**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**







**FORM
                10-K**





**(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 26, 2007**


**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**


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


**Delaware**
              **(State
                or other jurisdiction of**
              **Incorporation
                or organization)**
            
            **13-4092105**
              **(I.R.S.
                Employer**
              **Identification
                No.)****3535
                Harbor Blvd., Suite 100**
              **Costa
                Mesa, California**
              **(Address
                of principal executive offices)**
            
            **92626**
              **(Zip
                Code)****Registrant’s
                telephone number, including area code (714)
                599-5000**





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







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 x No o


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


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


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


Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the 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 24, 2008.




Documents
      Incorporated By Reference




None.





1


**TABLE
      OF CONTENTS**




**FORM
      10-K**


**Page**Forward-Looking
                Statements
            
            1Non-GAAP
                Financial Measures
            
            1Item
                1.
            Business.
            
            1Item
                1A.
            Risk
                Factors.
            
            7Item
                1B.
            Unresolved
                Staff Comments.
            
            12Item
                2.
            Properties.
            
            12Item
                3.
            Legal
                Proceedings.
            
            13Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            
            14Item
                5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities.
            
            15Item
                6.
            Selected
                Financial Data.
            
            15Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.
            
            16Item
                7A.
            Quantitative
                and Qualitative Disclosure About Market Risk.
            
            26Item
                8.
            Financial
                Statements and Supplementary Data
            
            26Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure.
            
            26Item
                9A.
            Controls
                and Procedures.
            
            26Item
                9B.
            Other
                Information.
            
            27Item
                10.
            Directors
                and Executive Officers of the Company.
            
            28Item
                11.
            Executive
                Compensation
            
            29Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            40Item
                13.
            Certain
                Relationships and Related Transactions and Director
                Independence
            
            40Item
                14.
            Principal
                Accounting Fees and Services
            
            41Item
                15.
            Exhibits,
                Financial Statement Schedules
            
            42


i


**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, an adverse ruling in our appeal in
      litigation involving El Pollo Loco S.A. de C.V. which could result in the
      imposition of significant monetary damages and loss of rights to trademarks in
      Mexico, 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.
      See
“Item 1A. Risk Factors.”




**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. 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 (average unit volume)
      ranked seventh nationwide in 2006 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. Our restaurants system-wide have achieved positive
      annual average same-store sales growth since 2000 and system-wide same-store
      sales growth of 2.7% in 2007 and 5.3% in 2006.




Our
      menu
      features our authentic flame-grilled chicken and includes approximately 50
      items
      ranging in price from $1.00 to $23.49, 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 26, 2007, our restaurant system consisted of 159 company-operated
      and
      230 franchised restaurants located primarily in California, with additional
      restaurants in Arizona, Nevada, Texas, Illinois, Colorado, Connecticut,
      Massachusetts, and Georgia. In 2007 we opened 11 new company-operated
      restaurants and 19 franchised restaurants.


1


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 26, 2007, we had total revenue of $279.0 million, operating
      income of $28.2 million and a net loss of $4.0 million. 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 (“NRA”), a restaurant industry
      trade association, 2007 was expected to mark the 16th 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 44%
      between 1990 and 2006 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.




According
      to the NRA, the restaurant industry faced several economic challenges in 2007,
      including the largest spike in wholesale food prices in 27 years, as well as
      increasing energy and gas prices. While softening somewhat going into 2008,
      these prices are expected to remain elevated. The cost of food and beverages
      account for approximately 33 cents of every dollar of restaurant sales and
      is
      one of the most critical items on their income statements (along with labor
      costs, which also represent about one-third of restaurant sales).




At
      eating-and-drinking establishments, including full-service, quick-service,
      cafeteria and snack outlets, the NRA forecast calls for sales to increase 4.4
      percent, or 0.8 percent when adjusted for menu price inflation, to $393.19
      billion this year. Most restaurant segments will post growth rates that hover
      around the 0.8 percent overall rate, heightening competition and favoring
      operators that take a bargain-pricing stance, the NRA says.




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 42% from 1990
      to
      2005.




**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.




*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 27 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 44% market share in 2006, 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 23%, 22% and 21% for fiscal 2005, 2006
      and
      2007, respectively. Our high AUV and restaurant-level profitability have
      facilitated a strong return on invested capital for new company-operated and
      new
      franchised restaurants. This model has been challenged by rising construction
      costs and higher commodity costs, which we are addressing with construction
      value engineering efforts and commodity product optimization
      projects.




*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 26, 2007, approximately 59% of our restaurants were franchised. Our
      franchise base consists of many successful, long-standing, multi-unit restaurant
      operators, with 83% 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, Missouri, Illinois,
      Georgia, Virginia, Utah, New York, New Jersey, Oregon, North Carolina, Florida
      and the six New England states. As of December 26, 2007, we had commitments
      to
      open 208 restaurants at various dates through 2016.


2


*Scalable
      Infrastructure and Enhanced Brand Image.* Our
      management team is 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.




**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 plan to 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.
                For example, in the third quarter of 2007 we introduced two new
                value-priced menu items, a crunchy taco and a soft chicken taco,
                which
                achieved the highest new product customer trial of any product introduced
                in the past seven years.




•
            *Increasing
                Average Check*.
                Our strategy to increase the average customer check includes 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 have implemented several initiatives over the last few years to
                improve
                the speed of service for our customers, including the implementation
                of an
                improved labor scheduling system, enhanced drive-thru timing reporting
                system, and an additional register at each drive-thru location.




•
            *Developing
                Our Catering Business*.
                We have enhanced catering services throughout our system and have
                increased the number of company and franchise stores that offer catering
                delivery.




*Increase
      Penetration of Existing Markets.* We will
      continue to open new company-operated and franchise restaurants in our existing
      markets, including California, Nevada, and Arizona. 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
      existing market strategy is to develop new company-operated restaurants in
      the
      greater Los Angeles area, Las Vegas, and the Central Valley of California,
      and
      to partner with experienced multi-unit operators in Arizona and the other
      regions of California. Our extensive operational and site selection expertise
      in
      the greater Los Angeles area, Las Vegas and the Central Valley create a strong
      platform on which to profitably grow our company-operated restaurant base.




In
      2007
      we opened  11
      Company-operated restaurants and 12 franchised restaurants in existing markets.
      We currently plan to open approximately ten new company-operated restaurants
      in
      fiscal 2008 with a moderately increasing number of restaurants in subsequent
      years. As of December 26, 2007, a total of 16 sites have been identified for
      new
      company-operated restaurant openings in 2008 through 2009. 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 December 26,
      2007, we had signed franchise development agreements with 10 franchisees to
      open
      an additional 53 restaurants in our existing markets, which are scheduled to
      open at various dates through 2015.




*Develop
      Certain New Markets with a Combination of Company Store Growth and 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. As of
      February 8, 2008, we are legally authorized to market franchises in 48 states
      and are pursuing opportunities in a number of those states. Our approach to
      franchising 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. By partnering
      with experienced operators in new markets, 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. In 2007, our franchisees
      opened 5 restaurants in Atlanta, one in New England and one in the Chicago
      area.
      As of December 26, 2007, we have signed development agreements with 12
      franchisees to open an additional 155 restaurants in Illinois, the six New
      England states, Missouri, Georgia, Virginia, Utah, Washington, New York, New
      Jersey, Oregon, North Carolina and Florida, which are scheduled to open at
      various dates through 2016. In addition to franchise growth, we plan to
      accelerate our company store growth outside of existing markets with development
      in the Chicago area and certain other markets that we are currently evaluating.
      Our increased operational bench strength, improvement in our restaurant opening
      process and improved technology tools give us the ability to extend into new
      markets with confidence.


3


*Increase
      Our Profitability.* Over the
      past several years we significantly improved our operations and implemented
      cost
      controls that led to increased restaurant-level profitability. However, these
      gains in restaurant level profitability have been offset by rising commodity
      costs and minimum wage increases. 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
                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 21 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 2007, there were
      over 900 quality control site visits to restaurants and 106 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, gift 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, debit card and gift 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 and to maintain inventory and
      cash
      management controls.




*Menu
      and Food Preparation* .
      We are
      committed to serving quality chicken and Mexican-inspired food. 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.




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 73
      company-operated restaurants and 92 franchised restaurants.


4


**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.




**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 certain
      new
      markets, leveraging the ownership of entrepreneurs with specific local market
      expertise and requiring a relatively minimal capital commitment by us. As of
      December 26, 2007, there were a total of 230 franchised restaurants, operated
      by
      59 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 49 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 a director 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.


5


Our
      development agreements 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.




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 beginning 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 2007, the quality control team conducted 106 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.
        Effective 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. In March 2008 we renewed a chicken supply contract with one of
        our
        suppliers for a term of one year at higher prices than the expiring contract.
        We
        are also in the process of renewing another contract and contracting with
        a new
        supplier, both of which will be effective as of March 2008 for one year
        terms.We implemented menu price increases in January 2007 and January 2006
        that
        have partially mitigated the impact of higher chicken prices on our
        profitability. Chicken makes up the largest part of our total product cost,
        approximately 13.4% of our revenue from company-operated restaurants for
        fiscal
        2007.




**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, such as KFC, Church’s Chicken, Popeye’s Chicken &
Biscuits and Taco Bell, as well as fast casual restaurants and franchisors
      of
      other restaurant concepts. We believe that QSR competition is based primarily
      on
      quality, taste, speed 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 as well as 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.





**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, and franchise sales. 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, and our franchisees are required to 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.


6


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 “Item
      1A. Risk Factors—Matters relating to employment and labor laws may adversely
      affect our business” and “Item 3. Legal Proceedings.”




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. As of February 8, 2008, we are
      legally authorized to market franchises in 48 states and are pursuing
      opportunities in many of 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 26, 2007, we believe that the
      risk
      of loss is remote.




**Employees**




As
      of
      December 26, 2007, we had approximately 4,146 employees, of whom approximately
      3,357 were hourly restaurant employees, 153 were salaried general managers
      engaged in managerial capacities, 491 were assistant managers and 145 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.




**I** **tem
      1A. Risk Factors.**







***Sources
      of financing may not be available to the Company in the amount or terms
      required.***





Our
      ability to manage our debt is dependent on increased positive cash flow from
      our
      growth of company and franchised stores, along with associated economies of
      scale. We can provide no assurances in this regard. If our cash flows do not
      improve, we may not be able to satisfy our debt covenants and we may be unable
      to revise or arrange new financing facilities on acceptable terms or at all.
      The
      liquidity crisis that began in 2007 as a result of the collapse of the subprime
      mortgage market has adversely impacted global credit markets, severely
      constrained liquidity conditions, and could make it more difficult for us to
      obtain debt financing. Continuation of such constraints may increase the
      Company’s costs of borrowing and could restrict the Company’s access to this
      potential source of future liquidity




***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.


7


***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 2005, 2006 and 2007, the cost
      of chicken included in our product cost was approximately 14.0%, 13.2% and
      13.4%, respectively, of our revenue from company-operated restaurants. Material
      increases in the cost of chicken could materially adversely affect our business,
      operating results and financial condition. 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 are a primary feed source for chicken, have increased
      dramatically. A major driver of this increase is rapidly increasing demand
      for
      corn from the ethanol industry. There have been many new ethanol plants opening
      in the United States, and most of these plants use corn as the primary source
      of
      grain to make ethanol. In addition, there has been a global increase in demand
      for corn and wheat, which has put pressure on grain prices worldwide. This
      increased demand on the nation’s corn crop has had and may continue to have an
      adverse impact on chicken prices. 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 seek to limit
      our exposure to chicken price fluctuations through contracts with suppliers
      ranging in term from one to three years. Although we have implemented menu
      price
      increases in the past to significantly offset the higher prices of chicken,
      due
      to competitive pressures there is no assurance we can do so in the future.
      If we
      do implement menu price increases in the future to protect our margins, check
      averages and restaurant traffic could be materially adversely
      affected.




***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 chicken 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 86% of our revenue in fiscal 2006
      and
      approximately 85% in fiscal 2007. 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 may suffer
      unexpected losses resulting from natural disasters or other catastrophic events
      affecting these areas, such as earthquakes, fires, explosions, 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;




•
            reach
                acceptable agreements regarding the lease or purchase of
                locations;


8


•
            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 company store
      growth and through franchise development agreements. Since fiscal 2003, we
      executed development agreements for new restaurants in California, Washington,
      Arizona, Missouri, Illinois, Georgia, Virginia, Utah, New York, New Jersey,
      Oregon, North Carolina, Florida 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 our restaurants could be adversely affected
      due
      to close proximity with our other restaurants and market saturation.




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




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




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




Franchisees
      may not have access to the financial or management resources that they need
      to
      open the restaurants contemplated by their agreements with us, or be able to
      find suitable sites on which to develop them. Franchisees may not be able to
      negotiate acceptable lease or purchase terms for restaurant sites, obtain the
      necessary permits and government approvals or meet construction schedules.
      Any
      of these problems could slow our growth and reduce our franchise revenue.
      Additionally, our franchisees typically depend on financing from banks and
      other
      financial institutions, which may not always be available to them, in order
      to
      construct and open new restaurants. The lack of adequate financing could
      adversely affect the number and rate of new restaurant openings by our
      franchisees and adversely affect our future franchise revenue. 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 depends in part on our ability to anticipate, identify and
      respond to changing consumer preferences and economic conditions.


9


***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 substantially 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.





***The
      loss of our appeal of a judgment in favor of EPL-Mexico could result in an
      event
      of default under our credit and debt facilities and materially adversely affect
      our liquidity, financial condition and business.***




In
        late
        2007, judgments totaling over $23 million were entered against EPL in connection
        with a lawsuit brought by El Pollo Loco S.A. de C.V. (“EPL-Mexico”). See “Item
        3. Legal Proceedings.” The judgments also required EPL to assign various
        trademarks and intellectual property that were the subject of the suit to
        EPL-Mexico. We have appealed these judgments in the U.S. Fifth Circuit
        Court of Appeals. The appeal process could take 12 to 18 months. If the
        judgments are upheld on appeal, EPL will be required to pay the amount of
        such
        judgments, which could result in an event of default under our credit and
        debt
        facilities and materially adversely affect our liquidity, financial condition
        and business. EPL has entered into agreements with a significant beneficial
        stockholder to facilitate the posting of an appeal bond and, if necessary,
        the
        ultimate payment of the judgments. However, there is no assurance that we
        will
        have the financial resources to pay such judgments or that the cost of financing
        such payments will not have a material adverse effect on our financial condition
        and cash flows. See “Item 7. Management’s Discussion and Analysis of Financial
        Condition and Results of Operations - Litigation Contingency.” In addition, the
        loss of the rights to use the trademarks and intellectual property in Mexico
        could adversely affect our brand in the United States and elsewhere if they
        are
        used to operate restaurants in Mexico that do not meet our high
        standards.




***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 26, 2007, our total debt
      was
      approximately $262.3 million, which represented approximately 60% of our total
      capitalization, and we had approximately $8.5 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 123%
                of
                our operating cash flow in fiscal 2007 (including 2% 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 ability to plan for and react 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 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.


10


***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 increased to $8.00 per hour. Legislation has
      also
      passed to raise the federal minimum wage from $5.85 to $6.55 per hour effective
      July 24, 2008 and to $7.25 per hour effective July 24, 2009. 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 $0.4 million
      at
      December 26, 2007. 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 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
      an appeal of an adverse judgment relating to intellectual property rights in
      Mexico as discussed in “Item 3. Legal Proceedings.”




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.


11


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.”




***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. 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 a majority 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.




**I** **tem
      1B. Unresolved Staff Comments.**




Not
      applicable.




**I** **tem
      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 144 properties on which we operate restaurants.


12


On
      May
      18, 2007, the Company entered into a new corporate office lease. The lease
      commenced in October of 2007 and has a term of 10 1⁄2 years at an annual expense
      for financial statement purposes of approximately $271,000.




