for under the purchase method.
  Goodwill results from the Acquisition by CAC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In accordance with SFAS No. 142, Goodwill and
  Other Intangible Assets, the Company does not amortize its goodwill and
  certain intangible assets with an indefinite life, including domestic
  trademarks. The Company performs its impairment test annually at its fiscal
  year end, or more frequently if impairment indicators arise. No impairment
  was recorded during the Predecessor year ended December 29, 2004 and the
  Predecessor period December 30, 2004 to November 17, 2005, or the Successor
  period November 18, 2005 to December 28, 2005 and the Successor year ended
  December 27, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Intangible assets and liabilities with a definite
  life are amortized using the straight-line method over their estimated useful
  lives as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                                 |  |                                      | 
| | ------------------------------- |  | ------------------------------------ | 
| | Franchise network               |  | 17.5 years                           | 
| | Favorable leasehold interests   |  | 1 to 18 years (remaining lease term) | 
| | Unfavorable leasehold interests |  | 1 to 20 years (remaining lease term) | 

F-10

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Deferred
  Financing CostsDeferred financing costs are recorded
  at cost and amortized using the effective interest method over the terms of
  the related notes. Deferred financing costs are included in other assets and
  the related amortization is reflected as a component of interest expense in
  the accompanying consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Impairment of
  Long-Lived AssetsThe Company reviews its long-lived
  assets for impairment whenever events or changes in circumstances indicate
  that the carrying value of certain assets may not be recoverable. If the
  Company concludes that the carrying value of such assets will not be
  recovered based on expected undiscounted future cash flows, an impairment
  write-down is recorded.  During the
  year ended December 29, 2004, the Company recorded an impairment charge
  for property of approximately $0.6 million for one under-performing
  company-operated store that will continue to be operated. The Predecessor
  also recorded an impairment charge of approximately $1.0 million for the
  period December 30, 2004 to November 17, 2005 for two
  under-performing Predecessor-operated restaurants that will continue to be
  operated. There was no impairment recorded by the Successor.                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Insurance ReservesThe
  Company is responsible for workers compensation insurance claims up to a
  specified aggregate stop loss amount. The Company maintains a reserve for
  estimated claims, both reported and incurred but not reported, based on
  historical claims experience and other assumptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Restaurant and
  Franchise RevenueRevenues from the operation of
  Company-operated restaurants are recognized as products are delivered to
  customers. Franchise revenue consists of franchise royalties, initial
  franchise fees, license fees due from franchisees, and rental income for
  leases and subleases to franchisees. Franchise royalties are based upon a
  percentage of net sales of the franchisee and are recorded as income as such
  sales are reported by the franchisees. Initial franchise and license fees are
  recognized when all material obligations have been performed and conditions
  have been satisfied, typically when operations have commenced. Initial fees
  during the Predecessor year ended December 29, 2004, the Predecessor
  period December 30, 2004 to November 17, 2005 and the Successor
  period November 18, 2005 to December 28, 2005 and the Successor
  year ended December 27, 2006, totaled $443,000, $277,000, $0 and $892,000,
  respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Advertising CostsProduction
  costs for radio and television commercials are initially capitalized and then
  fully expensed when the commercials are first aired. Advertising expense,
  which is a component of other operating expenses, was $8,249,000, $8,056,000,
  $291,000 and $9,320,000 for the Predecessor year ended December 29,
  2004, and the Predecessor period December 30, 2004 to November 17,
  2005 and the Successor period November 18, 2005 to December 28,
  2005 and the Successor year ended December 27, 2006, respectively, and is net
  of $9,009,000, $9,093,000, $1,055,000 and $11,979,000, respectively, funded
  by the franchisees advertising fees.                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Franchisees pay a monthly fee to the Company that
  ranges from 4% to 5% of their restaurants gross sales as reimbursement for
  advertising, public relations and promotional services the Company provides.
  Fees received in advance of provided services are included in other accrued
  expenses and current liabilities and were $911,000 and $1,358,000 at
  December 28, 2005 and December 27, 2006, respectively. Pursuant to the
  Companys Uniform Franchise Offering Circular, in market areas in which the
  Company and franchisees both operate restaurants (the Designated Market Area),
  the Company is required to spend from 4% to 5% of the Companys Designated
  Market Area restaurants gross sales on advertising, public relations and
  promotional services. At December 27, 2006, the Company was obligated to
  spend an additional $1,235,000 in future periods to comply with this
  requirement.                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Preopening CostsPreopening
  costs incurred in connection with the opening of new restaurants are expensed
  as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Franchise Area
  Development FeesThe Company receives area development
  fees from franchisees when they execute multi-unit area development
  agreements. The Company does not recognize revenue from the agreements until
  the related restaurants open. Unrecognized area development fees totaled
  $770,000 and $1,195,000 at December 28, 2005 and December 27, 2006,
  respectively, and are included in other noncurrent liabilities in the
  accompanying consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Operating LeasesRent
  expense for the Companys operating leases, which generally have escalating
  rentals over the term of the lease, is recorded on a straight-line basis over
  the lease term, as defined in SFAS No. 13, Accounting for Leases, as
  amended. The lease term begins when the Company has the right to control the
  use of the leased property, which is typically before rent payments are due
  under the terms of the lease. The difference between rent expense and rent
  paid is recorded as deferred rent, which is included in other noncurrent
  liabilities in the accompanying consolidated balance sheets, and is amortized
  over the term of the lease.                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Income TaxesDeferred
  income taxes are provided for temporary differences between the bases of
  assets and liabilities for financial statement purposes and income tax
  purposes. Deferred income taxes are based on enacted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-11

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | income tax rates in effect when the temporary
  differences are expected to reverse. A valuation allowance is provided when
  it is more likely than not that some portion or all of the deferred income
  tax asset will not be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Use of EstimatesThe
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to
  make estimates and assumptions that affect the reported amounts of assets and
  liabilities and disclosures of contingent assets and liabilities at the date
  of the financial statements and revenue and expenses during the period
  reported. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Financial
  InstrumentsThe recorded values of accounts receivable,
  accounts payable and certain accrued expenses approximate fair values based
  on their short-term nature. The recorded values of notes receivable and notes
  payable approximate fair value, as interest approximates market
  rates. The recorded value of other notes payable and senior secured notes
  payable approximates fair value, based on borrowing rates currently available
  to the Company for loans with similar terms and remaining maturities.                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Derivative
  Financial InstrumentsThe Company recognizes all
  derivatives as either assets or liabilities in the balance sheet and measures
  those instruments at fair value. Accounting for changes in the fair value of
  a derivative depends on the intended use and resulting designation of the
  derivative. For derivatives designated as hedges, changes in fair value are
  either offset against the change in the fair value of the assets or liabilities
  through earnings (fair value hedge) or recognized as a component of other
  comprehensive income or loss (cash flow hedge).                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | On the date the Company enters into a derivative
  contract, management designates the derivative as a hedge of identified exposure.
  The Company formally documents all relationships between hedging instruments
  and hedged items, as well as the risk-management objective and strategy for
  entering into various hedge transactions. The Company formally measures
  effectiveness of its hedging relationships both at the hedge inception and on
  an ongoing basis in accordance with its risk management policy. The Company
  does not have any derivative financial instruments as of December 27,
  2006.                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Accounting for
  Stock Based CompensationThe Company adopted the
  provisions of SFAS 123(R), Share-Based Payment on December 29,
  2005, which requires companies to expense the estimated fair value of
  employee stock options and similar awards based on the grant-date fair value
  of the award. The Company adopted SFAS 123(R) using a prospective application,
  which only applies to new awards and any awards that are modified or
  cancelled subsequent to the date of adoption of SFAS 123(R).                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Prior to December 29, 2005, the Company used the
  intrinsic value method to account for employee stock options in accordance
  with APB Opinion No. 25, Accounting for Stock Issued to Employees. Under
  Accounting Principle Board Opinion No. 25, the Company did not recognize
  compensation expense related to employee stock options if the exercise price
  of the options was equal to or greater than the market price of the
  underlying stock on the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Segment ReportingThe
  Company develops, franchises and operates quick-service restaurants under the
  name El Pollo Loco, providing similar products to similar customers. The
  restaurants possess similar economic characteristics resulting in similar
  long-term expected financial performance characteristics. Operating segments
  are components of an enterprise about which separate financial information is
  available that is evaluated regularly by the chief operating decision maker
  in deciding how to allocate resources and in assessing performance. Based on
  its methods of internal reporting and management structure, management
  determined that the Company operates in a single reporting segment.                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Recent Accounting
  ChangesIn September 2006, the Securities and Exchange
  Commission issued Staff Accounting Bulletin No. 108, Financial
  Statements  Considering the Effects of Prior Year Misstatements When
  Quantifying Misstatements in Current Year Financial Statements (SAB 108).
  This new guidance addresses how a registrant should quantify the effect of
  errors on the financial statements based on their impact to both the balance
  sheet and the income statement in order to determine materiality. The
  guidance provides for a one-time cumulative effect adjustment to correct for
  misstatements and errors that were not deemed material under a prior approach
  but are material under the SAB 108 approach. The application of SAB 108
  did not have an effect on the Companys consolidated financial position,
  results of operations or cash flows.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | In September 2006, the Financial Accounting Standards
  Board (the FASB) issued SFAS
  No. 157, Fair Value Measurements (SFAS 157). This new standard
  provides guidance for using fair value to measure assets and liabilities and
  information about the extent to which companies measure assets and
  liabilities at fair value, the information used to measure fair value, and
  the effect of fair value measurements on earnings. This framework is intended
  to provide increased consistency in how fair value determinations are made
  under various existing accounting standards which permit, or in some cases
  require, estimates of fair market value. SFAS 157 also expands financial
  statement disclosure requirements about a companys use of fair                                                                                                               