**Locations**




As
      of
      December 26, 2007, we and our franchisees operated 389 restaurants as
      follows:




**Designated
                Market Area**
            
            **Number
                of**
              **Company-**
              **Operated**
              **Restaurants**
            
            **Number
                of**
              **Franchised**
              **Restaurants**
            
            **Total**
              **Number
                of**
              **Restaurants**Los
                Angeles, CA
            
            128
            
            141
            
            269San
                Diego, CA
            
            —
            
            22
            
            22Phoenix,
                AZ
            
            —
            
            12
            
            12San
                Francisco/San Jose, CA
            
            —
            
            12
            
            12Sacramento/Stockton/Modesto,
                CA
            
            —
            
            9
            
            9Las
                Vegas, NV
            
            12
            
            —
            
            12San
                Antonio, TX
            
            6
            
            —
            
            6Fresno/Merced,
                CA
            
            7
            
            1
            
            8Bakersfield,
                CA
            
            —
            
            4
            
            4Palm
                Springs, CA
            
            4
            
            1
            
            5Reno,
                NV
            
            —
            
            3
            
            3Rio
                Grande Valley, TX
            
            —
            
            2
            
            2Santa
                Barbara, CA
            
            —
            
            2
            
            2El
                Paso, TX
            
            —
            
            2
            
            2Salinas,
                CA
            
            —
            
            2
            
            2El
                Centro, CA
            
            —
            
            1
            
            1Turlock,
                CA
            
            —
            
            1
            
            1Chicago,
                IL
            
            2
            *
            1
            
            3Denver,
                CO
            
            —
            
            1
            
            1Foxwoods,
                CT
            
            —
            
            1
            
            1Arizona
            
            —
            
            6
            
            6Massachusetts
            
            —
            
            1
            
            1Georgia
            
            —
            
            5
            
            5Total
            
            159
            
            230
            
            389




*
        The two
        company-operated restaurants in Chicago are franchise-owned restaurants.
        The
        company entered into a management agreement and assumed operations of the
        stores
        in October 2007. Results of operations of the restaurants are included in
        the
        Company’s financial statements beginning as of the agreement
        date.






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. Our franchisees employ a similar process
      using primarily outside consultants.





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.




**I** **tem
      3. Legal Proceedings.**




On
        or
        about April 16, 2004, a purported class action lawsuit was filed in the Superior
        Court of the State of California, County of Los Angeles, against EPL on behalf
        of all putative class members (former and current general managers and
        restaurant managers from April 2000 to present) alleging certain violations
        of
        California labor laws, including alleged improper classification of general
        managers and restaurant managers as exempt employees. Plaintiffs’ requested
        remedies include compensatory damages for unpaid wages, interest, certain
        statutory penalties, disgorgement of alleged profits, punitive damages and
        attorneys’ fees and costs as well as certain injunctive relief. The complaint
        was served on us on April 19, 2004. The court has lifted the stay on the
        class
        action pursuant to a recent California Supreme Court decision. The matter
        is now
        proceeding in Superior Court, and the parties are conducting limited discovery
        on the issue of class certification. While we intend to defend against this
        action vigorously, the ultimate outcome of this case is presently not
        determinable as it is in a preliminary phase. Thus, we cannot at this time
        determine the likelihood of an adverse judgment or a likely range of damages
        in
        the event of an adverse judgment.




On
        or
        about October 18, 2005, Salvador Amezcua, on behalf of 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. Amezcua as the named class representative on August 16, 2006.
        This
        action alleges certain violations of California labor laws and the California
        Business and Professions Code, based on, among other things, failure to pay
        overtime compensation, failure to provide meal periods, unlawful deductions
        from
        earnings and unfair competition. Plaintiffs’ requested remedies include
        compensatory and punitive damages, injunctive relief, disgorgement of profits
        and reasonable attorneys’ fees and costs. We were served with this complaint on
        December 16, 2005. The court denied EPL’s motion to compel arbitration, and the
        Company has appealed that decision. This matter is subject to an automatic
        stay
        while it is pending before the Court of Appeal. While we intend to defend
        against this action vigorously, the ultimate outcome of this case is presently
        not determinable as it is in a preliminary phase. Thus, we cannot at this
        time
        determine the likelihood of an adverse judgment or a likely range of damages
        in
        the event of an adverse judgment.


13


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 EPL-Mexico, 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
        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. Trial in this matter was completed on
        July
        26, 2007 with a jury verdict awarding damages in favor of EPL-Mexico in the
        amount of $21.3 million. Final judgment was issued by the Court on November
        30,
        2007 in the amount of $20,251,000 plus attorneys fees. In addition, the Court
        terminated the 1996 agreement and ordered EPL to assign all intellectual
        property defined in that agreement to EPL-Mexico. The trial court issued
        a
        further order awarding EPL-Mexico a total of $3,031,350 in attorneys’ fees and
        costs. In January 2008, EPL filed an appeal of these judgments in the U.S.
        Fifth
        Circuit Court of Appeals. The appeal process could take 12 to 18 months.
        If the
        judgments are upheld on appeal, EPL will be required to pay such judgments,
        which could result in an event of default under our credit facility and our
        long-term notes and materially adversely affect our liquidity, financial
        condition and business. In addition, the loss of the rights to use the
        trademarks and intellectual property in Mexico could adversely affect our
        brand
        in the U.S. and elsewhere.




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




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 claimed all rights, title and interest to the musical composition
“Guantanamera,” and alleged that the music used by EPL in its advertisements was
      an infringement of Fall River’s copyrights. Krueger’s insurance company accepted
      coverage and defended EPL in this suit. The parties settled the matter and
      the
      lawsuit was dismissed on November 15, 2007.




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.
      Plaintiff 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. The Court issued an order on November
      1, 2007, striking the class allegations on its own motion. This matter is
      therefore no longer a purported class action and is expected to have no material
      impact on the Company.





On
        April
        10, 2007, Shawn Monroe filed a purported class action in state court in Los
        Angeles County. Plaintiff had dismissed his individual ADA action against
        a
        single EPL restaurant when the Court denied his request to convert that lawsuit
        to a class action. He then filed this lawsuit alleging ADA violations on
        behalf
        of all disabled individuals who utilize wheelchairs or electric scooters
        for
        mobility at all EPL company-owned restaurants in the state of California.
        The
        Court issued an order on February 14, 2008 striking plaintiff’s class
        allegations without leave to amend his compliant. This case is an individual
        claim for a single restaurant location and therefore is expected to have
        no
        material impact on the Company.




In
      April
      2007, Dora Santana filed a purported class action in state court in Los Angeles
      County on behalf of all “Assistant Shift Managers.” Plaintiff alleges wage and
      hour violations including working off the clock, failure to pay overtime, and
      meal break violations on behalf of the purported class, currently defined as
      all
      Assistant Managers from April 2003 to present. Written discovery has just begun
      on the limited issue of class certification. While we intend to defend against
      this action vigorously, the ultimate outcome of this case is presently not
      determinable as it is in a preliminary phase. Thus, we cannot at this time
      determine the likelihood of an adverse judgment or a likely range of damages
      in
      the event of an adverse judgment. Any settlement of or judgment with a negative
      outcome arising from such lawsuit could be material, and we cannot give any
      assurance that we would have the resources available to pay such settlement
      or
      judgment.




In
      October 2004, five individual plaintiffs initially filed an employment related
      lawsuit against EPL in Los Angeles County Superior Court. The case was compelled
      to arbitration, and is now proceeding before a private arbitrator. Three
      plaintiffs settled for $3,000 each, leaving Syed Rahman, a former Assistant
      Manager, and Celso Diaz, a former delivery driver claiming discrimination in
      a
      variety of forms including race, religion, national origin and gender at the
      restaurant located in North Hollywood. EPL has a motion for summary judgment
      pending on each claim, and the arbitration has been taken off calendar to
      accommodate the required briefing timeline. While we intend to vigorously defend
      this action, 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 4, 2007, Robyn James, a former General Manager, filed a lawsuit
      in
      Superior Court for the County of Los Angeles. EPL was served on January 31,
      2008. Plaintiff alleges race discrimination as well as retaliation and negligent
      hiring and supervision. In addition to suing EPL, plaintiff has named as
      individual defendants, the Area Leader of the two stores where she was assigned
      and an Assistant Manager. This case is in the preliminary stage. 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.




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.




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




No
      matters were submitted to a vote of security holders in the fourth quarter
      of
      the fiscal year ended December 26, 2007.


14


**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 Exchange Act of 1934, as
      amended. There is no established public trading market for our common stock.
      On
      December 26, 2007, there was one holder of record of our common stock, El Pollo
      Loco Holdings, Inc.




In
      fiscal
      year 2006 and 2007, Intermediate paid no cash dividends. 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. See Notes
      12, 13 and 14 to our Consolidated Financial Statements.




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




**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 “Non-GAAP Financial Measures” at page 1 and “Item 7.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations - CAC Acquisition and Related Transactions.”




**Predecessor
                (1)**
            
            **Successor
                (1)****Fiscal
                Years (2)**
            
            
            
            
            
            **Fiscal
                Years (2)****2003**
            
            **2004**
            
            **December
                30, 2004 to November 17, 2005**
            
            **December
                30, 2004 to November 17, 2005**
            
            **2006**
            
            **2007****Income
                Statement Data:****(Amounts
                in thousands)**Restaurant
                revenue
            
            $
            193,220
            
            $
            204,820
            
            $
            197,267
            
            $
            24,527
            
            $
            242,571
            
            $
            259,987Franchise
                revenue
            
            
            13,226
            
            
            14,216
            
            
            13,661
            
            
            1,742
            
            
            17,317
            
            
            19,038Total
                operating revenue
            
            
            206,446
            
            
            219,036
            
            
            210,928
            
            
            26,269
            
            
            259,888
            
            
            279,025Product
                cost
            
            
            58,430
            
            
            64,595
            
            
            62,638
            
            
            7,958
            
            
            76,151
            
            
            81,233Payroll
                and benefits
            
            
            53,608
            
            
            55,200
            
            
            50,325
            
            
            6,746
            
            
            61,601
            
            
            67,545Depreciation
                and amortization
            
            
            13,039
            
            
            13,894
            
            
            12,743
            
            
            1,203
            
            
            10,333
            
            
            11,947Other
                operating expenses
            
            
            60,967
            
            
            65,979
            
            
            65,340
            
            
            7,958
            
            
            81,281
            
            
            90,074Operating
                income
            
            
            20,402
            
            
            19,368
            
            
            19,882
            
            
            2,404
            
            
            30,522
            
            
            28,226Interest
                expense, net
            
            
            8,100
            
            
            18,025
            
            
            38,726
            
            
            3,385
            
            
            28,813
            
            
            29,167Income
                (loss) before income taxes
            
            $
            12,302
            
            $
            1,343
            
            
            ($18,844
            )
            
            ($981
            )
            $
            1,709
            
            
            ($941
            )Net
                income (loss)
            
            $
            7,370
            
            $
            1,315
            
            
            ($11,193
            )
            
            ($588
            )
            $
            637
            
            
            ($4,034
            )**Supplementary
                Income Statement Data:**Restaurant
                other operating expense
            
            $
            38,511
            
            $
            39,900
            
            $
            38,153
            
            $
            4,623
            
            $
            51,039
            
            $
            56,138Franchise
                expense
            
            
            3,427
            
            
            3,410
            
            
            2,794
            
            
            352
            
            
            3,429
            
            
            3,747General
                and administrative expense
            
            
            19,029
            
            
            22,669
            
            
            24,393
            
            
            2,983
            
            
            26,813
            
            
            30,189Total
                other operating expenses
            
            $
            60,967
            
            $
            65,979
            
            $
            65,340
            
            $
            7,958
            
            $
            81,281
            
            $
            90,074**Balance
                Sheet Data:**Cash
                and cash equivalents
            
            $
            5,378
            
            $
            5,636
            
            
            
            
            $
            3,552
            
            $
            2,955
            
            $
            3,841Net
                property (3)
            
            
            64,678
            
            
            64,103
            
            
            
            
            
            71,307
            
            
            75,476
            
            
            83,322Total
                assets
            
            
            164,288
            
            
            167,238
            
            
            
            
            
            505,919
            
            
            509,048
            
            
            516,428Total
                debt (4)
            
            
            133,230
            
            
            169,582
            
            
            
            
            
            260,314
            
            
            262,187
            
            
            262,267Total
                stockholder’s equity (deficiency)
            
            
            (3,505
            )
            
            (38,875
            )
            
            
            
            
            171,691
            
            
            172,714
            
            
            172,311**Other
                Financial Data:**Depreciation
                and amortization
            
            
            13,039
            
            
            13,894
            
            
            12,743
            
            
            1,203
            
            
            10,333
            
            
            11,947Capital
                expenditures (5)
            
            
            12,262
            
            
            14,849
            
            
            13,270
            
            
            2,891
            
            
            14,022
            
            
            29,105







**(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.




15




**(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 2004, 2005, 2006 and 2007 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. The
                  amount
                  paid for the purchase of restaurants from franchisees was $8,358,000
                  in
                  2007.




**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 sections
      entitled “Risk Factors” and “Selected Financial Data,” and our consolidated
      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. Our restaurants are located principally in California, with additional
      restaurants in Arizona, Nevada, Texas, Illinois, Colorado, Connecticut and
      Georgia. 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
      restaurant counts at the end of each of the last three fiscal years are as
      follows:




**El
                Pollo Loco Restaurants**
              **Fiscal-Year
                End**2005
            2006
            2007Company-operated
            142
            151
            159Franchised
            191
            208
            230System-wide
            333
            359
            389




During
      2007, we opened 11 new company-operated restaurants, purchased 3 previously
      franchised restaurants and sold 8 restaurants to franchisees. In 2007,
      franchisees opened 19 new restaurants, acquired 8 restaurants from us, and
      sold
      us 3 restaurants.




We
      plan
      to open approximately ten company-operated restaurants in fiscal 2008 and a
      moderately increasing number of company-operated restaurants in succeeding
      years. We believe our franchisees will open approximately 40 new restaurants
      in
      fiscal 2008.




Our
      revenue is derived from two primary sources, company-operated restaurant revenue
      and franchise revenue, the latter of which is comprised principally of franchise
      royalties and to a lesser extent franchise fees and sublease rental income.
      A
      common measure of financial performance in the restaurant industry is
“same-store sales.” A restaurant enters the comparable restaurant base for the
      calculation of same-store sales the first full week after the 15-month
      anniversary of its opening. From 2006 to 2007, same-store sales for restaurants
      system-wide increased 2.7%. 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 menu price increases in January
      2008, January 2007 and January 2006. Our May 2005 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. 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, help desk revenue and
      franchise rental income. Royalties average 4% of the franchisees’ net sales. We
      believe that new franchise restaurant growth will increase as we sign
      development agreements with experienced franchisees in new and existing markets.
      As of December 26, 2007, we have commitments from franchisees to open 208
      restaurants at various dates through 2016. As of February 8, 2008 are currently
      legally authorized to market franchises in 48 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. In March 2008 we renewed a chicken supply contract with one of
        our
        suppliers for a term of one year at higher prices than the expiring contract.
        We
        are also in the process of renewing another contract and contracting with
        a new
        supplier, both of which will be effective as of March 2008 for one year terms.We
        implemented price increases in January 2008, January 2007 and January 2006
        that
        have partially mitigated the impact of higher chicken prices on our
        profitability. We expect that the cost of chicken will continue to be negatively
        affected by the significant demand for corn and, due to competitive pressures,
        there is no assurance that we will be able to increase menu prices in the
        future
        to offset these increased costs.


16


Payroll
      and benefits make up the next largest single expense. Payroll and benefits
      have
      been and remain subject to inflation, including 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 California
      passed legislation increasing the minimum wage in the state from $6.75 per
      hour
      to $7.50 per hour effective January 1, 2007. Additionally on January 1, 2008,
      the minimum wage in California increased to $8.00 per hour. Legislation has
      also
      passed to raise the federal minimum wage from $5.85 to $6.55 per hour effective
      July 24, 2008 and to $7.25 per hour effective July 24, 2009. The Company
      implemented a menu price increase of approximately 2% at the beginning of 2007
      and approximately 2.5% at the beginning of 2008 in order to mitigate the impact
      on profits of the minimum wage increase and commodity increases. 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 an overall reduction in the number of workers’ compensation claims due
      to employee safety initiatives that we began implementing in 2002.





Depreciation
      and amortization expense changed subsequent to our acquisition by CAC in 2005,
      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 litigation costs, rating agency
      fees, directors and officers insurance, compliance with laws relating to
      corporate governance and public disclosure, and audit fees. In addition, in
      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%, 22% and 21% for years 2005, 2006 and 2007,
      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 years
      2005,
      2006 and 2007:




**Fiscal
                Year****2005(1)**
            
            
            **2006**
            
            
            **2007**Net
                income (loss)
            
            $
            (11,781
            )
            $
            637
            
            $
            (4,034
            )Provision
                for income taxes
            
            
            8,044
            
            
            1,072
            
            
            3,093Interest
                expense, net
            
            
            42,111
            
            
            28,813
            
            
            29,167Depreciation
                and amortization
            
            
            13,946
            
            
            10,333
            
            
            11,947General
                and administrative expense
            
            
            27,376
            
            
            26,813
            
            
            30,189Franchise
                expense
            
            
            3,146
            
            
            3,429
            
            
            3,747Franchise
                revenue
            
            
            (15,403
            )
            
            (17,317
            )
            
            (19,038
            )Restaurant-level
                cash flow
            
            $
            51,351
            
            $
            53,780
            
            $
            55,071





(1)
            Reflects
                combined results for our Predecessor period and Successor period.
                This
                information is not in accordance with GAAP. See “Non-GAAP Financial
                Measures” on page 1.


17


**CAC
      Acquisition and Related 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.




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.




Trimaran
      Pollo Partners, LLC (the “LLC”) owns more than 99% of CAC, our parent company.
      On December 26, 2007, the Company entered into a Unit Purchase Agreement with
      the LLC, CAC, EPL, FS Equity Partners V, L.P. (“FSEP V”), FS Affiliates V, L.P.
      (“FSA V”), Peter Starrett (“Starrett” and collectively with FSEP V and FSA V,
      the “Purchasers”), and certain members of the LLC (the “Unit Purchase
      Agreement”). Pursuant to the Unit Purchase Agreement, the Purchasers acquired
      409,091 membership units from the LLC, for an aggregate purchase price of $45
      million. The LLC contributed the proceeds of this sale to CAC in consideration
      for 409,091 newly issued CAC shares. The LLC owned 1,910,753 CAC shares prior
      to
      the transaction and 2,319,844 CAC shares after the transaction, representing
      99.6% of CAC’s outstanding shares. CAC paid various fees and expenses related to
      this transaction of approximately $1.8 million. See “Liquidity and Capital
      Resources” below.




**Critical
      Accounting Policies and Estimates**




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 the significant
      judgments and estimates used in the preparation of our financial statements.




***Litigation
      Reserves***




We
        are
        the subject of litigation in the ordinary course of our business, such as
        claims
        asserting violations of wage and hour laws in our employment practices. In
        preparing our financial statements we account for these contingencies pursuant
        to the provisions of SFAS No. 5 and FIN 14, which require that we accrue
        for
        losses that are both probable and reasonably estimable. With respect to the
        lawsuit between us and EPL-Mexico as described in Item 3. Legal Proceedings,
        EPL
        filed an appeal of a $23 million judgment in January 2008 with the U.S. Fifth
        Circuit Court of Appeals. The appeal process could take 12 to 18 months.
        Our
        appeal will cite a number of key findings by the jury and actions by
        the plaintiff’s attorney that reinforce the Company’s firm belief that the
        damage findings were not supported by the facts in this case as a matter
        of law.
        Based on the arguments we will make on our appeal, we believe that the
        likelihood that the appeals court will affirm the judgment is not probable,
        and,
        accordingly, that the amount of any loss cannot be reasonably estimated at
        this
        time. Because we believe that these potential losses are not probable or
        estimable, we have not recorded any reserves or contingencies related to
        these
        legal matters. In the event that our assumptions used to evaluate these matters
        as neither probable nor estimable change in future periods, we may be required
        to record a liability for an adverse outcome, which could have a material
        adverse effect on our results of operations and financial position. See
“Litigation Contingency” below.


18


***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 amount, 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 a previous shareholder 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 2005, 2006 and 2007.




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 or in consideration
      of
      recent transactions involving stock sales with independent third parties. 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
                yearsFavorable
                leasehold interest
            1
                to 18 years (remaining lease term)Unfavorable
                leasehold interest
            1
                to 20 years (remaining lease term)




***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 our stock 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 is
      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 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.


19


Of
      the
      197,023 options we granted in 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 2005 due to the nominal size of the grant.




The
        terms
        of the 171,281 options granted on December 15, 2005 (that are outstanding
        at
        December 26, 2007), provided that if an initial public offering of at least
        $50,000,000 occurred before November 18, 2007, one-half of the then unvested
        options would have become exercisable and the remaining unvested options
        would
        have been 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 accounted for unvested options that would have been
        cancelled and replaced with restricted stock upon completion of an initial
        public offering before and until November 18, 2007 using variable accounting,
        which required us to recognize expense in each reporting period based on
        the
        change in incremental value of the award at each fiscal quarter. As the
        Company did not undertake an initial public offering prior to November 18,
        2007,
        the future compensation expense is calculated based on the fair market value
        of
        the underlying stock as of this date .
        For the
        year ended December 26, 2007, we recognized compensation expense of $381,000,
        which caused a decrease to net income of $155,000. As of December 26, 2007,
        the
        total unamortized compensation expense related to these options was
        approximately $1.5 million, which will be amortized over the remaining vesting
        period of approximately 5.0 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
      CAC common stock by a third party in March or June of 2006 because we believe
      the recent Acquisition by CAC constituted an arm’s-length transaction that
      provided an adequate basis, along with the other methods employed, to properly
      value CAC common stock on June 28, 2006.




In
        September 2006, we engaged an independent third-party valuation firm 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 each quarter from September 2006 to
        September 2007, we obtained valuations of the estimated then-current fair
        values
        of CAC stock prepared by an independent third-party valuation firm. 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 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 CAC 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.
        The third-party valuation firm, with our concurrence, estimated the volatility
        of CAC 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 value
        of
        CAC common stock would have been different as of each valuation date.




Beginning
      in 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 CAC 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 the simplified
      method per Staff Accounting Bulletin No. 107 “SAB 107”. 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 and December 26, 2007 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).




The
        fair
        market value of CAC’s common stock as of December 26, 2007 was determined by
        using the price a third-party purchaser paid in an independent, arm’s-length
        transaction to invest in Trimaran Pollo Partners, LLC, whose only asset is
        its
        investment in CAC. CAC’s only asset is its investment in EPLI. This transaction
        occurred on December 26, 2007. We did not obtain a contemporaneous valuation
        of
        CAC common stock by a third party because we believe this arm’s-length
        transaction most appropriately reflected the fair market value of the
        stock.




20


**Results
      of Operations**




Our
      operating results for 2005, 2006 and 2007 are expressed as a percentage of
      restaurant revenue below:




**Fiscal
                Years****2005(1)**
            
            **2006**
            
            **2007****Income
                Statement Data:**Restaurant
                revenue
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Product
                cost
            
            31.8
            
            
            31.4
            
            
            31.2Payroll
                and benefits
            
            25.7
            
            
            25.4
            
            
            26.0Depreciation
                and amortization
            
            6.3
            
            
            4.3
            
            
            4.6Other
                operating expenses
            
            33.0
            
            
            33.5
            
            
            34.6Operating
                income
            
            10.0
            
            
            12.6
            
            
            10.9Interest
                expense
            
            19.0
            
            
            11.9
            
            
            11.2Income
                (loss) before income taxes
            
            (8.9)
            
            
            0.7
            
            
            (0.4)Net
                income (loss)
            
            (5.3)
            
            
            0.3
            
            
            (1.6)**Supplementary
                Income Statement Data:**Restaurant
                other operating expense
            
            19.3
            
            
            21.0
            
            
            21.6Franchise
                expense
            
            1.4
            
            
            1.4
            
            
            1.4General
                and administrative expense
            
            12.3
            
            
            11.1
            
            
            11.6Total
                other operating expenses
            
            33.0
            
            
            33.5
            
            
            34.6





(1)
            Reflects
                combined results for our Predecessor period and Successor period.
                This
                information is not in accordance with GAAP. See “—Basis of Presentation”
                below 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 2005 to 2006. Because of the application of purchase
      accounting related to our acquisition by CAC in November 2005, certain
      amounts might not be comparable between the periods.




***Fiscal
      Year Ended December 26, 2007 Compared to Fiscal Year Ended December 27,
      2006***




Restaurant
      revenue increased $17.4 million, or 7.2%, to $260.0 million for 2007 from $242.6
      million from 2006. This increase was partially due to an additional $4.4 million
      in restaurant revenue resulting from a 1.9% increase in company-operated
      same-store sales for 2007 from 2006. Restaurants enter the comparable restaurant
      base for same-store sales the first full week after that restaurant’s
      fifteen-month anniversary. The components of the company-operated comparable
      sales growth increase were a price increase of 2.2%, a transaction decrease
      of
      1.4%, and a menu mix increase of 1.1%. The increase in restaurant revenue was
      also due in part to $6.4 million in current year revenue from twelve restaurants
      opened in 2005 and 2006, $6.7 million from eleven restaurants opened in 2007
      and
      $3.2 million from three restaurants acquired from a franchisee in 2007 partially
      offset by lost sales of $1.0 million due to the temporary closure of a
      restaurant due to a fire in 2007 and $2.3 million due to the sale of eight
      company restaurants to franchisees in 2007. The transaction decrease reflects
      intense competition and a general sales softness in the QSR industry, in part
      due to higher gas prices, recession fears and other economic factors that are
      expected to continue in 2008.




Franchise
      revenue increased $1.7 million, or 9.9%, to $19.0 million for 2007 from $17.3
      million for 2006. This increase is primarily due to an increase in royalties
      resulting from a 3.4% increase in franchise same-store sales and also to an
      increase of $0.2 million in franchise fees due to the increase in franchise
      store openings.




Product
      cost increased $5.0 million, or 6.7%, to $81.2 million for 2007 from $76.2
      million for 2006. These costs as a percentage of restaurant revenue were 31.2%
      for 2007 compared to 31.4% for 2006. This 0.2% decrease resulted primarily
      from
      the menu price increases taken in January 2007, offset partially by increases
      in
      commodity costs. See “Inflation” below.




Payroll
      and benefit expenses increased $5.9 million, or 9.6%, to $67.5 million for
      2007
      from $61.6 million for 2006. As a percentage of restaurant revenue, these costs
      increased by 0.6 percentage points to 26.0% for 2007 from 25.4% for 2006. This
      increase is primarily attributed to increased spending on manager training
      and
      the increase in the California minimum wage effective January 1, 2007. Payroll
      expenses will be negatively impacted in 2008 due to the California minimum
      wage
      increase from $7.50 to $8.00 per hour on January 1, 2008 and the increase in
      the
      federal minimum wage from $5.85 to $6.55 in July 2008. See “Inflation”
below.




Depreciation
      and amortization increased $1.6 million, or 15.6% to $11.9 million for 2007
      from
      $10.3 million for 2006. These costs as a percentage of restaurant revenue
      increased to 4.6% for 2007 from 4.3% for 2006. The increase in depreciation
      expense as a percentage of restaurant revenue is due to capital expenditures
      on
      existing restaurants to comply with the federal Americans with Disabilities
      Act
      remodels.




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
      $5.1 million, or 10.0%, to $56.1 million for 2007 from $51.0 million for 2006.
      These costs as a percentage of revenue increased by 0.6 percentage points to
      21.6% for 2007 from 21.0% for 2006. The increase in operating costs as a
      percentage of revenue was due in part to a 0.4% increase in occupancy costs
      as a
      percentage or revenue, which was primarily due to higher rent costs, a reduction
      in the annual amortization of the unfavorable leasehold interest liability
      and
      increased common area maintenance costs. The increase in operating costs was
      also due to increased advertising expense as a percentage of revenue of 0.2%,
      an
      increase in credit card fees as a percentage of revenue of 0.1%, and increased
      repair and maintenance fees as a percentage of revenue of 0.1%, partially due
      to
      a higher general run rate of equipment repairs and refrigeration. The increase
      in other operating expense was partially offset by insurance proceeds received
      in 2007 for a fire at one of our restaurants which decreased other operating
      expense by 0.2% as a percentage of revenue.


21


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 9.3%, to $3.7 million for 2007 compared to $3.4
      million for 2006. 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 increased $3.4 million, or 12.6%, to $30.2 million
        for 2007 from $26.8 million from 2006. General and administrative expense
        as a
        percentage of revenue was 11.6% and 11.1% for the 2007 and 2006, respectively.
        The increase in general and administrative expenses was due to a $0.8 million
        increase in salary and fringe expense, primarily due to increased headcount,
        a
        $2.5 million non-cash loss recognized in the current period primarily attributed
        to the sale of eight company restaurants to franchisees, increased legal
        fess of
        $1.5 million and an increase in stock option expense of $0.3 million, partially
        offset by $1.8 million in IPO expenses in 2006 that did not recur in the
        current
        year.




Interest
      expense, net of interest income, increased $0.4 million, or 1.2%, to $29.2
      million in 2007 from $28.8 million for 2006. Our average debt balances for
      2007
      increased to $262.2 million compared to $261.3 million for 2006 and our average
      interest rate decreased to 10.61% for 2007 compared to 10.62% for 2006.




Our
        provision for income taxes consisted of income tax expense of $3.1 million
        in
        2007 compared with $1.1 million in 2006 for an effective tax rate of (328.6)%
        for 2007 and 62.7% for 2006. The 2007 period’s effective tax rate was impacted
        by an adjustment to recognize an interest deduction related to the EPL
        Intermediate Discount Notes in the amount of $0.5 million that we determined
        not
        to be subject to Applicable High Yield Discount Obligation (AHYDO) rules
        in
        Section 163(i) of the Internal Revenue Code. The effective tax rate was also
        impacted by an adjustment for the non-deductible portion of goodwill
        written-off, in the amount of $2.8 million, related to the sale of eight
        company
        restaurants.




As
      a
      result of the factors above, we had a net loss of $4.0 million, or (1.6%) as
      a
      percentage of restaurant revenue, for 2007 compared to net income of $0.6
      million, or 0.3% of restaurant revenue, for 2006.




***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 2006 from $221.8
      million from 2005. This increase was partially due to an additional $8.2 million
      in restaurant revenue resulting from a 3.7% increase in company-operated
      same-store sales for 2006 from 2005. Restaurants enter the comparable restaurant
      base for same-store sales the first full week after that restaurant’s
      fifteen-month anniversary. The increase in restaurant revenue was also due
      in
      part to $5.8 million from six restaurants opened in 2005 and $6.8 million from
      nine restaurants opened in 2006.




Franchise
      revenue increased $1.9 million, or 12.4%, to $17.3 million for 2006 from $15.4
      million for 2005. This increase is primarily due to an increase in royalties
      resulting from a 7.0% 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 2006 from $70.6
      million for 2005. These costs as a percentage of restaurant revenue were 31.4%
      for 2006 compared to 31.8% for 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
      2006
      from $57.1 million for 2005. As a percentage of restaurant revenue, these costs
      decreased 0.3% to 25.4% for 2006 from 25.7% for 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.




Depreciation
      and amortization decreased $3.6 million, or 25.9% to $10.3 million for 2006
      from
      $13.9 million for 2005. These costs as a percentage of restaurant revenue
      decreased to 4.3% for 2006 from 6.3% for 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 2006 from $42.8 million for 2005.
      These costs as a percentage of revenue increased 1.7% to 21.0% for 2006 from
      19.3% for 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 2006 compared to $3.1
      million for 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
      2006 from $27.4 million from 2005. General and administrative expense as a
      percentage of revenue was 11.1% and 12.3% for the 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.