F-12

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | value measurements, including the effect of such
  measures on earnings. The provisions of SFAS 157 are effective for financial
  statements issued for fiscal years beginning after November 15, 2007.
  The Company is currently evaluating the impact, if any, that SFAS 157 will
  have on its consolidated financial position, results of operations and cash
  flows.                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | In June 2006, the FASB issued Interpretation No. 48, Accounting for
  Uncertainty in Income (FIN 48). FIN 48 prescribes a recognition threshold
  and measurement attribute for the financial statement recognition and
  measurement of a tax position taken or expected to be taken in the Companys
  tax return. FIN 48 also provides guidance on derecognition, classification,
  interest and penalties, accounting in interim periods and disclosure
  requirements for uncertain tax positions.
  FIN 48 is effective for fiscal years ending after December 15,
  2006. The Company is in the process of evaluating the effect, if any, the
  adoption of FIN 48 will have on its consolidated financial position, results
  of operations and cash flows.

4. SALE
AND ACQUISITIONS OF RESTAURANTS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In April 2004, the Company acquired the assets of
  two previously franchised restaurants. The purchase price of $2,421,000
  consisted of cash and was allocated as follows: property, $1,330,000 and
  goodwill, $1,091,000. Results of operations of these restaurants are included
  in the Companys financial statements beginning April 2004. In September
  2004, the Company sold two restaurants to a franchisee for a total of
  $1,020,000. These restaurants had an aggregate net book value of $608,000,
  and after selling expenses of $127,000, the Company realized a $285,000 gain
  that is included in other operating expenses in the accompanying consolidated
  statements of operations and comprehensive income (loss).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The pro forma effects of the Companys acquisitions
  on its historical results of operations are not material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

5.
PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid
expenses and other current assets consist of the following (in thousands):

|             |  |                     |       |                     |   |       | 
|------------ |  | ------------------- | ----- | ------------------- | - | ----- | 
|             |  | December 28,
  2005 |       | December 27,
  2006 |  
|             |  |                     |       |                     |  
|Prepaid rent |  | $                   | 1,288 |                     | $ | 1,394 | 
|Other        |  |                     | 1,901 |                     |   | 2,441 | 
|             |  |                     |       |                     |   |       | 
|             |  | $                   | 3,189 |                     | $ | 3,835 | 
|             |  |                     |       |                     |   |       | 

F-13

---



6. PROPERTY

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The costs
  and related accumulated depreciation and amortization of major classes of
  property as of December 28, 2005 and December 27, 2006 are as follows (in
  thousands):

|                                            |  |                     |        |                     |   |        |  
|------------------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | -
|                                            |  | December 28,
  2005 |        | December 27,
  2006 |  
|                                            |  |                     |        |                     |  
|Property
  owned:                           |  |                     |        |                     |   |        |  
|Land                                        |  | $                   | 12,794 |                     | $ | 12,771 |  
|Buildings and improvements                  |  |                     | 30,271 |                     |   | 42,439 |  
|Other property and equipment                |  |                     | 17,885 |                     |   | 24,110 |  
|Construction in progress                    |  |                     | 9,034  |                     |   | 4,435  |  
|                                            |  |                     |        |                     |   |        |  
|                                            |  |                     | 69,984 |                     |   | 83,755 |  
|Accumulated
  depreciation and amortization |  |                     | (863   | )                   |   | (9,913 | )
|                                            |  |                     |        |                     |   |        |  
|Property
  ownednet                        |  | $                   | 69,121 |                     | $ | 73,842 |  
|                                            |  |                     |        |                     |   |        |  
|Property
  held under capital leases        |  | $                   | 2,241  |                     | $ | 2,241  |  
|Accumulated
  amortization                  |  |                     | (55    | )                   |   | (607   | )
|                                            |  |                     |        |                     |   |        |  
|Property
  held under capital leasesnet    |  | $                   | 2,186  |                     | $ | 1,634  |  
|                                            |  |                     |        |                     |   |        |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Property
  held under capital leases consists principally of buildings and improvements.
  The total depreciation and amortization expense for property for the period
  ended December 29, 2004, the Predecessor period December 30, 2004 to November
  17, 2005 and the Successor periods November 18, 2005 to December 28, 2005 and
  December 27, 2006, was approximately $11,881,000, $11,364,000, $1,085,000 and
  $9,674,000 respectively.

7. GOODWILL AND OTHER INTANGIBLE ASSETS AND
LIABILITIES

| |                                                               
| | --------------------------------------------------------------
| | Changes in
  goodwill consist of the following (in thousands):

|                                              |  |                     |         |                     |   |         | 
|--------------------------------------------- |  | ------------------- | ------- | ------------------- | - | ------- | 
|                                              |  |                     |         |                     |   |         | 
|                                             
|                                              |  | December
  28, 2005 |         | December
  27, 2006 |  
|                                              |  |                     |         |                     |  
|Beginning
  balance                           |  | $                   |        |                     | $ | 272,204 | 
|Purchase of
  the Company by CAC (See Note 2) |  |                     | 272,204 |                     |   |        | 
|Purchase price adjustments                    |  |                     |        |                     |   | 5,310   | 
|                                              |  |                     |         |                     |   |         | 
|Ending
  balance                              |  |                     | 272,204 |                     |   | 277,514 | 
|Accumulated
  amortization                    |  |                     |        |                     |   |        | 
|                                              |  |                     |         |                     |   |         | 
|Goodwillnet                                  |  | $                   | 272,204 |                     | $ | 277,514 | 
|                                              |  |                     |         |                     |   |         | 

F-14

---



| |                                                                   
| | ------------------------------------------------------------------
| | Other
  intangible assets consist of the following (in thousands):

|                                               |  |                     |        |                     |   |        |  
|---------------------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | -
|                                               |  | December 28,
  2005 |        | December 27,
  2006 |  
|                                               |  |                     |        |                     |  
|Franchise networknet                          |  | $                   | 7,947  |                     | $ | 7,490  |  
|                                               |  |                     |        |                     |   |        |  
|Favorable leasehold interest - net             |  |                     | 5,751  |                     |   | 4,492  |  
|                                               |  |                     |        |                     |   |        |  
|Other intangible assetsnet                    |  | $                   | 13,698 |                     | $ | 11,982 |  
|                                               |  |                     |        |                     |   |        |  
|                                               |  |                     |        |                     |   |        |  
|Unfavorable leasehold interest
  liabilitynet |  | $                   | (9,037 | )                   | $ | (7,434 | )
|                                               |  |                     |        |                     |   |        |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Favorable
  leasehold interest represents the asset in excess of the approximate fair
  market value of the leases assumed as of November 18, 2005, the date of the
  Acquisition. The amount is being reduced 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 assumed as of November 18, 2005,
  the date of the Acquisition. The amount is being reduced over the approximate
  average life of the leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Amortization
  expense for international trademark was $167,000 and $150,000 for the
  Predecessor year ended December 29, 2004, and the Predecessor period December
  30, 2004 to November 17, 2005, respectively. Amortization expense for
  franchise network was $1,150,000, $1,034,000 $53,000 and $457,000 for the
  Predecessor year ended December 29, 2004, the Predecessor period December 30,
  2004 to November 17, 2005 and the Successor period November 18, 2005 to
  December 28, 2005 and the Successor year ended December 27, 2006, respectively.
  Amortization expense for operating agreements was $40,000 and $36,000 for the
  Predecessor year ended December 29, 2004 and the Predecessor period December
  30, 2004 to November 17, 2005, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 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 |  |   |       | 
|                          |  |   |       | 
|2007                      |  | $ | 1,542 | 
|2008                      |  |   | 1,599 | 
|2009                      |  |   | 1,596 | 
|2010                      |  |   | 1,471 | 
|2011                      |  |   | 1,458 | 