22


Interest
      expense, net of interest income, decreased $13.3 million, or 31.6%, to $28.8
      million in 2006 from $42.1 million for 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 2005,
      interest expense, net of interest income increased $8.4 million, or 41.2%,
      to
      $28.8 million for 2006 from $20.4 million for 2005. Our average debt balances
      for 2006 increased to $261.3 million compared to $166.9 million for 2005 and
      our
      average interest rate increased to 10.62% for 2006 compared to 9.06% for 2005.
      Our average debt balances for 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 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 of $0.6 million, or 0.3% as
      a
      percentage of restaurant revenue, for 2006 compared to a net loss of $11.8
      million, or (5.3%), for 2005.




**Liquidity
      and Capital Resources**




Our
      principal liquidity requirements are to service our debt and meet our capital
      expenditure needs. At December 26, 2007, our total debt was $262.3 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 $8.5 million that EPL had available at December 26, 2007, 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
        December 2007, our parent company, CAC, received a capital infusion of $45.0
        million. On December 26, 2007, CAC made a $3.0 million capital contribution
        to
        EPL through intermediary subsidiaries which was used for normal operating
        purposes and capital expenditures. On January 25, 2008, CAC made an $8 million
        capital contribution to the Company. The Company used $7.8 million of these
        proceeds to repurchase a portion of the outstanding 14.5% senior discount
        notes due 2014 (see Note 14 to our Consolidated Financial Statements) at
        a price
        that approximated their accreted value. The Company expects that CAC will
        make
        future capital contributions to the Company and EPL for acceleration of
        company-owned store growth and other corporate purposes.




In
      2007,
      our capital expenditures totaled $29.1 million, consisting of $13.1 million
      for
      new restaurants, $1.8 million for capitalized repairs of existing sites, $1.0
      million for remodels, including the remodel of the store that had a fire in
      the
      current year, $4.8 million for miscellaneous capital projects, including
      construction costs for the new corporate office, and $8.4 million for the
      purchase of three franchise restaurants.




Cash
        and
        cash equivalents increased $0.8 million from $3.0 million at December 27,
        2006
        to $3.8 million at December 26, 2007. During 2007, we made $2.3 million in
        principal repayments on EPL’s term loan, $17.5 million in payments to pay off
        borrowings under our revolving credit facility, and $25.0 million in interest
        payments. The interest payments related primarily to the 2013 Notes and the
        term
        loan, $14.8 million and $8.9 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**




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 $23.2 million for 2007 compared
      with $20.7 million for 2006. The increase in cash provided by operating
      activities of $2.5 million in 2007 compared to 2006 was primarily attributable
      to increased accounts payable balances, increases in deferred income taxes
      and
      changes in loss on disposal of assets partially offset by changes in the income
      taxes payable balances and the net loss.




*Investing
      Activities.* We
      had
      net cash used in investing activities of $21.1 million for 2007 compared with
      net cash used in investing activities of $19.1 million for 2006. The increase
      in
      cash used in investing activities of $2.0 million was related to $2.7 million
      in
      increased expenditures for new store construction, $0.8 million for increased
      spending for remodels, which included the remodel of the store that had the
      fire, $8.4 million for the purchase of the three franchise restaurants and
      $3.0
      million in construction costs related to the new corporate office, partially
      offset by $8.0 million in proceeds received for asset dispositions primarily
      attributed to the eight restaurants sold to franchises in the current period
      and
      for the insurance proceeds received for the store that had a fire in the current
      year and also due to $5.1 million for acquisition costs incurred in the prior
      period that did not recur in the current period.


23


*Financing
      Activities.* We
      had
      net cash used in financing activities of $1.2 million for 2007 compared with
      net
      cash used in financing activities of $2.2 million for 2006. The decrease in
      cash
      used in financing activities in 2007 was primarily attributable to the increased
      draw down of our revolving credit facility of $10.5 million and the capital
      contribution of $3.0 million received in 2007, partially offset by increased
      payments on debt of $12.7 million due to increased borrowings on our revolver
      that were paid in the current period and also due to a 2006 principal payment
      that was made in the current period.




**Debt
      and Other Obligations**




On
      November 18, 2005, EPL entered into senior secured credit facilities with
      Intermediate, as parent guarantor, Merrill Lynch Capital Corporation, as
      administrative agent, the other agents identified therein, Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of America,
      N.A., as lead arrangers and book managers, and a syndicate of financial
      institutions and institutional lenders. The senior secured credit facilities
      provide for an $104.5 million term loan and $25.0 million in revolving
      availability. As of December 26, 2007, EPL was in compliance with all of the
      financial covenants contained in its senior credit facility. In March 2007
      we
      amended the credit facility to reduce the interest rate and to modify in our
      favor the terms of certain restrictive covenants.




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




At
      December 26, 2007, we had $30,274,000 outstanding in aggregate principal amount
      of 141⁄2% Senior Discount Notes due 2014. No cash interest will accrue on the 2014
      Notes prior to November 15, 2009. Instead, the principal value of the 2014
      Notes
      will increase (representing accretion of original issue discount) from the
      date
      of original issuance until but not including November 15, 2009 at a rate of
      14
1⁄2 *%* per
      annum
      compounded annually, so that the accreted value of the 2014 Notes on November
      15, 2009 would 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. On January 25,
      2008, CAC made an $8 million capital contribution to the Company. The Company
      used $7.8 million of these proceeds to repurchase a portion of these notes
      at a
      price that approximated their accreted value. See Note 14 to our Consolidated
      Financial Statements.




As
      of
      December 26, 2007, we had $250,000 and $123,843,000 outstanding in aggregate
      principal amount under our 2009 Notes and 2013 Notes, respectively. See Notes
      11
      and 12 to our Consolidated Financial Statements.




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, 2007 (amounts in thousands):




**2008**
            
            **2009**
            
            **2010**
            
            **2011**
            
            **2012**
            
            **Thereafter**
            
            **Total**Existing
                Senior Secured Credit
              Facilities—Term
                Loan
            
            $
            8,817
            
            $
            8,738
            
            $
            8,658
            
            $
            105,035
            
            $
            —
            
            $
            —
            
            $
            131,2482009
                Notes
            
            
            23
            
            
            273
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            2962013
                Notes
            
            
            14,688
            
            
            14,688
            
            
            14,688
            
            
            14,688
            
            
            14,688
            
            
            139,688
            
            
            213,1282014
                Notes
            
            
            —
            
            
            —
            
            
            5,705
            
            
            5,705
            
            
            5,705
            
            
            50,751
            
            
            67,866Capital
                leases (see Note 7 to our
              consolidated
                financial statements)
            
            
            1,711
            
            
            948
            
            
            627
            
            
            457
            
            
            436
            
            
            2,031
            
            
            6,210Purchase
                obligations(2)
            
            
            2,838
            
            
            3,224
            
            
            2,203
            
            
            341
            
            
            —
            
            
            —
            
            
            8,606Subtotal
            
            
            28,077
            
            
            27,871
            
            
            31,881
            
            
            126,226
            
            
            20,829
            
            
            192,470
            
            
            427,354Restaurant
                operating leasesnet(1)
            
            
            15,925
            
            
            16,096
            
            
            15,769
            
            
            15,769
            
            
            15,446
            
            
            92,889
            
            
            171,894Total
            
            $
            44,002
            
            $
            43,967
            
            $
            47,650
            
            $
            141,995
            
            $
            36,275
            
            $
            285,359
            
            $
            599,248




(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 26, 2007, we had outstanding letters of credit totaling $14.0 million,
      which served as collateral for our various workers’ compensation insurance
      programs and our appeal bond in the Mexico litigation appeal.


24


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 26, 2007, 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 0.99 to 1; and




•
            EPL’s
                “leverage ratio” (as such term is defined in the senior credit agreement)
                was 5.07 to 1.




These
      two
      ratios were permitted to be no less than 0.95 to 1, and no greater than 5.25
      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 5.84 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.






Litigation
      Contingency





In
      late
      2007, judgments totaling over $23 million were entered against ELP in the case El
      Pollo Loco S.A. de C.V. (EPL-Mexico) v. El Pollo Loco, Inc. described in Item 3 of this Report. In connection with its appeal of this
      judgment, in January 2008 EPL posted an appeal bond in the amount of
      $24,301,450. A portion of the appeal bond was collateralized by a $17,900,000
      letter of credit arranged by Trimaran Fund II, LLC (“Trimaran Fund”). If
      Trimaran Fund provides cash collateral to secure the appeal bond, rather than
      a
      letter of credit, EPL must pay Trimaran Fund an annual fee equal to 13.25%
      of
      the cash collateral, payable quarterly. The cash collateral fee is payable,
      at
      Trimaran Fund’s option, in accordance with the payment options described in Item
      11. “Executive Compensation - Compensation Committee Interlocks and Insider
      Participation - Agreements Related to Litigation Appeal Bond.” The balance of
      the appeal bond was collateralized by unused borrowings under the revolving
      portion of our senior secured credit facilities. As a result, until the appeal
      bond is terminated, the borrowings available under our $25 million revolving
      line of credit are reduced by $6,450,000.





The
        appeal could take 12 to 18 months to complete. If the judgments are upheld
        on
        appeal, EPL will be required to pay the amount of such judgments, which could
        result in an event of default under our credit and debt facilities and
        materially adversely affect our liquidity, financial condition and business.
        EPL
        entered into agreements with Trimaran Fund to facilitate the posting of the
        appeal bond and, if necessary, the payment of the judgments, as described
        in
        Item 11. However, there is no assurance that we will have the financial
        resources to pay such judgments. If the plaintiff satisfies its judgment
        by
        collecting under the appeal bond, EPL will be required to repay the portion
        of
        the bond collateralized by Trimaran Fund, at the option of Trimaran Fund,
        with
        cash, a two-year convertible promissory note bearing interest at rates ranging
        from 13.25% to 17.50% per annum, or convertible preferred stock or common
        stock
        of CAC. If Trimaran Fund demands payment in cash or with a promissory note,
        such
        payments could have a material adverse effect on the Company’s liquidity, cash
        flows, financial condition and business.




For
      the
      reasons set forth in this Item 7 under “Critical Accounting Policies and
      Estimates,” no accrual for these judgments has been recorded as of December 26,
      2007.




**Recent
      Accounting Pronouncements**




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




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




In
      February 2007, the FASB issued Financial Accounting Standards No. 159, “The Fair
      Value Option for Financial Assets and Financial Liabilities—Including an
      amendment of FASB Statement No. 115” (“SFAS 159”). This Statement permits
      entities to choose to measure many financial instruments and certain other
      items
      at fair value. The objective is to improve financial reporting by providing
      entities with the opportunity to mitigate volatility in reported earnings caused
      by measuring related assets and liabilities differently without having to apply
      complex hedge accounting provisions. This Statement is expected to expand the
      use of fair value measurement, which is consistent with the FASB’s long-term
      measurement objectives for accounting for financial instruments. SFAS 159 is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. The Company is currently evaluating the impact, if any,
      that
      SFAS 159 will have on its consolidated financial position, results of operations
      and cash flows.


25




In
      September 2006, 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 ratified the consensus reached on Emerging Issues Task Force
      (“EITF”) Issue No. 06-03, How Taxes Collected from Customers and Remitted
      to Governmental Authorities Should Be Presented in the Income Statement (that
      is, Gross versus Net Presentation). The EITF reached a consensus that the
      presentation of taxes on either a gross or net basis is an accounting policy
      decision that requires disclosure. EITF 06-03 is effective for the first
      interim or annual reporting period beginning after December 15, 2006. Taxes
      collected from our customers are and have been recorded on a net basis. We
      have
      no intention of modifying this accounting policy. As such, the adoption of
      EITF 06-03 did not have an effect on our consolidated financial position or
      results of operations.




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 determined that the adoption of FIN 48 did not have a significant
      impact on its financial position or results of operations (see Note 17 to our
      Consolidated Financial Statements).




**Inflation**




Over
      the
      five years prior to 2007, inflation did not significantly affect our operating
      results. However, the impact of inflation on labor, food and occupancy costs
      in
      2007 and, in the future, could significantly affect our operations. In March
      2007 and March 2008, we renewed certain chicken supply contracts with terms
      ranging from one to two years at higher prices than the expiring contracts.
      In
      the last year, corn prices, which are a primary feed source for chicken, have
      increased dramatically. A major driver of this increase is rapidly increasing
      demand for corn from the ethanol industry. There have been many new ethanol
      plants opening in the United States, and most of these plants use corn as the
      primary source of grain to make ethanol. In addition, there has been a global
      increase in demand for corn and wheat, which has put pressure on grain prices
      worldwide. These conditions are expected to continue in 2008. Our workers’
compensation and health insurance costs have been and are subject to continued
      inflationary pressures. 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. We pay many
      of
      our employees hourly rates related to the applicable federal or state minimum
      wage. The State of California increased the minimum wage from $6.75 per hour
      to
      $7.50 per hour effective January 1, 2007. Additionally on January 1, 2008,
      the
      minimum wage in California increased to $8.00 per hour. Legislation has also
      passed to raise the federal minimum wage from $5.85 to $6.55 per hour effective
      July 24, 2008 and to $7.25 per hour effective July 24, 2009. Costs for
      construction, taxes, repairs, maintenance and insurance all impact our occupancy
      costs. We have implemented price increases in 2007 and 2008 to partially
      mitigate the impact of higher chicken prices and labor costs on our
      profitability. 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. Due to intense
      competition, there is no assurance we will be able to implement menu price
      increases in the future. If inflationary pressures require aggressive menu
      price
      increases in the future to protect our margins, check average and restaurant
      traffic could be materially, adversely affected.




**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 $104.0 million as of December 26, 2007 would result in an increase or
      decrease in interest expense of approximately $0.2 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
      26, 2007 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(T). 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 26, 2007. 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.


26


There
      have been no changes in our internal control over financial reporting that
      occurred during our year ended December 26, 2007, that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.




Management’s
      Report on Internal Control over Financial Reporting immediately precedes the
      Report of Independent Registered Public Accounting Firm.




**Item
      9B. Other Information.**




On
        March
        18, 2008, EPL executed a supply agreement with Koch Foods, Inc., one of its
        suppliers of chicken for its restaurants. The agreement provides for prices
        and
        quantities of chicken to be provided to the Company and is effective for
        the
        period March 1, 2008 through February 28, 2009. This information is provided
        in
        this report in response to Item 1.01, Entry into a Material Definitive
        Agreement, of Form 8-K in lieu of filing a Form 8-K.




On
        March 19, 2008,
        the Compensation Committee approved an amendment to the executive officers’
employment agreements to conform the definition of adjusted EBITDA in such
        agreements (which is used in connection with the determination of annual
        incentive bonuses) to the definition of adjusted EBITDA applicable to all
        employees under the Company’s employee incentive plans. The form of the
        amendment is filed as Exhibit 10.43 to this Report and is incorporated herein
        by
        this reference. This information is provided in this report in response to
        Item
        5.02(e), Compensatory Arrangements of Certain Officers, of Form 8-K in lieu
        of
        filing a Form 8-K.




On
        March 20, 2008,
        the Company issued a press release reporting results of operations for the
        fourth quarter and year ended December 26, 2007. A copy of the press release
        is
        being furnished as Exhibit 99 hereto and is incorporated herein by this
        reference. We do not intend for this exhibit to be incorporated by reference
        into any other filings we make with the SEC. This information is provided
        in
        this report in response to Item 2.02, Results of Operations and Financial
        Condition, and Item 9.01, Financial Statements and Exhibits, of Form 8-K
        in lieu
        of filing a Form 8-K.


27


**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
            
            55
            
            President,
                Chief Executive Officer and DirectorKaren
                B. Eadon
            
            54
            
            Senior
                Vice President of Marketing and Chief Marketing OfficerJoseph
                N. Stein
            
            47
            
            Senior
                Vice President of Finance, Chief Financial Officer and
                TreasurerBrian
                Berkhausen
            
            52
            
            Senior
                Vice President of DevelopmentJeanne
                A. Scott
            
            60
            
            Senior
                Vice President of Human Resources and Training and Assistant
                SecretaryJerry
                Lovejoy
            
            54
            
            Senior
                Vice President, General Counsel and SecretaryStephen
                J. Sather
            
            60
            
            Senior
                Vice President of OperationsDouglas
                K. Ammerman(2)
            
            56
            
            DirectorJay
                R. Bloom
            
            52
            
            DirectorAndrew
                R. Heyer(3)
            
            50
            
            DirectorDean
                C. Kehler(2)
            
            51
            
            DirectorDennis
                Lombardi(2)(3)
            
            60
            
            DirectorAlberto
                Robaina
            
            43
            
            DirectorJohn
                M. Roth(3)
            
            49
            
            DirectorGriffin
                Whitney
            
            32
            
            Director





(1)
            As
                of March 1, 2008.