8. OTHER ASSETS

| |                                                        
| | -------------------------------------------------------
| | Other assets
  consist of the following (in thousands):

|                                 |  |                     |        |                     |   |        | 
|-------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | 
|                                 |  | December 28,
  2005 |        | December 27,
  2006 |  
|                                 |  |                     |        |                     |  
|Deferred
  financing costs - net |  | $                   | 9,422  |                     | $ | 8,552  | 
|Other                            |  |                     | 2,132  |                     |   | 2,043  | 
|                                 |  |                     |        |                     |   |        | 
|                                 |  | $                   | 11,554 |                     | $ | 10,595 | 
|                                 |  |                     |        |                     |   |        | 

|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          | Amortization
  expense for deferred financing costs was $1,536,000, $7,426,000, $152,000 and
  $1,367,000 for the Predecessor year ended December 29, 2004, the Predecessor
  period December 30, 2004 to November 17, 2005, the Successor period November
  18, 2005 to December 28, 2005 and the year ended December 27, 2006,
  respectively.                                                                                                                                                       
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|9. LEASES
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|          | The
  Companys operations utilize property, facilities, equipment and vehicles
  owned by the Company or leased from others. Buildings and facilities leased
  from others are primarily for restaurants and support facilities. Restaurants
  are operated under lease arrangements that generally provide for a fixed base
  rent and, in some instances, contingent rent based on a percentage of gross
  operating profit or gross revenues in excess of a defined amount. Initial
  terms of land

F-15

---



| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and
  restaurant building leases generally are not less than 20 years, exclusive of
  options to renew. Leases of equipment primarily consist of restaurant
  equipment, computer systems and vehicles. The Company subleases facilities to
  certain franchisees.
| |                                                                                                                                                                                                                                                                   
| | Information
  regarding the Companys future lease obligations at December 27, 2006 is as
  follows (in thousands):                                                                                                                                               

|                                             |  |                            |        |                              |   |                            |  |                              |         |  |   |       | 
|-------------------------------------------- |  | -------------------------- | ------ | ---------------------------- | - | -------------------------- |  | ---------------------------- | ------- |  | - | ----- | 
|                                             |  | Capital Leases             |        | Operating Leases             |  
|                                             |  |                            |        |                              |  
|Year Ending
  December 31                    |  | Minimum
  Lease
  Payments |        | Minimum
  Sublease
  Rentals |   | Minimum
  Lease
  Payments |  | Minimum
  Sublease
  Rentals |        
|                                             |  |                            |        |                              |   |                            |  |                              |        
|2007                                         |  | $                          | 1,935  |                              | $ | 997                        |  | $                            | 15,477  |  | $ | 1,665 | 
|2008                                         |  |                            | 1,601  |                              |   | 833                        |  |                              | 14,870  |  |   | 1,354 | 
|2009                                         |  |                            | 1,005  |                              |   | 582                        |  |                              | 14,540  |  |   | 1,024 | 
|2010                                         |  |                            | 661    |                              |   | 291                        |  |                              | 13,906  |  |   | 574   | 
|2011                                         |  |                            | 465    |                              |   | 166                        |  |                              | 13,437  |  |   | 378   | 
|Subsequent
  years                           |  |                            | 2,467  |                              |   | 518                        |  |                              | 80,161  |  |   | 941   | 
|                                             |  |                            |        |                              |   |                            |  |                              |         |  |   |       | 
|Total                                        |  |                            | 8,134  |                              | $ | 3,387                      |  | $                            | 152,391 |  | $ | 5,936 | 
|                                             |  |                            |        |                              |   |                            |  |                              |         |  |   |       | 
|Less imputed
  interest                      |  |                            | 2,878  |                              |   |                            |  |                              |         |  |   |       | 
|Present
  value of capital lease obligations |  |                            | 5,256  |                              |   |                            |  |                              |         |  |   |       | 
|Less current
  maturities                    |  |                            | (1,313 | )                            |   |                            |  |                              |         |  |   |       | 
|                                             |  |                            |        |                              |   |                            |  |                              |         |  |   |       | 
|Noncurrent
  portion                         |  | $                          | 3,943  |                              |   |                            |  |                              |         |  |   |       | 
|                                             |  |                            |        |                              |   |                            |  |                              |         |  |   |       | 

| |                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net rent
  expense for the Predecessor year ended December 29, 2004, the Predecessor period
  December 30, 2004 to November 17, 2005 and the Successor period November 18,
  2005 to December 28, 2005 and the Successor year ended December 27, 2006 is
  as follows (in thousands):

|                       |  |                   |        |                                            |   |        |   |   |       |   |   |        |  
|---------------------- |  | ----------------- | ------ | ------------------------------------------ | - | ------ | - | - | ----- | - | - | ------ | -
|                       |  | Predecessor       |        | Successor                                  |  
|                       |  |                   |        |                                            |  
|                       |  | Year Ended        |        |                                            |   |        |  
|                       |  |                   |        |                                            |   |        |  
|                       |  | December 29, 2004 |        | December 30, 2004
  to November 17,
  2005 |   |        |   |   |      
|                       |  |                   |        |                                            |   |        |   |   |      
|Base rent              |  | $                 | 14,546 |                                            | $ | 13,315 |   | $ | 1,561 |   | $ | 15,969 |  
|Contingent
  rent      |  |                   | 342    |                                            |   | 420    |   |   | 42    |   |   | 518    |  
|Less
  sublease income |  |                   | (4,097 | )                                          |   | (3,860 | ) |   | (345  | ) |   | (4,221 | )
|                       |  |                   |        |                                            |   |        |   |   |       |   |   |        |  
|Net rent
  expense     |  | $                 | 10,791 |                                            | $ | 9,875  |   | $ | 1,258 |   | $ | 12,266 |  
|                       |  |                   |        |                                            |   |        |   |   |       |   |   |        |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Base rent
  and contingent rent are included in other operating expenses, while sublease
  income is included in franchise revenue in the accompanying consolidated
  statements of operations and comprehensive income (loss). Sublease income
  includes contingent rental income of $1,623,000, $1,700,000, $154,000 and
  $1,980,000 for the Predecessor year ended December 29, 2004, the Predecessor
  period December 30, 2004 to November 17, 2005 the Successor period November
  18, 2005 to December 28, 2005 and the year ended December 27, 2006,
  respectively.                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In addition
  to the sublease income described above, the Company is a lessor for certain
  property, facilities and equipment owned by the Company and leased to others,
  principally franchisees, under noncancelable leases with terms ranging from 5
  to 11 years. The lease agreements generally provide for a fixed base rent
  and, in some instances, contingent rent based on a percentage of gross
  operating profit or gross revenues. Total rental income, included in
  franchise revenue in the accompanying consolidated statements of operations,
  for leased property was $342,000, $346,000, $38,000 and $385,000 for the
  Predecessor year ended December 29, 2004, the Predecessor period December 30,
  2004 to November 17, 2005, the Successor period November 18, 2005 to December
  28, 2005 and the year ended December 27, 2006, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Minimum
  future rental income under noncancelable operating leases in effect as of
  December 27, 2006 is as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                     |  |   |       | 
|------------------------------------ |  | - | ----- | 
|Year Ending
  December 31            |  |   |      
|                                     |  |   |      
|2007                                 |  | $ | 290   | 
|2008                                 |  |   | 291   | 
|2009                                 |  |   | 302   | 
|2010                                 |  |   | 234   | 
|2011                                 |  |   | 166   | 
|Thereafter                           |  |   | 513   | 
|                                     |  |   |      
|Total future
  minimum rental income |  | $ | 1,796 | 
|                                     |  |   |      

F-16

---



10. PREDECESSOR DEBT (2009 Notes and 2010
Notes)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December
  2003, EPL issued the 2009 Notes, consisting of $110,000,000 of senior secured
  notes accruing interest at 9.25% per annum, due 2009. In March 2004, EPL
  Intermediate, Inc. issued the 2010 Notes, consisting of $70.0 million in
  aggregate principal amount at maturity of 12 1/2% senior
  discount notes due 2010. In October 2005, EPL and Intermediate commenced
  tender offers to purchase all outstanding 2009 Notes and 2010 Notes
  (collectively, the Notes), respectively; concurrently, EPL and Intermediate
  solicited consents to amend the indentures governing the Notes to eliminate
  substantially all of the restrictive covenants and certain events of default
  and to modify other provisions contained in the indentures. As of December
  28, 2005, all of the Notes, with the exception of $250,000 of 2009 Notes, had
  been purchased. In connection therewith, substantially all of the restrictive
  covenants and events of default in the related indentures were eliminated.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The
  Predecessors notes payable, which consisted of approximately $7.3 million
  due to SunTrust Bank (SunTrust) at December 29, 2004, were repaid in 2005.
  SunTrust continues to be the issuing bank with respect to certain of the
  Companys letters of credit totaling $37,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

11. SENIOR UNSECURED NOTES PAYABLE (2013
Notes)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November
  18, 2005, EPL Finance issued the 2013 Notes, consisting of $125,000,000
  aggregate principal amount of 11 3/4% senior
  notes due 2013 in a private placement. Interest is payable in May and
  November beginning May 15, 2006. The 2013 Notes are unsecured, are guaranteed
  by Intermediate, and may be redeemed, at the discretion of the issuer, after
  November 15, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | In 2005 EPL
  Finance merged with and into EPL, with EPL surviving the merger and assuming
  EPL Finances obligations under the 2013 Notes and the related indenture. The
  indenture contains certain provisions which may prohibit EPLs ability to
  incur additional indebtedness, sell assets, engage in transactions with affiliates,
  and issue or sell preferred stock, among other items.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | In October
  2006, EPL completed the exchange of the 2013 Notes for registered, publicly
  tradable notes that have substantially identical terms as the 2013 Notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | EPL incurred
  direct costs in connection with this offering. These costs have been
  capitalized and are included in other assets in the accompanying balance
  sheets. The Company used the proceeds from the 2013 Notes to purchase
  substantially all of the outstanding 2009 Notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | As a holding
  company, the stock of EPL constitutes 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 13) have restrictions that limit
  distributions or dividends to be paid by EPL to the Company. Conditions that
  would allow for distributions or dividends to be made include compliance with
  a Fixed Charge Coverage Ratio test (as defined) and cash received from the
  proceeds of new equity contributions. 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. Furthermore, subject to
  certain restrictions, EPL is permitted under the terms of EPLs senior
  secured credit facilities and the indenture governing the 2013 Notes and 2014
  Notes to incur additional indebtedness that may severely restrict or prohibit
  the making of distributions, the payment of dividends or the making of loans
  by EPL. EPL does not currently meet the fixed charge coverage ratio,
  therefore EPL is not permitted to incur additional indebtedness except for
the $14.6 million available under the revolving line of credit.

12. 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 an $104.5 million term loan and $25.0 million in
  revolving availability. Of this senior secured revolving credit facility, EPL
  drew down $2.8 million and issued $8.1 million of letters of credit to
  replace existing letters of credit. Future principal payments under the new
  term loan at December 27, 2006 are as follows (in thousands).

F-17

---



| |                           |  |   |         | 
| | ------------------------- |  | - | ------- | 
| | Year Ending
  December 31 |  |   |         | 
| |                           |  |   |         | 
| | 2007                      |  | $ | 1,306   | 
| | 2008                      |  |   | 1,045   | 
| | 2009                      |  |   | 1,045   | 
| | 2010                      |  |   | 1,045   | 
| | 2011                      |  |   | 99,275  | 
| |                           |  |   |         | 
| |                           |  | $ | 103,716 | 
| |                           |  |   |         | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 27, 2006 was 8.37%. In March 2007 the Company
  amended the credit facility to reduce the interest rate and to modify in the Companys
  favor the terms of certain restrictive covenants. 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 December 27, 2006, EPL was in compliance with
  all of the financial covenants contained in its senior credit facility and
has $14.6 million available for borrowings under the revolving line of credit.

13. PIK
NOTES (2014 Notes)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November 18, 2005, Intermediate Finance
  issued the 2014 Notes, consisting of $39,342,000 aggregate principal amount
  at maturity of 14 1/2% senior discount notes due 2014 (the 2014 Notes) in a
  private placement. In 2005 Intermediate Finance merged with and into
  Intermediate, with Intermediate surviving the merger and assuming
  Intermediate Finances obligations under the notes and the related indenture.
  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 11).           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | At December 27, 2006, the Company had
  $26,319,000 outstanding in aggregate principal amount of the 2014 Notes. No
  cash interest will accrue on the 2014 Notes prior to November 15, 2009.
  Instead, the principal value of the 2014 Notes will increase (representing
  accretion of original issue discount) from the date of original issuance
  until but not including November 15, 2009 at a rate of 14 1/2% per
  annum compounded annually, so that the accreted value of the 2014 Notes on
  November 15, 2009 will be equal to the full principal amount of
  $39,342,000 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.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Intermediate incurred direct costs in connection
  with this offering. These costs have been capitalized and are included in
  other assets in the accompanying balance sheets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

14.
OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Other accrued expenses and current liabilities
  consist of the following (in thousands):

|                                   |  |                     |       |                     |   |       | 
|---------------------------------- |  | ------------------- | ----- | ------------------- | - | ----- | 
|                                   |  | December 28,
  2005 |       | December 27,
  2006 |  
|                                   |  |                     |       |                     |  
|Accrued sales and property
  taxes |  | $                   | 2,230 |                     | $ | 2,561 | 
|                                   |  |                     |       |                     |   |       | 
|Other                              |  |                     | 1,453 |                     |   | 1,746 | 
|                                   |  |                     |       |                     |   |       | 
|                                   |  | $                   | 3,683 |                     | $ | 4,307 | 
|                                   |  |                     |       |                     |   |       | 

F-18

---



15.
OTHER NONCURRENT LIABILITIES

| |                                                                        
| | -----------------------------------------------------------------------
| | Other noncurrent liabilities consist of the
  following (in thousands):

|                          |  |                     |       |                     |   |       | 
|------------------------- |  | ------------------- | ----- | ------------------- | - | ----- | 
|                          |  | December 28,
  2005 |       | December 27,
  2006 |  
|                          |  |                     |       |                     |  
|Closed restaurant reserve |  |                     | 460   |                     |   | 322   | 
|                          |  |                     |       |                     |   |       | 
|Deferred rent             |  |                     | 1,659 |                     |   | 2,779 | 
|                          |  |                     |       |                     |   |       | 
|Other                     |  |                     | 1,484 |                     |   | 1,802 | 
|                          |  |                     |       |                     |   |       | 
|                          |  | $                   | 3,603 |                     | $ | 4,903 | 
|                          |  |                     |       |                     |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Closed restaurant reserve represents the net present
  value of expected future cash outflows for leases for which the Company
  currently has no operations. The reserves relate exclusively to lease
  liabilities acquired in connection with the Successors purchase of Holdings
  in 2005. Decreases in the closed restaurant reserve include payments of the
  liability, additions of new subleases and changes in estimates regarding the
  increased collectibility of future rental income. Increases in the closed
  restaurant reserve include changes in estimates regarding the decreased
  collectibility of future rental income. Additions of new subleases and
  estimates regarding the increased collectibility of future rental income are
  reflected as reductions of goodwill. Changes in estimates regarding decreased
  collectibility of future rental income are reflected as expense.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The Company leases its facilities under various
  operating lease agreements. Certain provisions of these leases provide for
  graduated rent payments and landlord contributions. The Company recognizes
  rent expense on a straight-line basis over the lease term. The cumulative
  difference between such rent expense and actual payments to date is reflected
  as deferred rent. Landlord contributions are also included in deferred rent
  and are amortized as a reduction of rent expense ratably over the lease term.                                                                                                                                                                                                                                                                                                                                                                                

16.
INCOME TAXES 

| |                                                                                      
| | -------------------------------------------------------------------------------------
| | The provision for income taxes is based on the
  following components (in thousands):

|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|---------------------- |  | -------------------------- | ------ | ------------------------------------ | - | ------------------------------------ | - | -------------------------- | ---- | - |  | ----- | 
|                       |  | Predecessor                |        | Successor                            |  
|                       |  |                            |        |                                      |  
|                       |  | Year EndedDecember 29,2004 |        | December 30, 2004 toNovember 17,2005 |   | November 18, 2005 toDecember 28,2005 |   | Year EndedDecember 27,2006 |     
|                       |  |                            |        |                                      |   |                                      |   |                            |     
|Current income taxes:  |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|Federal                |  | $                          | (988   | )                                    | $ | (467                                 | ) | $                          |     |   |  | 22    | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|State                  |  |                            | (194   | )                                    |   | 663                                  |   |                            |     |   |  | 13    | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|                       |  |                            | (1,182 | )                                    |   | 196                                  |   |                            |     |   |  | 35    | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|Deferred income taxes: |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|Federal                |  |                            | 1,195  |                                      |   | (5,524                               | ) |                            | (307 | ) |  | 994   | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|State                  |  |                            | 15     |                                      |   | (2,323                               | ) |                            | (86  | ) |  | 43    | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|                       |  |                            | 1,210  |                                      |   | (7,847                               | ) |                            | (393 | ) |  | 1,037 | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 
|                       |  | $                          | 28     |                                      | $ | (7,651                               | ) | $                          | (393 | ) |  | 1,072 | 
|                       |  |                            |        |                                      |   |                                      |   |                            |      |   |  |       | 

| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A reconciliation of the provision for income taxes
  to the amount of income tax expense that would result from applying the
  federal statutory rate to income before provision for income taxes is as
  follows (in thousands):

F-19

---



|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   |       | 
|---------------------------------------------------- |  | -------------------------------- | ---- | ------------------------------------------ | - | ------------------------------------------ | - | -------------------------------- | ---- | - | - | ----- | 
|                                                     |  | Predecessor                      |      | Successor                                  |  
|                                                     |  |                                  |      |                                            |  
|                                                     |  | Year Ended
  December 29,
  2004 |      | December 30, 2004 to
  November 17,
  2005 |   | November 18, 2005 to
  December 28,
  2005 |   | Year Ended
  December 27,
  2006 |     
|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |     
|Provision for income taxes at statutory rate         |  | $                                | 490  |                                            | $ | (6,595                                     | ) | $                                | (343 | ) |   | 598   | 
|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   |       | 
|State income taxesnet of federal income tax benefit |  |                                  | (116 | )                                          |   | (1,079                                     | ) |                                  | (55  | ) |   | 37    | 
|Disqualified interest expense                        |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   | 353   | 
|Release of income tax contingency                    |  |                                  | (420 | )                                          |   |                                           |   |                                  |      |   |   |       | 
|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   |       | 
|Other                                                |  |                                  | (74  | )                                          |   | 23                                         |   |                                  | 5    |   |   | 84    | 
|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   |       | 
|                                                     |  | $                                | 28   |                                            | $ | (7,651                                     | ) | $                                | (393 | ) | $ | 1,072 | 
|                                                     |  |                                  |      |                                            |   |                                            |   |                                  |      |   |   |       | 

| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Deferred
  income taxes reflect the tax effect of temporary differences between the
  carrying amount of the assets and liabilities for financial reporting
  purposes and the amount used for income tax purposes.