(2)
            Member
                of Audit Committee.


(3)
            Member
                of Compensation Committee.




*Stephen
      E. Carley* has
      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 25 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 13 years in brand management and operations with General Mills, Inc.,
      the
      Pillsbury Company and PepsiCo, Inc.




*Karen
      B. Eadon* has
      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
      Berkhausen* was
      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. Scott* was
      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 Resources at 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.




*Jerry
      Lovejoy* has been
      the Senior Vice President and General Counsel for the Company and EPL since
      July
      2007. From November 1999 to May 2003, he served as Division Counsel for
      McDonald’s Corporation in San Diego, California and from August 2003 to July
      2006, he served as Vice President and General Counsel of Men’s Wearhouse in
      Fremont, California.




*Stephen
      J. Sather* was
      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.




*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.


28


*Jay
      R. Bloom* was
      elected a director of the Company and EPL in December 2007. Mr. Bloom has been
      a
      Managing Partner of Trimaran Capital, 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 1998. Prior to co-founding Trimaran
      Capital, Mr. Bloom was a vice chairman of CIBC World Markets Corp. and co-head
      of the CIBC Argosy Merchant Banking Funds from 1995 to 2006. Prior to joining
      CIBC World Markets Corp., Mr. Bloom was a founder and Managing Director of
      the
      Argosy Group L.P. Mr. Bloom currently serves on the Board of Directors of
      Norcraft Companies, L.P., Educational Services of America, Inc., PrimeCo
      Wireless Communications LLC, NSP Holdings LLC, Standard Steel, LLC and Source
      Financial Corporation.




*Andrew
      R. Heyer* has
      been
      a director of the Company since February 2007 and of EPL since November 2005.
      Mr. Heyer has been the Chief Executive Officer and a Managing Director of
      Mistral Capital Management, LLC, a private equity fund, since 2007. Mr. Heyer
      was a Managing Partner of Trimaran Capital, L.L.C. from 2000 until 2007 and
      he
      has been 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 Hain Celestial Group, Inc.,
      Village Voice Media, LLC, Brite Media Group LLC and Charlie Brown’s Acquisition
      Corp.




*Dean
      C. Kehler* was
      elected a director of the Company in February 2007 and has served as a director
      of EPL since November 2005. He has been a Managing Partner of Trimaran Capital,
      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.




*Dennis
      Lombardi* was
      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.




*Alberto
      Robaina* was
      elected a director in December 2007. Since May 2007, Mr. Robaina has been a
      Managing Director and General Counsel of Trimaran Capital, L.L.C., where he is
      responsible for legal and administrative matters for the firm’s private equity
      business and for Trimaran Advisors, L.L.C., the firm’s fixed income management
      business. Prior to joining Trimaran, Mr. Robaina spent ten years as General
      Counsel and Assistant Secretary for the New York City Investment
      Fund.




*John
      M. Roth* was
      elected a director in December 2007. Mr. Roth joined Freeman Spogli & Co., a
      private equity investment firm, in 1988 and became a general partner in 1993.
      From 1984 to 1988, Mr. Roth was employed by Kidder, Peabody & Co.
      Incorporated in the Mergers and Acquisitions Group. Mr. Roth also serves on
      the
      board of directors of Asbury Automotive Group, Inc., an automotive dealership
      group, and of hhgregg, Inc., a retailer of video products and
      appliances.




*Griffin
      Whitney* has
      been
      a director of the Company since September 2006. Mr. Whitney has been a Senior
      Associate with Mistral Capital Management LLC, a private equity firm, since
      January 2008. He was an Associate at Trimaran Capital, L.L.C. from June 2005
      through December 2007. From August 2003 to May 2005, Mr. Whitney attended the
      University of Pennsylvania Wharton School of Business, where he received a
      Masters in Business Administration. Prior thereto he was an Associate at AEA
      Investors, LLC and an analyst in the mergers and acquisitions group at JP
      Morgan/The Beacon Group.




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 responsibilities of the Compensation Committee (the “Committee”) of our
      Board of Directors are: (1) to establish and maintain fair, reasonable and
      competitive 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 corporate performance goals; and (2) to oversee the competency
      and
      qualifications of senior management personnel and the provisions of senior
      management succession planning.


29


The
      Company’s compensation policies with respect to its executive officers are based
      on the principles that total 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 set and maintain executive compensation
      at
      levels that are sufficiently competitive to attract, retain and motivate high
      quality executive talent to maximize the Company’s success. We seek to achieve
      this goal through a three-pronged compensation program consisting of base
      salaries, annual incentive bonus and stock option grants pursuant to which
      our
      executive officers will earn substantially more compensation than their base
      salaries if corporate performance goals are met or surpassed. The annual
      incentive bonus is linked strictly to the achievement of the Company’s annual
      performance goals and rewards short-term performance. Stock options provide
      a
      long-term incentive for executives to create wealth for our shareholders and
      provide rewards based on the appreciation in stock price.




Throughout
      this discussion, the individuals who served as the Company’s Chief Executive
      Officer and Chief Financial Officer during 2007 and 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.
      Two
      members of our Compensation Committee, Andrew Heyer and John Roth, are
      representatives of funds which have a majority membership interest in the LLC.




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. These agreements were negotiated with, and approved
      by, the LLC. We also enter into similar agreements with persons who become
      executive officers after the Acquisition. The employment agreements, which
      are
      described below under “Employment Agreements,” provide for the salary, annual
      bonus, benefits and payments upon termination of employment described below.
      CAC
      maintains a Stock Option Plan pursuant to which it grants options to purchase
      CAC common stock to our executive officers and other senior management. 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 rights described below under “Payments Upon Termination or Change in
      Control.” This Agreement also generally imposes 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.”




**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, and negotiations
      with the LLC. Salary adjustments 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. Each year, in connection with its approval
      of the annual operating plan, the Board of Directors approves annual merit
      increase pools for various categories of Company employees based on a percentage
      of the aggregate current salaries of employees in each category. These
      percentages, which take into account cost of living factors in Orange County,
      California, are determined in conjunction with the preparation of the annual
      operating plan and are influenced by other costs and their impact on budgeted
      EBITDA. For 2007, the Board approved merit salary increase pools ranging from
      2.5% to 3% for Support Center employees, consisting of approximately 150
      management and administrative personnel, including executive officers, at
      corporate headquarters.




Annual
        salary increases for executive officers are approved by the Compensation
        Committee based on recommendations from the Chief Executive Officer and his
        assessment of the individual’s performance during the prior year. All Company
        Support Center employees, including executive officers, are annually evaluated
        on the following basis: (i) the employee’s achievement of performance
        accountabilities and goals (which vary depending upon the individual employee’s
        area of responsibility, e.g., operations, marketing, development, human
        resources, finance, etc.) which are set jointly by the employee and his
        supervisor in the prior year, and (ii) the employee’s demonstration of
        certain “Good to Great” behaviors (based on the principles outlined in Jim
        Collins' book Good to Great), such as sound decision-making,
        collaboration and teamwork, customer orientation, execution and initiative,
        and
        integrity and trust. The employee’s performance accountabilities and Good to
        Great behaviors are weighted 50/50 in determining an overall performance
        rating.
        We believe that this balance promotes our policy of tying compensation to
        both
        short-term performance goals and organizational behaviors that build long-term
        value. The Compensation Committee reviews the performance of the Chief Executive
        Officer on an annual basis using the same performance review documents and
        principles as used for the other executive officers. Based on the executive’s
        performance review ratings and other factors such as relative position,
        responsibilities and tenure, the Chief Executive Officer, in consultation
        with
        the Compensation Committee members, recommends specific salary increases
        for all
        executive officers, including himself. In 2007, the Chief Executive Officer
        received a 3% salary increase and the Other Named Officers received salary
        increases ranging from 2% to 4%.




***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. In addition, all
      of
      our Support Center employees are eligible for an annual bonus based on the
      achievement of budgeted EBITDA and other employees are entitled to bonuses
      based
      on the achievement of specific operating performance goals tailored to their
      positions and responsibilities.




Our
      annual incentive bonus plan provides for a cash bonus, dependent upon the level
      of achievement of budgeted 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 the
      Named
      Executive Officers reflect our compensation policy that a substantial portion
      of
      the compensation opportunity should depend on the achievement of specific
      corporate performance goals. As set forth in their respective employment
      agreements, the target bonus awards (as a percentage of base salary) are as
      follows: Chief Executive Officer, 100%; Chief Financial Officer, 75%; and Senior
      Vice Presidents, 75%.


30


Depending
      on the achievement of budgeted EBITDA, the annual bonus for executive officers
      ranges from 25% to 150% of the target bonus, and no bonus is paid if actual
      adjusted 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 adjusted EBITDA is less than budgeted EBITDA, compared
      to
      the increase if actual adjusted EBITDA exceeds budgeted EBITDA. For example,
      if
      actual adjusted EBITDA equals 95% of budgeted EBITDA, the bonus is equal to
      62.5% of target bonus, whereas if actual adjusted 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 budgeted EBITDA. The amount of annual incentive bonus paid
      to the Named Executive Officers in 2007 is set forth in the column “Non-Equity
      Incentive Plan Compensation” in the Summary Compensation Table below. Additional
      information regarding the 2007 bonus opportunities for our Named Executive
      Officers is set forth under “Grants of Plan Based Awards in Fiscal
      2007.”




Adjusted
      EBITDA is defined as the income of the Company before, without duplication,
      interest expense, amortization of deferred financing fees and
      acquisition-related bank fees, income taxes, depreciation and amortization
      expense, gains (or losses) on the sale of company-operated restaurants or other
      significant assets, amortization of rent related to the application of FAS
      13,
      legal expenses associated with lawsuits relating to FLSA and California Labor
      Code exempt classification, transaction and new debt offering expenses, stock
      option expenses, and litigation-related legal expenses over plan, and after
      all
      bonuses and profit sharing expenses of the Company of any kind.




During
      2007, the Company incurred significant legal expenses in connection with
      litigation involving El Pollo Loco S.A. de C.V. and Arch Insurance Company
      (the
“Litigation”), which is described in Item 3 of this report. At the request of
      management, in February 2008, the Compensation Committee and the Board of
      Directors approved an adjustment in the determination of adjusted EBITDA so
      that
      for the years 2007 and 2008 only, adjusted EBITDA will be calculated before
      all
      expenses relating to the Litigation, because those expenses are out of the
      ordinary and not directly related to the Company’s operating performance. As
      noted above, in addition to executive officers, all of the Company’s Support
      Center employees are eligible for bonuses based on the achievement of budgeted
      EBITDA. Therefore, the Compensation Committee and the Board determined that
      this
      adjustment was necessary to promote the morale and retention of Company
      employees.




We
      believe that adjusted EBITDA is the best measure of our financial performance
      to
      use for the purpose of employee 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 adjusted 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 the multi-unit limited
      service restaurant industry.




Each
        year, management prepares a five-year development plan and annual operating
        plan
        for the upcoming fiscal year which reflects management’s and the LLC’s
        objectives for return on assets, growth and capital spending. These plans
        are
        reviewed and approved by the Board of Directors. Budgeted EBITDA is derived
        from
        the annual operating plan using the definition of adjusted EBITDA above.
        In each
        of the following
        years, annual bonus payouts to executive officers where the following
        percentages of target bonus: 2007 - 63%; 2006 - 70%; 2005 - 105%; 2004 -
        101%;
        and 2003 - 101%. In the last five years, the Company achieved or exceeded
        budgeted EBITDA in 2003, 2004 and 2005.




***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 2007.




***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 for CAC to grant non-qualified stock options to
      purchase CAC common stock to an eligible employee either upon hire or upon
      promotion to a minimum management level in the Company. Newly hired or promoted
      director-level or above 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 hire as Senior Vice President), the
      Named Executive Officers were granted stock 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, option awards have been determined
      by the Compensation Committee, in its discretion, taking into account the number
      of options previously granted to other officers. Stock options are granted
      with
      an exercise price equal to the fair market value of CAC stock based on an
      independent valuation as described in Item 7 of this Report.




Our
      stock
      options are both “performance-based” and “time-based” awards. For the first five
      years after the grant of an option, options vest 20% per year upon the
      achievement of annual or cumulative budgeted EBITDA goals to motivate management
      to achieve our financial goals. Because budgeted EBITDA was not achieved in
      2007, none of the options vested in 2007. However, even if the financial goals
      are not achieved, options vest 100% after seven years to encourage and reward
      loyalty and long-term commitment to the Company. We also provide for accelerated
      vesting upon an initial public offering of at least $50 million or a change
      in
      control of CAC because these 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 Compensation 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, auto fuel and
      maintenance costs, supplemental ExecuCare health insurance and payment of other
      health insurance premiums. Due to the significant amount of travel by our Chief
      Executive Officer to visit restaurants throughout the country, Mr. Carley is
      entitled to the use of a leased automobile and in 2007 the Compensation
      Committee approved an annual travel stipend of up to $10,000 for personal
      expenses incurred by Mr. Carley and his spouse. We intend to continue to
      maintain these modest executive benefits and perquisites for officers; however,
      subject to the terms of employment agreements, the Compensation Committee in
      its
      discretion may revise, amend or add to the officers’ executive benefits and
      perquisites if it deems it advisable.


31


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**




Under
      the
      terms of various agreements first entered into in connection with the
      Acquisition by CAC, the Named Executive Officers are entitled to payments in
      the
      event of a termination of employment under certain circumstances or a change
      in
      control of CAC. See “Employment and Related Agreements” above. The types of
      payments and estimated amounts payable are described below under “Potential
      Payments upon Termination or Change in Control.”




We
      do not
      view the change in control or post termination payments as additional elements
      of compensation because they are not directly related to the services provided
      by the executive and because a change in control or other triggering event
      may
      never occur. We believe the use and structure of our change in control and
      post
      termination payments are consistent with our compensation objectives to attract,
      motivate and retain highly talented executives. In addition, we believe the
      change in control arrangements preserve morale and productivity, provide a
      long-term commitment to job stability and financial security, and encourage
      retention in the face of the potential disruptive impact of an actual or
      potential change in control of the Company. Our change in control policies
      ensure that the interest of our executives will be materially consistent with
      the interest of our stockholders when considering corporate
      transactions.




Pursuant
      to their employment agreements, 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. 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. 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 severance 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. The difference
      in
      Mr. Carley’s severance package and method of payment compared to the other
      executives is due to his previous executive experience and his negotiations
      with
      the LLC.




In
      the
      event of the death or disability of an executive, to acknowledge such person’s
      contribution to the Company’s performance, the executive is entitled to a pro
      rata bonus based on the timing of such event during the year.




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 right 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 right 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 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 (the “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 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 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:John
                M. RothAndrew
                R. HeyerDennis
                Lombardi


32


**Summary
      Compensation Table**




The
      following table provides compensation information for years 2006 and 2007 with
      respect to our principal executive officer, our principal financial officer,
      and
      our three other most highly compensated executive officers (the “Named Executive
      Officers”).