F-20

---



The
Companys deferred income tax assets and liabilities consist of the following
(in thousands):

|                                    |  |                  |        |                  |   |                  |   |   |         |  
|----------------------------------- |  | ---------------- | ------ | ---------------- | - | ---------------- | - | - | ------- | -
|                                    |  | Predecessor      |        | Successor        |  
|                                    |  |                  |        |                  |  
|                                    |  | December 29,2004 |        | December 28,2005 |   | December 27,2006 |  
|                                    |  |                  |        |                  |   |                  |  
|Negative
  leasehold liability      |  | $                | 2,197  |                  | $ | 1,489            |   | $ | 1,460   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Capital
  leases                    |  |                  | 916    |                  |   | 1,462            |   |   | 1,167   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Accrued
  vacation                  |  |                  | 567    |                  |   | 628              |   |   | 658     |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Accrued
  bonus                     |  |                  | 1,026  |                  |   | 966              |   |   |        |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Deferred
  rent                     |  |                  | 2,072  |                  |   | 727              |   |   | 1,138   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Accrued
  workers compensation     |  |                  | 1,284  |                  |   | 1,441            |   |   | 1,509   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Enterprise
  zone and other credits |  |                  | 209    |                  |   | 208              |   |   | 351     |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|State taxes                         |  |                  | 48     |                  |   | 2,217            |   |   | 2,205   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Net
  operating losses              |  |                  |       |                  |   | 8,789            |   |   | 9,463   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Interest
  expense                  |  |                  |       |                  |   |                 |   |   | 1,155   |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Other                               |  |                  | 298    |                  |   | 243              |   |   | 522     |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Deferred
  income tax assets        |  |                  | 8,617  |                  |   | 18,170           |   |   | 19,628  |  
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Other
  identifiable intangibles    |  |                  | (5,542 | )                |   | (47,860          | ) |   | (49,828 | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Prepaid
  expense                   |  |                  | (1,345 | )                |   | (1,446           | ) |   | (1,522  | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Basis
  difference in fixed assets  |  |                  | (2,089 | )                |   | (1,659           | ) |   | (1,658  | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Other                               |  |                  | (69    | )                |   | (68              | ) |   | (69     | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Deferred
  income tax liabilities   |  |                  | (9,045 | )                |   | (51,033          | ) |   | (53,077 | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  
|Net deferred
  income tax liability |  | $                | (428   | )                | $ | (32,863          | ) | $ | (33,449 | )
|                                    |  |                  |        |                  |   |                  |   |   |         |  

| |                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  has evaluated the available evidence supporting the realization of its gross
  deferred tax assets, including the amount and timing of future taxable
  income, and has determined it is more likely than not that the assets will be
  realized.                                                                           
| |                                                                                                                                                                                                                                                                                                                                           
| | As of
  December 27, 2006, the Successor has federal and state net operating loss
  carryforwards of approximately $19,178,500 and $31,455,300, respectively,
  which expire beginning in 2025 and 2015, respectively. The Successor also has
  state enterprise zone credits of approximately $351,000 which carryforward
  indefinitely.
| |                                                                                                                                                                                                                                                                                                                                           
| | The
  utilization of net operating loss carryforward may be subject to limitations
  under provision of the Internal Revenue Code Section 382 and similar state
  provisions.                                                                                                                                                             

17. EMPLOYEE BENEFIT PLANS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  sponsors a defined contribution employee benefit plan that permits its
  employees, subject to certain eligibility requirements, to contribute up to
  15% of their qualified compensation to the plan. The Company matches 100% of
  the employees contributions of the first 3% of the employees annual
  qualified compensation, and 50% of the employees contributions of the next
  2% of the employees annual qualified compensation. The Companys matching
  contribution vests ratably over three years. The Companys contributions to
  the plan for the Predecessor year ended December 29, 2004 and the Predecessor
  period December 30, 2004 to November 17, 2005, and the Successor period
  November 18, 2005 to December 28, 2005 and the Successor year ended December
  27, 2006, were approximately $239,000, $259,000, $34,000 and $393,000,
  respectively.

F-21

---



18. STOCK-BASED COMPENSATION

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of
  December 29, 2004 and November 17, 2005, options to purchase 84,117 and
  82,617 shares, respectively, of common stock of Holdings were outstanding. As of December 28, 2005 and
  December 27, 2006, options to purchase 277,608 and 302,772 shares,
  respectively of common stock of CAC were outstanding. Included in that amount are 81,540 options
  that are fully vested; the remaining options vest 100% on the seventh
  anniversary of the grant date, 100% upon a change of control at CAC if
  certain conditions are met, or partially vest upon the Companys attaining
  annual financial or other goals, with the remaining unvested portion vesting
  on the seventh anniversary of the grant date. All options were granted at fair value on the date of grant.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Changes in
  stock options for the Predecessor year ended December 29, 2004, the
  Predecessor period December 30, 2004 to November 17, 2005, the Successor
  period November 18, 2005 to December 28, 2005, and the Successor year ended
  December 27, 2006 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|--------------------------------------------------------------- |  | ------ | ------- | ------------------------------------- | - | --------------------------------------------------------------- |  | ------------------------------- | --- |  |  | ------ | 
|Predecessor                                                     |  | Shares |         | Weighted-Average
  Exercise Price (3) |   | Weighted-
  Average
  Remaining
  Contractual Life
  (in Years) |  | Aggregate 
  Intrinsic 
  Value |    
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |    
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |    
|OutstandingDecember 31, 2003                                   |  |        | 103,500 |                                       | $ | 29.06                                                           |  |                                 |     |  |  |        | 
|Grants (weighted-average fair value of
  $14.51 per share)      |  |        | 7,500   |                                       | $ | 47.30                                                           |  |                                 |     |  |  |        | 
|Exercised                                                       |  |        | (23,903 | )                                     | $ | 8.27                                                            |  |                                 |     |  |  |        | 
|Canceled                                                        |  |        | (2,980  | )                                     | $ | 18.36                                                           |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|OutstandingDecember 29, 2004                                   |  |        | 84,117  |                                       | $ | 15.96                                                           |  |                                 |     |  |  |        | 
|Grants (weighted-average fair value of
  $12.28 per share)      |  |        | 1,250   |                                       | $ | 36.56                                                           |  |                                 |     |  |  |        | 
|Exercised                                                       |  |        | (2,500  | )                                     | $ | 11.27                                                           |  |                                 |     |  |  |        | 
|Canceled                                                        |  |        | (250    | )                                     | $ | 17.61                                                           |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|OutstandingNovember 17, 2005                                   |  |        | 82,617  | (1)                                   | $ | 20.70                                                           |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|Successor                                                       |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|OutstandingNovember 18, 2005                                   |  |        |        |                                       | $ |                                                                 |  |                                 |     |  |  |        | 
|Converted from Holdings options (2)                             |  |        | 81,835  |                                       | $ | 8.75                                                            |  |                                 |     |  |  |        | 
|Grants (weighted-average fair value of
  $29.56 per share)      |  |        | 195,773 |                                       | $ | 86.43                                                           |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|OutstandingDecember 28, 2005                                   |  |        | 277,608 |                                       | $ | 63.53                                                           |  |                                 |     |  |  |        | 
|Grants (weighted-average fair value of
  $45.86 per share)      |  |        | 32,153  |                                       | $ | 96.48                                                           |  |                                 |     |  |  |        | 
|Exercised                                                       |  |        | (295    | )                                     | $ | 10.80                                                           |  |                                 |     |  |  |        | 
|Canceled                                                        |  |        | (6,694  | )                                     | $ | 86.43                                                           |  |                                 |     |  |  |        | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|OutstandingDecember 27, 2006                                   |  |        | 302,772 |                                       | $ | 66.58                                                           |  |                                 | 7.9 |  |  | 11,306 | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|Vested and expected to vest in the future 
  December 27, 2006 |  |        | 299,078 |                                       | $ | 66.58                                                           |  |                                 | 7.9 |  |  | 11,168 | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 
|Exercisable  December 27, 2006                                 |  |        | 81,540  |                                       | $ | 8.74                                                            |  |                                 | 4.9 |  |  | 7,774  | 
|                                                                |  |        |         |                                       |   |                                                                 |  |                                 |     |  |  |        | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Concurrent
  with and because of the Acquisition, 82,617 options of Holdings became fully
  vested. 47,976 of these options were purchased by CAC in connection with the
  Acquisition. The remaining options were exchanged for options in CAC (see
  Note 2 below).                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | At the date
  of the Acquisition all previously outstanding options became fully vested.
  Existing option holders were allowed to exchange all or a portion of their
  Holdings options for CAC options. The CAC options received had the same
  intrinsic value as the Holdings options that were relinquished. These
  options were included as a portion of purchase consideration in the
  Acquisition.                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | The weighted
  average exercise prices have been retroactively adjusted to reflect the
  reduction in exercise prices that occurred as a result of the March 2004
  dividends that were paid to Holdings. Effective with the March 2004
  completion of the 2010 Notes offering described in Note 10, Intermediate
  paid a dividend to Holdings of $37,000,000, which applied the proceeds to pay
  a cash dividend to its stockholders. The dividend effectively reduced the
  fair value of the stock options outstanding at the date of the offering. To
  partially offset the effects of the reduction, the Board of Directors of

F-22

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Holdings reduced the exercise price of the
  outstanding options by 53.0% in order to maintain consistency before and
  after the redemption and the dividend in (i) the aggregate intrinsic value
  of the option awards and (ii) the ratio of the exercise price per share
  to the fair market value per share. In accordance with FASB Interpretation
  No. 44, Accounting for Certain Transactions Involving Stock
  Compensation, such reduction in the exercise price was not considered to be a
  modification requiring variable accounting treatment. The Board of Directors
  of EPL also approved a bonus of up to $2,300,000 to be paid to the option
  holders at various dates through 2009 contingent upon continued employment
  with the Company. In April 2004, approximately $1,300,000 was paid to the
  option holders. As of December 29, 2004, approximately $500,000 of the
  bonus had been earned, but not yet paid. The remaining $500,000 of bonus was
  paid in conjunction with the Acquisition and recorded as payroll and benefits
  expense. As of December 27, 2006, the Company had no further obligations.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Outstanding stock options at December 27, 2006
  are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                           |  |                   |         |                                                        |     |                                      |  |                   |        |                                      |  |        |  |   |       | 
|-------------------------- |  | ----------------- | ------- | ------------------------------------------------------ | --- | ------------------------------------ |  | ----------------- | ------ | ------------------------------------ |  | ------ |  | - | ----- | 
|Range of
  Exercise Prices |  | NumberOutstanding |         | Weighted-
  AverageRemainingContractual Life(in Years) |     | Weighted-
  Average
  Exercise Price |  | NumberExercisable |        | Weighted-
  Average
  Exercise Price | 
|                           |  |                   |         |                                                        |     |                                      |  |                   |        |                                      | 
|$2.98                      |  |                   | 17,694  |                                                        | 3.1 |                                      |  | $                 | 2.98   |                                      |  | 17,694 |  | $ | 2.98  | 
|$7.56                      |  |                   | 24,026  |                                                        | 4.3 |                                      |  | $                 | 7.56   |                                      |  | 24,026 |  | $ | 7.56  | 
|$9.68-$11.77               |  |                   | 33,074  |                                                        | 5.7 |                                      |  | $                 | 10.67  |                                      |  | 33,074 |  | $ | 10.67 | 
|$15.48-$20.60              |  |                   | 6,746   |                                                        | 7.8 |                                      |  | $                 | 18.59  |                                      |  | 6,746  |  | $ | 18.59 | 
|$86.43                     |  |                   | 206,857 |                                                        | 9.0 |                                      |  | $                 | 86.43  |                                      |  |       |  | $ |      | 
|$108.92                    |  |                   | 14,375  |                                                        | 9.8 |                                      |  | $                 | 108.92 |                                      |  |       |  | $ |      | 
|                           |  |                   |         |                                                        |     |                                      |  |                   |        |                                      |  |        |  |   |       | 
|                           |  |                   | 302,772 |                                                        | 7.9 |                                      |  | $                 | 66.58  |                                      |  | 81,540 |  | $ | 8.74  | 
|                           |  |                   |         |                                                        |     |                                      |  |                   |        |                                      |  |        |  |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The intrinsic value is calculated as the difference
  between the market value as of December 27, 2006 and the exercise price of
  the options outstanding and options exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Options are accounted for as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Intrinsic Value Method: Prior to
  December 29, 2005, the Company used the intrinsic value method to account for
  employee stock options in accordance with APB Opinion No. 25. Under APB
  Opinion No. 25, the Company did not recognize compensation expense related to
  employee stock options if the exercise price of the options was equal to or
  greater than the market price of the underlying stock on the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Variable Accounting: Options
  granted after November 18, 2005 provide that, in the event of a successful
  completion of an initial public offering of at least $50 million before
  November 18, 2007, 50% of the then unvested options will vest immediately
  upon consummation of the offering. The remaining unvested options will
  automatically terminate and the optionees will be entitled to receive
  restricted stock with an aggregate economic value equal to the fair market
  value (measured at the close of business of the first day of public trading)
  of the shares into which the terminated unvested options were exercisable
  minus the aggregate exercise price of such options. Upon a change in control
  of CAC, or if the initial public offering occurs after November 18, 2007,
  100% of the options granted will vest immediately.                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | For options granted prior to December 29, 2005 that
  may be cancelled and replaced with restricted stock upon completion of an
  initial public offering before November 18, 2007, the Company uses variable accounting to recognize
  expense based on the change in incremental value of the award at each
  reporting period. Compensation expense of $245,000 and a corresponding
  decrease in net income of $91,000 was recognized for the year ended December
  27, 2006 related to such options. At the date of cancellation of the original
  award and issuance of the replacement award upon completion of an offering,
  the Company will begin applying SFAS 123(R) to the award. SFAS 123(R)
  requires recording compensation expense for the incremental cost (the
  difference between the fair value of the award immediately before and after
  the modification) plus any unamortized intrinsic value computed on the
  modification date. As the fair value of the award will be equivalent before
  and after the modification, there will be no incremental cost related to this
  stock award upon modification. However, compensation expense will be recorded
  for the unamortized intrinsic value computed on the modification date.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | SFAS 123(R): In December 2004, the
  FASB issued SFAS 123(R) which requires companies to expense the estimated
  fair value of employee stock options and similar awards based on the
  grant-date fair value of the award. The cost will be recognized on a straight-line basis over the
  period during which an employee is required to provide service in exchange
  for the award, usually the vesting period. The Company adopted the provisions
  of SFAS 123(R) on December 29, 2005 using a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-23

---



|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                  | prospective
  application. Under the prospective application, SFAS 123(R), applies to new
  awards and any awards that are modified or cancelled subsequent to the date
  of adoption of SFAS 123(R). Prior periods are not revised for comparative
  purposes. Because the Company used the minimum value method for its pro forma
  disclosures under SFAS 123, options granted prior to December 29, 2005 will
  continue to be accounted for in accordance with APB Opinion No. 25 unless
  such options are modified, repurchased or cancelled after December 29, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  | In order to
  meet the fair value measurement objective, the Company utilizes the
  Black-Scholes option-pricing model to value compensation expense for
  share-based awards granted beginning in fiscal 2006 and developed estimates
  of various inputs including forfeiture rate, expected term life, expected
  volatility, and risk-free interest rate. The forfeiture rate is based on historical
  rates and reduces the compensation expense recognized. The expected term of
  options granted is derived from both historical and forecasted exercise
  activity for options granted within a specified date range. The risk-free
  interest rate is based on the implied yield on a U.S. Treasury constant
  maturity with a remaining term equal to the expected term of the Companys
  employee stock options. Expected volatility is based on the comparative
  industry entity data. The Company does not anticipate paying any cash
  dividends in the foreseeable future and therefore uses an expected dividend
  yield of zero for option valuation.                                                                                                                                                                                                                                                                                      
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  | The
  weighted-average estimated fair value of employee stock options granted
  during the year ended December 27, 2006 was $45.96 per share using the
  Black-Scholes model with the following weighted-average assumptions used to
  value the option grants: Expected volatility ranged from 33% to 41%; Expected term life  7.0
  years; Forfeiture rate  1.22%; Risk-free interest rates ranged from 4.3% to 4.7%; and
  Expected dividends  0%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  | Under the
  prospective method of SFAS 123R, compensation expense was recognized during
  the year ended December 27, 2006 for all stock based payments granted after
  December 28, 2005 based on the grant date fair value estimated in accordance
  with the provisions of SFAS 123R. During the year ended December 27, 2006,
  the Company recognized share-based compensation expense before tax of
  $112,000 related to stock option grants after December 28, 2005. This expense
  was included in other operating expenses consistent with the salary expense for the related optionees. This incremental stock-based
  compensation expense caused a decrease to net income of $42,000 for the
  year ended December 27, 2006. The adoption of SFAS 123(R) did
  not impact the Companys cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  | Upon
  consummation of an initial public offering or a change in control of CAC, the
  Company would incur compensation expense related to the immediate vesting of
  the unvested portion of certain options. The expense will be determined by
  calculating the unrecognized compensation cost as of the date of the
  completion of the offering or the change in control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|19. COMMITMENTS AND CONTINGENCIES
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  | Legal Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                 
|                                  | On or about
  April 16, 2004, two former employees and one current employee filed a class
  action suit in the Superior Court of the State of California, County of Los
  Angeles, against EPL on behalf of all putative class members (former and
  current general managers and restaurant managers from April 2000 to present)
  alleging certain violations of California labor laws, including alleged
  improper classification of general managers and restaurant managers as exempt
  employees (the Elias Action). Plaintiffs requested remedies include
  compensatory damages for unpaid wages, interest, certain statutory penalties,
  disgorgement of alleged profits, punitive damages and attorneys fees and
  costs as well as certain injunctive relief. The complaint was served on us on
  April 19, 2004. The court has ordered the class action stayed pending the
  arbitration of one of the named putative class plaintiffs claims as a result
  of his execution of a mandatory arbitration agreement with us. 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 himself and all others
  similarly situated, filed a purported class action complaint against EPL in
  the Superior Court of the State of California, County of Los Angeles. Carlos
  Olvera replaced Mr. Amezuca as the named class representative on August 16,
  2006 (the Olvera Action). 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. We were served with this complaint on December 16, 2005. The
  court has ordered that the case be deemed complex and assigned it to the
  complex litigation                                                                                                                                                                                                                                                                                                                                                                        