**Non-Equity****Option**
            
            **Incentive
                Plan**
            
            **All
                Other****Awards**
            
            **Compensation**
            
            **Compensation****Salary**
            
            **($)**
            
            **($)**
            
            **($)**
            
            **Total
                ($)****Name
                and Principal Position**
            
            **Year**
            
            **($)**
            
            **(a)**
            
            **(b)**
            
            **(c)**
            
            **(d)**Stephen
                E. Carley,
            
            
            2007
            
            
            367,009
            
            
            287,657
            
            
            237,390
            
            
            57,600
            
            
            949,656President
                and Chief Executive Officer
            
            
            2006
            
            
            359,136
            
            
            287,657
            
            
            251,884
            
            
            61,456
            
            
            960,133Joseph
                N. Stein,
            
            
            2007
            
            
            249,109
            
            
            95,866
            
            
            121,154
            
            
            27,438
            
            
            493,567Senior
                Vice President, Finance and
            
            
            2006
            
            
            242,034
            
            
            95,866
            
            
            127,314
            
            
            25,392
            
            
            490,606Chief
                Financial OfficerKaren
                B. Eadon,
            
            
            2007
            
            
            262,171
            
            
            95,866
            
            
            127,184
            
            
            30,390
            
            
            515,611Senior
                Vice President, Marketing
            
            
            2006
            
            
            256,547
            
            
            95,866
            
            
            134,949
            
            
            36,277
            
            
            523,639Brian
                Berkhausen,
            
            
            2007
            
            
            241,478
            
            
            76,708
            
            
            116,844
            
            
            29,477
            
            
            464,507Senior
                Vice President, Development
            
            
            2006
            
            
            237,049
            
            
            76,708
            
            
            125,193
            
            
            33,177
            
            
            472,127Stephen
                J. Sather,
            
            
            2007
            
            
            229,933
            
            
            110,627
            
            
            111,544
            
            
            34,298
            
            
            486,402Senior
                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 the applicable fiscal year 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 19 to our Consolidated Financial
                  Statements.




(b)
            These
                amounts represent bonuses earned in the applicable fiscal year. For
                a
                description of the terms of the bonuses, see “Compensation Discussion and
                Analysis” and the table “Grants of Plan-Based Awards in Fiscal
                2007.”




(c)
            For
                2007, these amounts represent (i) 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; (ii)
                reimbursements under a supplemental health insurance plan;
                (iii) Company contributions to its 401K Plan ($12,845 for Mr.
                Carley); (iv) auto allowance and auto lease payments; (v) auto fuel
                and
                maintenance costs; and (vi) personal expenses in connection with
                business
                travel. We have stated the full cost of these perquisites to the
                Company
                since we do not obtain the information necessary to calculate the
                percentage of these costs that represents a personal benefit to each
                individual.




(d)
              Based
                  on the total compensation amounts, each Named Executive Officer’s bonus
                  represented approximately one-fourth of his or her total compensation.
                  The
                  salaries of the Named Executive Officers as a percentage of total
                  compensation ranged from37%
                  for Mr. Carley to approximately one-half (47% to 52%) for the other
                  Named
                  Executive Officers, reflecting the higher portion of Mr. Carley’s
                  compensation that is
                  incentive-based.





**Grants
      of Plan-Based Awards in Fiscal 2007**




During
      2007, 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.” The following
      table describes the estimated future payouts under these awards.




**Estimated
                Future Payouts Under Non-Equity Incentive Plan Awards****Name**
            
            **Grant**
              **Date**
            
            **Threshold**
              **($)**
            
            **Target**
              **($)**
            
            **Maximum**
              **($)**Stephen
                E. Carley
            
            2/08/07
            
            92,478
            
            369,910
            
            554,865Joseph
                N. Stein
            
            2/08/07
            
            47,197
            
            188,786
            
            283,179Karen
                B. Eadon
            
            2/08/07
            
            49,546
            
            198,182
            
            297,273Brian
                Berkhausen
            
            2/08/07
            
            45,518
            
            182,070
            
            273,105Stephen
                J. Sather
            
            2/08/07
            
            43,453
            
            173,813
            
            260,720


33


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
      adjusted 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 adjusted EBITDA is 90% of budgeted EBITDA (“Threshold” column)
      to 150% of target bonus if actual adjusted EBITDA equals 125% or more of
      budgeted EBITDA (“Maximum” column). No bonus is paid if actual adjusted 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 the definition of adjusted “EBITDA.” For the actual amount of bonus
      earned pursuant to these awards, see the column “Non-Equity Incentive Plan
      Compensation” in the Summary Compensation Table above.




**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, 2010. 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.




***Bonus*** *.* Contingent
      on our meeting certain financial goals, the target bonus for each Named
      Executive Officer is 75% of the officer’s salary, except for Mr. Carley, whose
      target bonus is 100% of his salary. The terms of the bonus are described in
      the
      table “Grants of Plan - Based Awards in Fiscal 2007” 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 is required to provide Mr. Carley with
      a
      leased vehicle and pay 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 foregoing compensation plus one year additional base
      salary payable over 12 months, except that Mr. Carley is entitled to two years
      of base salary and bonus 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 304,287 options outstanding at December 26, 2007,
      80,831 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 26, 2007, an aggregate of 223,456 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 2007” 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 of CAC,
      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 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 CAC
      compensation committee.


34


**Outstanding
      Equity Awards at Fiscal Year-End 2007**




**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
            
            
            4/9/201166,741
            
            $
            86.43
            
            
            12/14/2016Joseph
                N. Stein
            
            
            10,158
            
            
            
            
            $
            9.68
            
            
            4/9/201222,247
            
            $
            86.43
            
            
            12/14/2016Karen
                B. Eadon
            
            
            15,356
            
            
            
            
            $
            11.03
            
            
            10/12/201222,247
            
            $
            86.43
            
            
            12/14/2016Brian
                Berkhausen
            
            
            8,977
            
            
            
            
            $
            2.98
            
            
            12/28/200917,778
            
            $
            86.43
            
            
            12/14/2016Steve
                J. Sather
            
            
            -0-
            
            
            17,778
            
            $
            86.43
            
            
            12/14/2016







(a)
            These
                options were initially granted by our parent company 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 2007” for an explanation of budgeted EBITDA.
                None of these options vested in
                2007.




•
            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.




•
            100%
                of the options will vest upon the occurrence of an initial public
                offering
                of at least $50 million or a change in control of
                CAC.




**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 are listed
      in the table 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 26, 2007 (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 $110.00. See “Item 7.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations - Critical Accounting Policies - Share-B ased
      Compensation” for a description of the manner in which we determine the fair
      market value of CAC common stock.


35


**Type
                of Payment/Recipient**
            
            **Termination
                by EPL for**
              **“Cause”
                or by**
              **Officer
                Without**
              **“Good
                Reason”**
              **$**
            
            **Termination**
              **Due
                to**
              **Death
                or**
              **“Disability”**
              **$**
            
            **Termination
                by EPL**
              **Without
                “Cause”**
              **or
                by Officer With**
              **“Good
                Reason”**
              **$**
            
            **“Change
                in**
              **Control”**
              **$**Base
                SalaryStephen
                E. Carley
            
            0
            
            
            0
            
            
            739,820
            (1)
            
            N/AJoseph
                N. Stein
            
            0
            
            
            0
            
            
            251,715
            (2)
            
            N/AKaren
                B. Eadon
            
            0
            
            
            0
            
            
            264,243
            (2)
            
            N/ABrian
                Berkhausen
            
            0
            
            
            0
            
            
            242,760
            (2)
            
            N/AStephen
                J. Sather
            
            0
            
            
            0
            
            
            231,750
            (2)
            
            N/ABonusStephen
                E. Carley
            
            0
            
            
            237,390
            (3)
            
            489,274
            (4)
            
            N/AJoseph
                N. Stein
            
            0
            
            
            121,154
            (3)
            
            121,154
            (3)
            
            N/AKaren
                B. Eadon
            
            0
            
            
            127,184
            (3)
            
            127,184
            (3)
            
            N/ABrian
                Berkhausen
            
            0
            
            
            116,844
            (3)
            
            116,844
            (3)
            
            N/AStephen
                J. Sather
            
            0
            
            
            111,544
            (3)
            
            111,544
            (3)
            
            N/AGain
                on Sale of CAC Stock (5)Stephen
                E. Carley
            
            0
            
            
            2,340,242
            
            
            2,340,242
            
            
            N/AJoseph
                N. Stein
            
            0
            
            
            1,046,892
            
            
            1,046,892
            
            
            N/AKaren
                B. Eadon
            
            0
            
            
            1,547,053
            
            
            1,547,053
            
            
            N/ABrian
                Berkhausen
            
            0
            
            
            960,719
            
            
            960,719
            
            
            N/AStephen
                J. Sather
            
            0
            
            
            432,662
            
            
            432,662
            
            
            N/AAcceleration
                of Stock Options (6)Stephen
                E. Carley
            
            N/A
            (7)
            
            N/A
            
            
            N/A
            
            
            1,573,085Joseph
                N. Stein
            
            N/A
            (7)
            
            N/A
            
            
            N/A
            
            
            524,362Karen
                B. Eadon
            
            N/A
            (7)
            
            N/A
            
            
            N/A
            
            
            524,362Brian
                Berkhausen
            
            N/A
            (7)
            
            N/A
            
            
            N/A
            
            
            419,027Stephen
                J. Sather
            
            N/A
            (7)
            
            N/A
            
            
            N/A
            
            
            419,027







(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 of employment by EPL without cause or by the
                officer
                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 of employment for any reason, CAC has the
                right (but not the obligation) 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. In
                the case
                of termination due to death or disability, or without cause or for
                good
                reason, this table assumes the purchase of all CAC shares 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 $110.00, the fair market value of
                CAC stock
                at December 26, 2007. No amounts are reported in the event of termination
                for cause or without good reason since the officer wouild be paid
                only his
                cost of the shares, resulting in no gain on the transaction.These
                purchase rights terminate upon the occurrence of an initial public
                offering of at least $50 million.




(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 $110.00, the fair market value of CAC
                stock on
                December 26, 2007. See the table “Outstanding Equity Awards at Fiscal
                Year-End 2007.”




(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


36


•
            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 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
      2007 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 the following fees for attending committee meetings that are
        held
        on days other than days on which board meetings are held: $2,000 per meeting
        to
        the chairman of a committee and $1,000 per meeting to other committee members.
        All directors are reimbursed their reasonable expenses for attending meetings
        and, pursuant to a Monitoring and Management Services Agreement, the Company
        reimburses Trimaran Fund Management, LLC and Freeman Spogli & Co. V,
        L.P. the travel and related expenses of their 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**
                **($)**Douglas
                  K. Ammerman
              
              
              39,500
                  (a
              )
              
              9,991
                  (b
              )
              
              49,491Dennis
                  J. Lombardi
              
              
              26,000
                  (a
              )
              
              9,589
                  (c
              )
              
              35,589Jay
                  R. Bloom, Andrew Heyer, Glenn B. Kaufman, Dean C. Kehler, Alberto
                  Robaina,
                  John M. Roth and Griffin Whitney (d)
              
              
              0
              
              
              0
              
              
              0







(a)
            Pursuant
                to our Independent Director Stock Plan, Messrs. Ammerman and Lombardi
                elected to receive all of their 2007 director fees in common stock
                of CAC.
                Shares are issued quarterly with respect to fees earned during the
                quarter
                and are valued based on the fair market value of CAC common stock
                on the
                last day of the applicable quarter.




(b)
            Mr.
                Ammerman’s 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 of CAC.
                The
                fair value of the options on the date of grant ($49,981) and the
                compensation expense reported above were calculated using the guidance
                of
                SFAS 123R. The assumptions used in these calculations are described
                in
                Note 19 to our Consolidated Financial Statements. At December 26,
                2007,
                Mr. Ammerman had 1,027 options with an exercise price of
                $108.92.


37


(c)
            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 reported above 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 19 to
                our
                Consolidated Financial Statements for the assumptions used in these
                calculations. At December 26, 2007, 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 26, 2007, 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 of CAC (grant date value
                of
                $67,120).




(d)
              Mr.
                  Kaufman resigned on January 30, 2008. All of these persons, except
                  Mr.
                  Kaufman, are designees of either Trimaran or the FS Parties (as
                  defined below under “LLC Operating Agreement”) and are compensated as
                  employees of affiliates of such companies for their services to
                  such
                  affiliates and not for their services to us.




**Compensation
      Committee Interlocks and Insider Participation**




In
      2007,
      our compensation committee was comprised of Andrew Heyer and Dennis Lombardi.
      Mr. Heyer served as a Vice President of the Company until February 2008, but
      he
      is not an employee of the Company. Mr. Heyer serves on the board of directors
      as
      the designee 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
      .04% of the 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 Jay R. Bloom, Andrew Heyer and Dean Kehler are Managing Partners
      of
      Trimaran, which is the Managing Member of the LLC. They are also each one-third
      beneficial owners of Trimaran and Trimaran Fund Management, LLC.




The
      stockholders agreement, LLC operating agreement and monitoring and management
      services agreement described below were each initially entered into in
      connection with the LLC’s 2005 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).




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 Trimaran and its affiliates and the FS Parties
      (as defined below under “LLC Operating Agreement”) certain rights to request
      that CAC register their shares under the Securities Act of 1933. In demand
      registrations, the other parties to the stockholders agreement have certain
      rights to participate on a pro rata basis.




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, in 2007 Jay Bloom, Andrew
      Heyer, Dean Kehler, Albert Robaina and Griffin Whitney, affiliates of Trimaran,
      served on the Company’s and EPL’s board of directors as Trimaran directors,
      Glenn Kaufman served as a director as the designee of American Securities,
      and
      Stephen Carley served as a non-Trimaran director.


38


The
        operating agreement was amended December 26, 2007 to add as members of the
        LLC
        FS Equity Partners V, L.P. and FS Affiliates V, L.P. (jointly, the “FS
        Funds”) and Peter Starrett (together with the FS Funds, the “FS
        Parties”). Pursuant to this amendment, the FS Parties have the right to appoint
        one member to the board of directors of CAC, the Company and EPL so long
        as they
        collectively hold 5% or more of the LLC’s membership units. Until the FS Parties
        hold less than 15% of the LLC’s membership units, their director
        designee is entitled to serve on the Company’s compensation committee. The
        FS Parties also have certain observer rights with respect to board and committee
        meetings of CAC, the Company and EPL. The Company pays the costs of such
        observers to attend board and committee meetings. John Roth was elected a
        director of the Company in December 2007 pursuant to this amendment to the
        operating agreement. Mr. Roth is a managing member of FS Capital Partners
        V, LLC
        (which is the general partner of the FS Funds).




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 (“Fund Management”), CAC
      paid Fund Management an annual fee of $500,000, payable in quarterly
      installments, for Fund Management to be available to provide advisory and
      monitoring services to CAC and its subsidiaries, including the Company and
      EPL,
      as requested by CAC. This agreement was amended on December 26, 2007, to add
      Freeman Spogli & Co. V, L.P. (“FS”) as a party and to provide that Fund
      Management and FS (the “Advisors”) will receive annual management fees of
      $357,000 and $143,000, respectively. In addition, CAC must reimburse the
      Advisors for all reasonable out of pocket expenses incurred by them in
      connection with their services, including fees and expenses paid to third
      parties and travel and related expenses of their designees who serve on the
      board of CAC and the Company. The Company paid Fund Management and FS $624,000
      and $0, respectively, in 2007 on behalf of CAC. Company director John Roth
      is a
      managing member of the general partner of FS.




Fund
      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
      Fund Management serves as a financial advisor in connection with any such
      transaction, Fund Management and FS will receive a fee equal to 1.4286% and
      .5714%, respectively, 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, Fund Management and FS will be entitled to an additional
      one-time fee of $1,786,000 and $714,000, respectively. CAC and its subsidiaries,
      including the Company and EPL, must indemnify Fund Management and FS and their
      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 as to each Advisor until such
      Advisor elects to terminate it.




**Development
      Agreement**




Trimaran
      and certain of its affiliates that are members of the LLC collectively
      beneficially own about 70% and the FS Funds together beneficially own about
      28% of Fiesta Brands, Inc. We entered into a development agreement with
      Fiesta Brands on August 10, 2006. This development 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. During 2007, Fiesta Brands opened 5 restaurants
      and
      is paying us franchise and other fees on the same terms as other franchisees.
      This development agreement is, and the franchise agreements executed when each
      restaurant is opened are 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 than we could have obtained from an
      unaffiliated third party.




**Agreements
      Related to Litigation Appeal Bond**





In
      connection with our appeal of an adverse judgment in the case *El
      Pollo Loco S.A. de C.V. v. El Pollo Loco, Inc.* described in Item 3 of this Report, EPL posted an appeal bond in the amount
      of
      $24,301,450. A portion of the appeal bond was collateralized by a $17,900,000
      letter of credit arranged by Trimaran Fund II, LLC (“Trimaran Fund”). Trimaran
      Fund is a 20.6% member of the LLC and an affiliate of Trimaran.





To
      compensate Trimaran Fund for this accommodation, on December 19, 2007, EPL
      and
      CAC entered into two agreements with Trimaran Fund: a Fee Agreement and a
      Payment and Subscription Agreement. Pursuant to the Fee Agreement, in January
      2008 EPL paid Trimaran Fund an up-front fee of $536,000, representing 3% of
      the
      amount of the letter of credit. EPL must also reimburse Trimaran Fund for any
      amounts it must pay in connection with the letter of credit. If Trimaran Fund
      provides cash collateral to secure the appeal bond, rather than a letter of
      credit, EPL must pay Trimaran Fund an annual fee equal to 13.25% of the cash
      collateral, payable quarterly. The cash collateral fee is payable, at Trimaran
      Fund’s option, in accordance with the Payment Options described
      below.





The
      purpose of the Payment and Subscription Agreement is to provide for the
      possibility that after all appeals EPL will be required to pay the judgments.
      If
      the appeal bond is used to satisfy the judgment, EPL or CAC would be required
      repay Trimaran Fund in one or more of the following forms, at the option of
      Trimaran Fund (“Payment Options”):





·
            cash;





·
            a
                two-year promissory note, accruing interest at a rate of 13.25% per
                annum,
                compounded annually, increasing by 0.50% per calendar quarter to
                a maximum
                of 17.5% per annum, convertible into or payable with, at the holder’s
                option, convertible preferred stock or common stock of CAC;
                or





·
              convertible
                  preferred stock or common stock of
                  CAC.





Trimaran
            Fund may choose any combination of the Payment Options only to the extent
            that
            such options do not result in a default under the terms of the Company’s
            indebtedness outstanding at the time. The Company’s indentures require that
            transactions with affiliates, such as Trimaran Fund, must be on terms
            that are
            no less favorable than the Company would have obtained in a transaction
            with an
            unrelated party. If the terms of these agreements, including any Payment
            Option
            chosen by Trimaran Fund, do not comply with this provision in the indentures,
            the parties have agreed to modify the terms of these agreements to the
            extent
            required to comply with the indentures. Any
            CAC
            shares or debt securities issued under the foregoing agreements are subject
            to
            applicable pre-emptive rights under the stockholders agreement and LLC
            operating
            agreement described above.




Pursuant
      to a Contribution Agreement dated December 26, 2007 among the FS Funds and
      Trimaran Fund, the FS Funds are required to contribute their pro rata share
      (based on their percentage interest in the LLC) of any amounts Trimaran Fund
      pays in connection with the appeal bond or its letter of credit, and the FS
      Funds will share pro rata in any payments from EPL received by
      Trimaran Fund pursuant to the foregoing agreements.


39


**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 99.6% of the outstanding common stock of CAC and its ability
      to
      elect all 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, 35 th Floor,
      New York, New York 10017. The remaining .04% of CAC’s common stock is owned by
      the Company’s executive officers, directors Douglas Ammerman and Dennis
      Lombardi, and other EPL employees.




The
      managing member of the LLC, which has complete voting and management authority
      for the LLC and the right to appoint a majority of the directors of CAC, the
      Company and EPL, is Trimaran Capital, LLC (“Trimaran”). Trimaran is beneficially
      owned one-third by each of Jay R. Bloom, Andrew Heyer and Dean Kehler, directors
      of the Company. Messrs. Bloom, Heyer and Kehler disclaim beneficial ownership
      of
      shares of CAC and the Company except to the extent of their pecuniary interest
      therein.




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




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




**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.


40


Based
        on
        the Nasdaq definition of independence, our board of directors has determined
        that Douglas Ammerman and Dennis Lombardi are independent. Messers. Ammerman
        and
        Lombardi, together with Dean C. Kehler, who is not independent, serve on
        our
        audit committee. During 2007 our compensation committee was comprised of
        Mr.
        Lombardi, who is independent, and Andrew Heyer, who is not independent. John
        Roth, who is not independent, joined the compensation committee in February
        2008. 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 2006 and
      2007:




**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 $978,000.




Audit
      fees for the audit of our 2007 annual financial statements and the review of
      the
      financial statements included in our Quarterly Reports on Form 10-Q in 2007
      totaled $399,000.




**Audit-Related
      Fees**




We
      were
      not billed by Deloitte for any audit-related fees in 2006 and 2007.




**Tax
      Fees**




Fees
      billed to us by Deloitte for professional services for tax compliance, tax
      advice and tax planning totaled $81,000 in 2006 and $55,000 in
      2007.




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 2007 and 2006.




**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 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.


41


**PART
      IV**




**Item
      15. Exhibits, Financial Statement Schedules**




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




The
      financial statements listed below which appear on the pages indicated are filed
      as part of this annual report. 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-1Consolidated
                Balance Sheets as of December 27, 2006 and December 26,
                2007
            
            F-2Consolidated
                Statements of Operations for the Predecessor Period December 30,
                2004 to
                November 17, 2005, the Successor Period November 18, 2005 to December
                28,
                2005, and the Successor Years Ended December 27, 2006 and December
                26,2007
            
            F-4Consolidated
                Statements of Stockholder’s Equity (Deficiency) for the Predecessor Period
                December 30, 2004 to November 17, 2005, the Successor Period November
                18,
                2005 to December 28, 2005, and the Successor Years Ended December
                27, 2006
                and December 26,2007
            
            F-5Consolidated
                Statements of Cash Flows for the Predecessor Period December 30,
                2004 to
                November 17, 2005, the Successor Period November 18, 2005 to December
                28,
                2005, and the Successor Years Ended December 27, 2006 and December
                26,
                2007
            
            F-6Notes
                to Consolidated Financial Statements
            
            F-8




3. *Exhibits
      -* See
      the
      Exhibit Index which follows the financial statements included in this Report
      for
      a list of exhibits. The Exhibit Index is incorporated herein by this
      reference.


42


**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.




March
                  24, 2008
              EPL
                  INTERMEDIATE, INC.By:
              /s/
                  Jospeh SteinJoseph
                  SteinSenior
                  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
                    24, 2008Stephen
                    E. Carley/s/
                    Joseph Stein
                
                Senior
                    Vice President (Principal Financial and Accounting
                    Officer)
                
                March
                    24, 2008Joseph
                    Stein/s/
                    Douglas K. Ammerman
                
                Director
                
                March
                    24, 2008Douglas
                    K. Ammerman/s/
                    Jay R. Bloom
                
                Director
                
                March
                    24, 2008Jay
                    R. Bloom/s/
                    Andrew R. Heyer
                
                Director
                
                March
                    24, 2008Andrew
                    R. Heyer/s/
                    Dean C. Kehler
                
                Director
                
                March
                    24, 2008Dean
                    C. Kehler/s/
                    Dennis Lombardi
                
                Director
                
                March
                    24, 2008Dennis
                    Lombardi/s/
                    Alberto Robaina
                
                Director
                
                March
                    24, 2008Alberto
                    Robaina/s/
                    John M. Roth
                
                Director
                
                March
                    24, 2008John
                    M. Roth/s/
                    Griffin Whitney
                
                Director
                
                March
                    24, 2008Griffin
                    Whitney




43


**REPORT
      OF MANAGEMENT ON INTERNAL CONTROLS**





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Securities Exchange Act of 1934. Our internal control over financial
      reporting is designed to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles. All
      internal control systems, no matter how well designed, have inherent
      limitations. Therefore, even those systems determined to be effective can
      provide only reasonable assurance with respect to financial reporting, and
      misstatements may not be prevented or detected.





Management
      has assessed the effectiveness of our internal control over financial reporting
      as of December 26, 2007. In making its assessment of internal control over
      financial reporting, management used the criteria set forth in Internal Control
      - Integrated Framework issued by the Committee of Sponsoring Organizations
      of
      the Treadway Commission (COSO).





Our
      Management has concluded that based on our assessment, as of December 26, 2007,
      our internal control over financial reporting was effective.




This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by such accounting firm
      pursuant to temporary rules of the Securities and Exchange Commission that
      permit the Company to provide only management’s report in the annual
      report.


44


**R** **EPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders of


EPL
      Intermediate, Inc.


Costa
      Mesa, California




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 26, 2007, and December 27, 2006, and the related
      consolidated statements of operations, stockholders’ equity (deficiency), and
      cash flows for the years ended December 26, 2007, 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 period from December 30, 2004 to
      November 17, 2005 (the “Predecessor Period”), 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 26, 2007 and
      December 27, 2006, 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 4 and 19 to the consolidated financial statements, the
      Company changed its method of accounting for share-based compensation in 2006
      as
      a result of adopting Fiancial Accounting Standards Board - Statement No. 123(R),
      *Share-Based Payment*.






*/s/
      DELOITTE & TOUCHE LLP*




Costa
                Mesa, CaliforniaMarch
                20, 2008


F-1


**EPL
                  INTERMEDIATE, INC.****(A
                  Wholly Owned Subsidiary of El Pollo Loco Holdings,
                  Inc.)**
  **CONSOLIDATED
                  BALANCE SHEETS****(Amounts
                  in thousands)**
  **DECEMBER
                    27,**
                
                **DECEMBER
                    26,****ASSETS**
                
                **2006**
                
                **2007**CURRENT
                    ASSETS:Cash
                    and cash equivalents
                
                $
                2,955
                
                $
                3,841Notes
                    and accounts receivable--net
                
                
                3,564
                
                
                3,631Inventories
                
                
                1,560
                
                
                1,778Prepaid
                    expenses and other current assets
                
                
                3,835
                
                
                3,674Income
                    taxes receivable
                
                
                68
                
                
                -Deferred
                    income taxes
                
                
                799
                
                
                2,357Total
                    current assets
                
                
                12,781
                
                
                15,281PROPERTY
                    --Net
                
                
                73,842
                
                
                82,217PROPERTY
                    HELD UNDER CAPITALLEASES--Net
                
                
                1,634
                
                
                1,105GOODWILL
                
                
                277,514
                
                
                276,911DOMESTIC
                    TRADEMARKS
                
                
                120,700
                
                
                120,700OTHER
                    INTANGIBLE ASSETS--Net
                
                
                11,982
                
                
                10,607OTHER
                    ASSETS
                
                
                10,595
                
                
                9,607TOTAL
                    ASSETS
                
                $
                509,048
                
                $
                516,428See
                    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
                    27,**
                
                **DECEMBER
                    26,****2006**
                
                **2007****LIABILITIES
                    AND STOCKHOLDER'S EQUITY**CURRENT
                    LIABILITIES:Revolving
                    credit facility
                
                $
                3,000
                
                $
                2,500Current
                    portion of note payable
                
                
                1,306
                
                
                1,035Current
                    portion of obligations undercapital
                    leases
                
                
                1,313
                
                
                1,241Accounts
                    payable
                
                
                9,821
                
                
                13,203Accrued
                    salaries
                
                
                3,665
                
                
                3,725Accrued
                    vacation
                
                
                1,834
                
                
                1,936Accrued
                    insurance
                
                
                3,869
                
                
                1,412Accrued
                    income taxes payable
                
                
                -
                
                
                102Accrued
                    interest
                
                
                2,709
                
                
                1,934Accrued
                    advertising
                
                
                1,358
                
                
                180Other
                    accrued expenses and current liabilities
                
                
                4,307
                
                
                5,076Total
                    current liabilities
                
                
                33,182
                
                
                32,344NONCURRENT
                    LIABILITIES:Senior
                    secured notes (2009 Notes)
                
                
                250
                
                
                250Senior
                    unsecured notes (2013 Notes)
                
                
                123,646
                
                
                123,843PIK
                    Notes (2014 Notes)
                
                
                26,319
                
                
                30,274Note
                    payable--less current portion
                
                
                102,410
                
                
                100,418Obligations
                    under capital leases--lesscurrent
                    portion
                
                
                3,943
                
                
                2,706Deferred
                    income taxes
                
                
                34,247
                
                
                38,864Other
                    intangible liabilities--net
                
                
                7,434
                
                
                6,047Other
                    noncurrent liabilities
                
                
                4,903
                
                
                9,371Total
                    noncurrent liabilities
                
                
                303,152
                
                
                311,773COMMITMENTS
                    AND CONTINGENCIESSTOCKHOLDER'S
                    EQUITYCommon
                    stock, $.01 par value--20,000 sharesauthorized;
                    100 shares issued and outstanding
                
                
                -
                
                
                -Additional
                    paid-in-capital
                
                
                172,665
                
                
                176,296Retained
                    earnings (accumulated deficit)
                
                
                49
                
                
                (3,985
                )Total
                    stockholder's equity
                
                
                172,714
                
                
                172,311TOTAL
                
                $
                509,048
                
                $
                516,428See
                    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
                    30, 2004**
                
                **November
                    18 to****to
                    November 17,**
                
                **December
                    28,**
                
                **December
                    27,**
                
                **December
                    26,****2005**
                
                **2005**
                
                **2006**
                
                **2007**OPERATING
                    REVENUE:Restaurant
                    revenue
                
                $
                197,267
                
                $
                24,527
                
                $
                242,571
                
                $
                259,987Franchise
                    revenue
                
                
                13,661
                
                
                1,742
                
                
                17,317
                
                
                19,038Total
                    operating revenue
                
                
                210,928
                
                
                26,269
                
                
                259,888
                
                
                279,025OPERATING
                    EXPENSES:Product
                    cost
                
                
                62,638
                
                
                7,958
                
                
                76,151
                
                
                81,233Payroll
                    and benefits
                
                
                50,325
                
                
                6,746
                
                
                61,601
                
                
                67,545Depreciation
                    and amortization
                
                
                12,743
                
                
                1,203
                
                
                10,333
                
                
                11,947Other
                    operating expenses
                
                
                65,340
                
                
                7,958
                
                
                81,281
                
                
                90,074Total
                    operating expenses
                
                
                191,046
                
                
                23,865
                
                
                229,366
                
                
                250,799OPERATING
                    INCOME
                
                
                19,882
                
                
                2,404
                
                
                30,522
                
                
                28,226INTEREST
                    EXPENSE--Net of interestincome
                    of $369, $0, $413 and $384 forthe
                    periods ended November 17, 2005,December
                    28, 2005, December 27,2006
                    and December 26, 2007respectively
                
                
                38,726
                
                
                3,385
                
                
                28,813
                
                
                29,167INCOME
                    (LOSS) BEFORE PROVISIONFOR
                    INCOME TAXES
                
                
                (18,844
                )
                
                (981
                )
                
                1,709
                
                
                (941
                )PROVISION
                    (BENEFIT) FOR INCOMETAXES
                
                
                (7,651
                )
                
                (393
                )
                
                1,072
                
                
                3,093NET
                    INCOME (LOSS)
                
                $
                (11,193
                )
                
                (588
                )
                
                637
                
                $
                (4,034
                )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**
 **Retained****Additional**
              
              **Earnings****Common**
              
              
              
              **Paid-in**
              
              **(Accumulated****Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit)**
              
              **Total**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
              
              
              
              
              
              2,988Net
                  loss
              
              
              
              
              
              -
              
              
              -
              
              
              (11,193
              )
              
              (11,193
              )BALANCE,
                  NOVEMBER 17, 2005
              
              
              100
              
              
              -
              
              
              (7,235
              )
              
              (50,383
              )
              
              (57,618
              )
 **Successor**
 BALANCE,
                    NOVEMBER 18, 2005
                
                
                100
                
                
                -
                
                
                172,279
                
                
                -
                
                
                172,279Net
                    loss
                
                
                
                
                
                -
                
                
                -
                
                
                (588
                )
                
                (588
                )BALANCE,
                    DECEMBER 28, 2005
                
                
                100
                
                
                -
                
                
                172,279
                
                
                (588
                )
                