F-24

---



|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                               | panel. 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. This
  action has been designated by the court as related to the Elias Action
  referenced above. 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. Any settlement of or judgment with a negative outcome arising from
  such lawsuit could have an adverse material impact on the Companys
consolidated financial position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               | The
  contractual rights to use the name El Pollo Loco® and certain related
  trademarks and intellectual property in Mexico were assigned to us in 1996,
  pursuant to an agreement between us and a company controlled by Jose
  Francisco Ochoa, the founder of the first El Pollo Loco restaurant in Mexico
  and the United States. As consideration for the assignment of such rights, we
  agreed, subject to the terms and conditions of the agreement, to use
  commercially reasonable efforts to develop a minimum number of restaurants in
  Mexico by February 2006 and to pay certain fees for each such restaurant that
  we develop. On March 31, 2004, EPL-Mexico filed suit against us in state
  court in Laredo, Texas alleging, among other things, that we breached our
  agreement with EPL-Mexico by failing to exploit the trademarks and develop
  new restaurants in Mexico and claiming that the right to use the name El
  Pollo Loco® in Mexico should revert to EPL-Mexico. EPL-Mexico is seeking
  return of the trademarks and damages. EPL-Mexico also initiated an amparo
  proceeding, which is an administrative challenge under Mexican law, to our
  ownership of the trademarks before the Mexican Intellectual Property
  Institute. This proceeding was resolved in our favor by Mexicos Supreme
  Court of Justice of the Nation. We successfully removed the Texas action to
  federal court and we have filed a counterclaim against EPL-Mexico to defend
  our rights to the trademarks in Mexico. A jury trial is expected to occur in
  2007. We believe that EPL-Mexicos claims are without merit and that, based
  on the rights we possess pursuant to the agreement, we possess adequate legal
  and contractual rights to use the intellectual property in question in
  Mexico. However, failure to prevail in this action could result in the loss
  of our ownership in Mexico of the El Pollo Loco trademarks and intellectual
  property at issue, which could affect our brand in the United States and
  elsewhere as well as the imposition of significant monetary damages, which
  could have a material adverse impact on the Companys
consolidated financial position, results of operations or cash flows.
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               | On November
  1, 2006, Fall River Music, Inc. filed a lawsuit United States District Court,
  Central District of California, Santa Ana Division, against El Pollo Loco,
  Inc. and its advertising agency, Krueger Communications, LLC. Fall River
  Music claims all rights, title and interest to the musical composition
  Guantanamera, and alleges that the music used by EPL in its advertisements
  is an infringement of Fall Rivers copyrights. Fall River Music, Inc. seeks
  unspecified damages as a result of this alleged infringement. While EPL has
  received a denial of coverage from its insurance company, Kruegers insurance
  company has accepted coverage and is currently defending EPL. The action is
  set for trial on February 12, 2008. 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. Any settlement of or judgment with a negative
  outcome arising from such lawsuit could have an adverse material impact on the Companys
consolidated financial position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               | On January
  11, 2007, Veronica Blanco, on behalf of herself and all others similarly
  situated, filed a purported class action complaint against EPL in the United
  States District Court, Central District of California, Santa Ana Division.
  Veronica Blanco, on behalf of herself and all others similarly situated,
  alleges violations of the federal Fair Credit Reporting Act and Fair and
  Accurate Credit Transactions Act, which restrict the credit card information
  that may be printed on customer receipts. While we intend to defend against
  this action vigorously, the ultimate outcome of this case is not presently
  determinable as it is in the preliminary phase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               | We are 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. A significant
  increase in the number of these claims or an increase in amounts owing under
  successful claims could materially adversely affect our business, financial
  condition, results of operation and cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               | 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 rebates 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
      $11,008,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|20. RELATED PARTY TRANSACTIONS
|                              
|                               | Until
  November 18, 2005, EPL was a party to a Management Consulting Agreement with
  American Securities Capital Partners, L.P., which is an affiliate of the
  former majority owner of Holdings, pursuant to which ASCP provided EPL with
  certain management services. The annual fee for ASCPs services was
  approximately $400,000 plus its reasonable expenses. During the fiscal year
  ended December 29, 2004 and the Predecessor period from December 30, 2004 to
  November 17, 2005, $492,000 and $435,000, respectively, was expensed and paid
  to ASCP for managerial services and expenses. EPL is currently a party to a
  Management Consulting Agreement with Trimaran Fund Management, L.L.C.
  (Trimaran), an affiliate of the majority owner of CAC, with annual fees of
  approximately $500,000 plus reasonable expenses. During fiscal years ended
  December 28, 2005 and December 27, 2006, $59,000 and $570,000,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-25

---



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | respectively, was expensed and paid to Trimaran.
  These amounts are included in other operating expenses in the accompanying
  consolidated statements of operations.
| |                                                                                                                                                                       
| | The Company had receivables (payables) from
  affiliates of $(25,000) and $0 as of December 28, 2005 and
  December 27, 2006, respectively.                           

21.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The
following tables present selected quarterly financial data for the periods
ended as indicated (in thousands):

For the year ended December 27, 2006:

|                                                  |  |           |        |     |   |        |  |     |        |  |   |        |  
|------------------------------------------------- |  | --------- | ------ | --- | - | ------ |  | --- | ------ |  | - | ------ | -
|                                                  |  | Successor |       
|                                                  |  |           |       
|                                                  |  | 2006      |       
|                                                  |  |           |       
|                                                  |  | 1st       |        | 2nd |   | 3rd    |  | 4th |       
|                                                  |  |           |        |     |   |        |  |     |       
|Operating
  revenue                               |  | $         | 63,168 |     | $ | 65,858 |  | $   | 66,309 |  | $ | 64,553 |  
|Operating income                                  |  |           | 7,134  |     |   | 9,139  |  |     | 9,054  |  |   | 5,195  |  
|Income (loss)
  before provision for income taxes |  |           | 15     |     |   | 2,040  |  |     | 1,826  |  |   | (2,172 | )
|Net income
  (loss)                               |  |           | 9      |     |   | 1,247  |  |     | 532    |  |   | (1,151 | )

For the Successor period from November 18, 2005 to
December 28, 2005:

|                                                  |  |           |   |     |   |     |  |     |   |  |   |        |  
|------------------------------------------------- |  | --------- | - | --- | - | --- |  | --- | - |  | - | ------ | -
|                                                  |  | Successor |  
|                                                  |  |           |  
|                                                  |  | 2005      |  
|                                                  |  |           |  
|                                                  |  | 1st       |   | 2nd |   | 3rd |  | 4th |  
|                                                  |  |           |   |     |   |     |  |     |  
|Operating
  revenue                               |  | $         |  |     | $ |    |  | $   |  |  | $ | 26,269 |  
|Operating income                                  |  |           |  |     |   |    |  |     |  |  |   | 2,404  |  
|Income (loss)
  before provision for income taxes |  |           |  |     |   |    |  |     |  |  |   | (981   | )
|Net income
  (loss)                               |  |           |  |     |   |    |  |     |  |  |   | (588   | )

For the Predecessor period from December 30, 2004 to
November 17, 2005:

|                                                  |  |             |        |     |   |        |  |     |        |  |   |         |  
|------------------------------------------------- |  | ----------- | ------ | --- | - | ------ |  | --- | ------ |  | - | ------- | -
|                                                  |  | Predecessor |       
|                                                  |  |             |       
|                                                  |  | 2005        |       
|                                                  |  |             |       
|                                                  |  | 1st         |        | 2nd |   | 3rd    |  | 4th |       
|                                                  |  |             |        |     |   |        |  |     |       
|Operating
  revenue                               |  | $           | 54,670 |     | $ | 61,166 |  | $   | 61,561 |  | $ | 33,531  |  
|Operating income
  (loss)                         |  |             | 4,930  |     |   | 6,971  |  |     | 8,296  |  |   | (315    | )
|Income (loss)
  before provision for income taxes |  |             | 194    |     |   | 2,206  |  |     | 3,559  |  |   | (24,803 | )
|Net income
  (loss)                               |  |             | 115    |     |   | 1,446  |  |     | 2,100  |  |   | (14,854 | )

F-26

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EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                       
|(1) 2.1     |  | Stock Purchase Agreement, dated as of September 27, 2005, among Chicken Acquisition Corp., EPL Holdings, Inc., EPL Intermediate, Inc., EL Pollo Loco, Inc, the equityholders of the EPL Holdings, Inc. parties thereto, and American Securities Capital Partners, L.P.
|            |  |                                                                                                                                                                                                                                                                       
|(6) 2.2     |  | Agreement and Plan of Merger, dated November 18, 2005, of EPL Intermediate Finance Corp., to be merged with and into EPL Intermediate, Inc.                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                       
|(2) 3.1     |  | Certificate of Incorporation of EPL Intermediate, Inc.                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                       
|(2) 3.2     |  | Certificate of Designations, Preferences and Rights of 6% Series A Preferred Stock                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                       
|(2) 3.3     |  | Bylaws of EPL Intermediate, Inc. relating to the 2014 Notes                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                       
|(6) 4.1     |  | Indenture relating to the 2014 Notes, dated November 18, 2005, between EPL Intermediate, Inc. (as successor by merger to EPL Intermediate Finance Corp.) and The Bank of New York Trust Company, N.A.                                                                 
|            |  |                                                                                                                                                                                                                                                                       
|(6) 4.2     |  | Form of Note (included as Exhibit A to Exhibit 4.1)                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                       
|(6) 4.3     |  | Registration Rights Agreement relating to the 2014 Notes, dated November 18, 2005, among EPL Intermediate, Inc. (as successor by merger to EPL Intermediate Finance Corp.), Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC     
|            |  |                                                                                                                                                                                                                                                                       
|(3) 4.4     |  | Indenture relating to the 2009 Notes, dated as of December 19, 2003, among El Pollo Loco, Inc., EPL Intermediate, Inc. and The Bank of New York, as Trustee                                                                                                           
|            |  |                                                                                                                                                                                                                                                                       
|(6) 4.5     |  | Indenture relating to the 2013 Notes, dated November 18, 2005, among El Pollo Loco, Inc. (as successor by merger to EPL Finance Corp.), EPL Intermediate, Inc. and The Bank of New York Trust Company, N.A.                                                           
|            |  |                                                                                                                                                                                                                                                                       
|(6) 4.6     |  | Registration Rights Agreement relating to the 2013 Notes, dated November 18, 2005, among El Pollo Loco, Inc. (as successor by merger to EPL Finance Corp.), Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC                     
|            |  |                                                                                                                                                                                                                                                                       
|(7) 4.7     |  | Supplemental Indenture, dated November 2, 2005, between El Pollo Loco, Inc. and The Bank of New York as Trustee                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.1 +  |  | Employment Agreement, dated September 27, 2005, between El Pollo Loco, Inc. and Stephen E. Carley                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.2 +  |  | Employment Agreement, dated September 27, 2005, between El Pollo Loco, Inc. and Joseph Stein                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.3 +  |  | Amendment No. 1 to Stein Employment Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and Joseph Stein                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.4 +  |  | Employment Agreement, dated November 1, 2005, between El Pollo Loco, Inc. and Brian Berkhausen                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.5 +  |  | Employment Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and Karen Eadon                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.6 +  |  | Employment Agreement, dated September 30, 2005, as amended October 10, 2005, between El Pollo Loco, Inc. and Pamela Milner                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.7 +  |  | Amendment No. 1 to Milner Employment Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and Pamela Milner                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                       
|(6) 10.8 +  |  | Employment Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and Jeanne Scott                                                                                                                                                                            

---



|            |  |                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.9 +  |  | Employment Agreement, dated January 9, 2006, between El Pollo Loco, Inc. and Stephen Sather                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.10 + |  | Form of Exchange Agreement, entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.11 + |  | Amendment No. 1 to Form of Exchange Agreement, entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.12 + |  | Form of Exchange Stock Option Agreement, entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.13 + |  | Amendment No. 1 to Form of Exchange Stock Option Agreement, entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.14 + |  | Amendment No. 2 to Form of Exchange Stock Option Agreement, entered into between Chicken Acquisition Corp. and certain executive officers                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.15   |  | Stockholders Agreement, dated November 18, 2005, among Chicken Acquisition Corp., Trimaran Pollo Partners, LLC and certain continuing investors                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                      
|(8) 10.16   |  | Second Amended and Restated Limited Liability Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated March 8, 2006, among affiliates of Trimaran Fund Management, L.L.C. and certain other third party investors                                                                      
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.17   |  | Monitoring and Management Services Agreement, dated November 18, 2005, between Chicken Acquisition Corp. and Trimaran Fund Management, L.L.C.                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.18   |  | Credit Agreement, dated November 18, 2005, among El Pollo Loco, Inc., EPL Intermediate, Inc., Merrill Lynch Capital Corporation, Bank of America, N.A., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIT Lending Services Corporation and the other lenders party thereto
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.19   |  | Security Agreement, dated as of November 18, 2005, with Merrill Lynch Capital Corporation                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.20   |  | Securities Pledge Agreement, dated as of November 18, 2005, with Merrill Lynch Capital Corporation                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.21   |  | Guaranty, dated as of November 18, 2005, with Merrill Lynch Capital Corporation                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                      
|10.22 +     |  | Form of Non-Qualified Stock Option Agreement for directors with Chicken Acquisition Corp.                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.23 + |  | Form of Non-Qualified Stock Option Agreement for officers with Chicken Acquisition Corp.                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                      
|(6) 10.24 + |  | Chicken Acquisition Corp. 2005 Stock Option Plan                                                                                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                      
|(3)* 10.25  |  | Letter Agreement, dated February 23, 2005, between Gold Kist Inc. and El Pollo Loco, Inc.                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                      
|(3)* 10.26  |  | Letter Agreement, dated February 15, 2005, between Pilgrims Pride Corporation and El Pollo Loco, Inc.                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                      
|(6)* 10.27  |  | Amendment to Letter Agreement, dated January 21, 2006, between Gold Kist Inc. and El Pollo Loco, Inc.                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                      
|(6)* 10.28  |  | Amendment to Letter Agreement, dated January 11, 2006, between Pilgrims Pride Corporation and El Pollo Loco, Inc.                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                      
|(3) 10.29   |  | Form of Franchise Development Agreement                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                      
|(3) 10.30   |  | Form of Franchise Agreement                                                                                                                                                                                                                                                                          

---



|+10.31   |  | Compensation of Independent Directors                                                            
|-------- |  | -------------------------------------------------------------------------------------------------
|         |  |                                                                                                  
|10.32    |  | Fiesta Brands Development Agreement dated August 10, 2006.                                       
|         |  |                                                                                                  
|12.1     |  | Computation of Ratio of Earnings to Fixed Charges                                                
|         |  |                                                                                                  
|(4) 14.1 |  | El Pollo Loco, Inc. Code of Business Ethics & Conduct                                            
|         |  |                                                                                                  
|(5) 21.1 |  | Subsidiaries of EPL Intermediate, Inc.                                                           
|         |  |                                                                                                  
|23.1     |  | Consent of Duff & Phelps                                                                         
|         |  |                                                                                                  
|31.1     |  | Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|         |  |                                                                                                  
|31.2     |  | Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|         |  |                                                                                                  
|32.1     |  | Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
|         |  |                                                                                                  
|32.2     |  | Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
|        

|(1) | Incorporated by reference to EPL Intermediate, Inc.s Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2005 (File No. 333-115644) as filed on November 14, 2005.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to EPL Intermediate, Inc.s Registration Statement on Form S-4 (File No. 333-115644) as filed on May 19, 2004.                                                  
|   
|(3) | Incorporated by reference to El Pollo Loco, Inc.s Registration Statement on Form S-4 (File No. 333- 115486) as filed on May 14, 2004.                                                    
|   
|(4) | Incorporated by reference to El Pollo Loco, Inc.s Annual Report on Form 10-K for the fiscal year ended December 29, 2004 (File No. 333-115486) as filed on March 28, 2005.               
|   
|(5) | Incorporated by reference to EPL Intermediate, Inc.s Registration Statement on Form S-4 (File No. 333-115644) as filed on May 19, 2004.                                                  
|   
|(6) | Incorporated by reference to EPL Intermediate, Inc.s Form 10-K for the year ended December 27, 2005 (File No. 333-115644) filed on April 10, 2006.                                       
|   
|(7) | Incorporated by reference to El Pollo Loco, Inc.s Form 8-K filed on November 4, 2005.                                                                                                    
|   
|(8) | Incorporated by reference to EPL Intermediate Inc.s Registration Statement on Form S-4 (File No. 333-133318) filed on April 14, 2006.                                                    
|   



|+ | Management contracts and compensatory plans and arrangements.                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Certain confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a Confidential Treatment Request.

|
|

---