                171,691Stock-based
                    compensation
                
                
                
                
                
                
                
                
                358
                
                
                
                
                
                358Exercise
                    of stock options
                
                
                
                
                
                
                
                
                50
                
                
                
                
                
                50Repurchase
                    of common stock of CAC
                
                
                
                
                
                
                
                
                (22
                )
                
                
                
                
                (22
                )Net
                    income
                
                
                
                
                
                -
                
                
                -
                
                
                637
                
                
                637BALANCE,
                    DECEMBER 27, 2006
                
                
                100
                
                
                -
                
                
                172,665
                
                
                49
                
                
                172,714Stock-based
                    compensation
                
                
                
                
                
                
                
                
                754
                
                
                
                
                
                754Tax
                  benefit from
                  exercise of stock options
                
                
                
                
                
                
                
                
                (69
                )
                
                
                
                
                (69
                )Repurchase
                    of common stock of CAC
                
                
                
                
                
                
                
                
                (54
                )
                
                
                
                
                (54
                )Capital
                    contribution
                
                
                
                
                
                
                
                
                3,000
                
                
                
                
                
                3,000Net
                    loss
                
                
                
                
                
                -
                
                
                -
                
                
                (4,034
                )
                
                (4,034
                )BALANCE,
                    DECEMBER 26, 2007
                
                
                100
                
                
                -
                
                
                176,296
                
                
                (3,985
                )
                
                172,311See
                    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
                    30, 2004**
                
                **November
                    18 to****to
                    November 17,**
                
                **December
                    28,**
                
                **December
                    27,**
                
                **December
                    26,****2005**
                
                **2005**
                
                **2006**
                
                **2007**CASH
                    FLOWS FROM OPERATINGACTIVITIES:Net
                    income (loss)
                
                $
                (11,193
                )
                $
                (588
                )
                $
                637
                
                $
                (4,034
                )Adjustments
                    to reconcile net income (loss) to net cash
                    provided by operating activities:Depreciation
                    and amortization of propertyand
                    intangible assets
                
                
                12,743
                
                
                1,202
                
                
                10,333
                
                
                11,947Stock-based
                    compensation expense
                
                
                -
                
                
                -
                
                
                358
                
                
                754Interest
                    accretion
                
                
                4,762
                
                
                389
                
                
                3,651
                
                
                4,152(Gain)
                    loss on disposal of assets
                
                
                (494
                )
                
                3
                
                
                4
                
                
                2,558Asset
                    impairment
                
                
                1,047
                
                
                -
                
                
                -
                
                
                -Amortization
                    of deferred financing costs
                
                
                7,426
                
                
                152
                
                
                1,367
                
                
                1,391Amortization
                    of negative leasehold interest
                
                
                (1,345
                )
                
                (9
                )
                
                (344
                )
                
                (469
                )Deferred
                    income taxes
                
                
                (7,847
                )
                
                (393
                )
                
                585
                
                
                2,990Tax
                    benefit of exercise of stock options
                
                
                2,988
                
                
                -
                
                
                -
                
                
                (69
                )Changes
                    in operating assets and liabilities:Notes
                    and accounts receivable--net
                
                
                (97
                )
                
                (187
                )
                
                (566
                )
                
                (67
                )Inventories
                
                
                (252
                )
                
                16
                
                
                (188
                )
                
                (218
                )Prepaid
                    expenses and other current assets
                
                
                452
                
                
                (1,111
                )
                
                (646
                )
                
                161Income
                    taxes receivable / payable
                
                
                (1,701
                )
                
                -
                
                
                3,757
                
                
                170Other
                    assets
                
                
                (150
                )
                
                154
                
                
                67
                
                
                (230
                )Accounts
                    payable
                
                
                1,080
                
                
                3,377
                
                
                (638
                )
                
                3,051Accrued
                    salaries and vacation
                
                
                5,379
                
                
                (5,451
                )
                
                (413
                )
                
                162Accrued
                    insurance
                
                
                146
                
                
                100
                
                
                330
                
                
                (2,457
                )Other
                    accrued expenses and current and noncurrent liabilities
                
                
                22,948
                
                
                2,421
                
                
                2,449
                
                
                3,337Net
                    cash provided by operating activities
                
                
                35,892
                
                
                75
                
                
                20,743
                
                
                23,129CASH
                    FLOW FROM INVESTINGACTIVITIES:Proceeds
                    from asset disposition
                
                
                1,363
                
                
                -
                
                
                2
                
                
                8,035Purchase
                    of other assets
                
                
                (1,086
                )
                
                -
                
                
                -
                
                
                -Purchase
                    of franchise restaurants
                
                
                -
                
                
                -
                
                
                -
                
                
                (8,358
                )Purchase
                    of property
                
                
                (13,270
                )
                
                (2,891
                )
                
                (14,022
                )
                
                (20,747
                )Payment
                    of acquisition costs
                
                
                -
                
                
                (213,841
                )
                
                (5,073
                )
                
                -Net
                    cash used in investing activities
                
                
                (12,993
                )
                
                (216,732
                )
                
                (19,093
                )
                
                (21,070
                )CASH
                    FLOWS FROM FINANCINGACTIVITIES:Proceeds
                    from issuance of common stock
                
                
                -
                
                
                -
                
                
                50
                
                
                -Repurchase
                    of common stock of CAC
                
                
                -
                
                
                -
                
                
                (22
                )
                
                (54
                )Excess
                    tax benefits related to exercise of stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                69Capital
                    contribution
                
                
                -
                
                
                155,525
                
                
                -
                
                
                3,000Proceeds
                    from borrowings
                
                
                -
                
                
                253,200
                
                
                6,500
                
                
                17,000Payment
                    of obligations under capital leases
                
                
                (1,058
                )
                
                (193
                )
                
                (1,219
                )
                
                (1,252
                )Payments
                    on debt
                
                
                (7,886
                )
                
                (178,749
                )
                
                (7,059
                )
                
                (19,763
                )Deferred
                    financing costs
                
                
                -
                
                
                (9,574
                )
                
                (497
                )
                
                (173
                )Net
                    cash (used in) provided by financing activities
                
                
                (8,944
                )
                
                220,209
                
                
                (2,247
                )
                
                (1,173
                )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
                    30, 2004**
                
                **November
                    18 to****to
                    November 17,**
                
                **December
                    28,**
                
                **December
                    27,**
                
                **December
                    26,****2005**
                
                **2005**
                
                **2006**
                
                **2007**INCREASE
                    (DECREASE) IN CASH ANDCASH
                    EQUIVALENTS
                
                $
                13,955
                
                $
                3,552
                
                $
                (597
                )
                $
                886CASH
                    AND CASH EQUIVALENTS--Beginning
                    of period
                
                
                5,636
                
                
                -
                
                
                3,552
                
                
                2,955CASH
                    AND CASH EQUIVALENTS--End
                    of period
                
                $
                19,591
                
                $
                3,552
                
                $
                2,955
                
                $
                3,841SUPPLEMENTAL
                        DISCLOSURE OF CASH FLOWINFORMATION--Cash
                        paid during the period for:Interest
                        (net of amounts capitalized)
                
                $
                6,460
                
                $
                20,307
                
                $
                24,401
                
                $
                25,025Income
                    taxes
                
                $
                65
                
                $
                -
                
                $
                125
                
                $
                38




In
      November 2005, Chicken Acquisition C orp.
      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 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 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 consultant's and auditors' fees in excess of
      the
      original estimate); and $51,000 (in other acquisition costs).





During
      2005, the Predecessor recorded a $10.5 million deemed distribution to
      shareholders for expenses assumed on their behalf.





In
      2007,
      the Company acquired three restaurants from a franchisee for total consideration
      of $8,500,000. The Company’s allocation of the purchase price to the fair value
      of the acquired assets is as follows: equipment, $0.1 million, favorable lease,
      $0.2 million, and goodwill, $8.2 million.





As
      of
      November 17, 2005, December 28, 2005, December 27, 2006 and December 26, 2007,
      the Company had included in accounts payable $1,247,000, $783,000, $1,027,000
      and $1,358,000 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 Costa Mesa, California. The Company’s
        activities are conducted 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, Connecticut, Massachusetts and Georgia, 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 26, 2007, the Company operated 159 (128
        in the greater Los Angeles area) and franchised 230 (141 in the greater Los
        Angeles area) El Pollo Loco restaurants. The Company is a wholly owned
        subsidiary of El Pollo Loco Holdings, Inc. (“Holdings”). Holdings is a wholly
        owned subsidiary of Chicken Acquisition Corp. ("CAC").




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 CAC, Holdings, Intermediate, EPL, the equity
        holders of Holdings, and American Securities Capital Partners, L.P. (“ASCP”).
        Pursuant to the Stock Purchase Agreement, on November 18, 2005, CAC, an
        affiliate of Trimaran Fund II, L.L.C., purchased (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). As a result of the Acquisition, CAC is the
        owner of the nation’s leading restaurant company specializing in flame-grilled
        chicken. The Acquisition was accounted for as a purchase of Holdings by CAC
        in
        accordance with SFAS No. 141.




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 2006.


F-8


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




The
      goodwill recorded as part of the purchase accounting is not deductible for
      income tax purposes.




**3.
      EQUITY INVESTMENT IN CHICKEN ACQUISITION CORPORATION**




The
      Company is a wholly owned indirect subsidiary of CAC, which is 99% owned by
      Trimaran Pollo Partners, LLC (the “LLC”) (which is controlled by affiliates of
      Trimaran Capital, LLC). The LLC’s only material asset is its investment in CAC.
      CAC’s only material asset is its investment in Intermediate.




On
        December 26, 2007, the Company entered into a Unit Purchase Agreement with
        the
        LLC, CAC, EPL, FS Equity Partners V, L.P. (“FSEP V”), FS Affiliates V, L.P.
        (“FSA V”), Peter Starrett (“Starrett” and collectively with FSEP V and FSA V,
        the “Purchasers”), and certain members of the LLC (the “Unit Purchase
        Agreement”). Pursuant to the Unit Purchase Agreement, the Purchasers acquired
        409,091 membership units from the LLC, for an aggregate purchase price of
        $45
        million. The LLC contributed the proceeds of this sale to CAC in consideration
        for 409,091 newly issued CAC shares. The LLC owned 1,910,753 CAC shares prior
        to
        the transaction and 2,319,844 CAC shares after the transaction, representing
        99.6% of CAC’s outstanding shares. CAC paid various fees and
        expenses related to this transaction of approximately $1.8
        million.




On
      December 26, 2007, CAC made a $3 million capital contribution to EPL through
      intermediary subsidiaries. On January 25, 2008, CAC made an $8 million capital
      contribution to the Company. The Company used $7.8 million of these proceeds
      to
      repurchase outstanding 14.5% senior discount notes due 2014 (see Note 14) at
      a
      price that approximated their accreted net book value.




**4.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




***Basis
      of Presentation*** **—** The
      Company’s fiscal year end is the last Wednesday of the calendar year, which in
      2005 was December 28, 2005, in 2006 was December 27, 2006 and in 2007
      was December 26, 2007. The accompanying consolidated balance sheets present
      the
      Company’s financial position as of December 27, 2006 and December 26,
      2007. The accompanying consolidated statements of operations, stockholder’s
      equity (deficiency) and cash flows present 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 periods ended
      December 27, 2006 and December 26, 2007.


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 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
                yearsLand improvements
            
            3-30 yearsBuilding improvements
            
            3-10
                yearsRestaurant equipment
            
            3-10
                yearsOther
                equipment
            
            2-10
                yearsLeasehold 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 $69,000 of internal costs related to site selection
      and
      construction activities during the period from December 30, 2004 to
      November 17, 2005. The Predecessor also capitalized $84,000 of interest
      expense during the period from December 30, 2004 to November 17, 2005.
      The Successor capitalized $16,000, $47,000 and $4,000 of internal costs related
      to site selection and construction activities during the period from November
      18, 2005 to December 28, 2005 and the years ended December 27, 2006 and December
      26, 2007, respectively. The Successor also capitalized $106,000, $166,000 and
      $252,000, of interest expense during the period from November 18, 2005 to
      December 28, 2005 and the years ended December 27, 2006 and December 26,
      2007, 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 resulted from the Acquisition by CAC and from the acquisition of
      certain franchise locations.




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
      period from December 30, 2004 to November 17, 2005, or the Successor period
      November 18, 2005 to December 28, 2005 and the Successor years ended December
      27, 2006 and December 26, 2007.




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 yearsFavorable
                leasehold interests
            
            1 to 18 years (remaining lease term)Unfavorable
                leasehold interests
            
            1 to 20 years (remaining lease term)




***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. The Predecessor 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.


F-10


***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 period December 30, 2004 to November 17, 2005 and the
      Successor period November 18, 2005 to December 28, 2005 and the
      Successor years ended December 27, 2006 and December 26, 2007, totaled $277,000,
      $0, $892,000 and $1,049,000, respectively. Sales tax collected from our
      customers is recorded on a net basis.




***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 $8,056,000, $291,000, $9,320,000
      and $10,373,000 for the Predecessor period December 30, 2004 to
      November 17, 2005 and the Successor period November 18, 2005 to
      December 28, 2005 and the Successor years ended December 27, 2006 and
      December 26, 2007, respectively, and is net of $9,093,000, $1,055,000,
      $11,979,000 and $13,605,000, 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 $1,358,000
      and $180,000 at December 27, 2006 and December 26, 2007, 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 26, 2007, the Company was obligated
      to spend an additional $74,000 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 $1,195,000 and $1,945,000 at December 27, 2006 and
      December 26, 2007, respectively, and are included in other current and
      noncurrent liabilities in the accompanying consolidated balance sheets.




***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 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.




***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, which provide 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.


F-11


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




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




In
      February 2007, the FASB issued Financial Accounting Standards No. 159, “The Fair
      Value Option for Financial Assets and Financial Liabilities—Including an
      amendment of FASB Statement No. 115” (“SFAS 159”). This Statement permits
      entities to choose to measure many financial instruments and certain other
      items
      at fair value. The objective is to improve financial reporting by providing
      entities with the opportunity to mitigate volatility in reported earnings caused
      by measuring related assets and liabilities differently without having to apply
      complex hedge accounting provisions. This Statement is expected to expand the
      use of fair value measurement, which is consistent with the FASB’s long-term
      measurement objectives for accounting for financial instruments. SFAS 159 is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. The Company is currently evaluating the impact, if any,
      that
      SFAS 159 will have on its consolidated financial position, results of operations
      and cash flows.




In
      September 2006, 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 ratified the consensus reached on Emerging Issues Task Force
      (“EITF”) Issue No. 06-03, How Taxes Collected from Customers and Remitted
      to Governmental Authorities Should Be Presented in the Income Statement (that
      is, Gross versus Net Presentation). The EITF reached a consensus that the
      presentation of taxes on either a gross or net basis is an accounting policy
      decision that requires disclosure. EITF 06-03 is effective for the first
      interim or annual reporting period beginning after December 15, 2006. Taxes
      collected from our customers are and have been recorded on a net basis. We
      have
      no intention of modifying this accounting policy. As such, the adoption of
      EITF 06-03 did not have an effect on our consolidated financial position or
      results of operations.




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 has adopted FIN 48 and has determined that, based on its
      analysis, the adoption of FIN 48 did not have a material impact on our
      consolidated financial position or results of operations.




**5.
      SALE AND ACQUISITIONS OF RESTAURANTS**




On
      June
      29, 2007, the Company acquired the assets of three previously franchised
      restaurants (Las Vegas restaurants). The purchase price of $8.5 million
      consisted of cash and was accounted for using the purchase method of accounting
      in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141,
      Business Combinations. The Company’s allocation of the purchase price to the
      fair value of the acquired assets is as follows: equipment, $0.1 million,
      favorable lease, $0.2 million, and goodwill, $8.2 million. Results of operations
      of the Las Vegas restaurants are included in the Company’s financial statements
      beginning as of the acquisition date. The pro forma effects of the Company’s
      acquisition on its historical results of operations are not
      material.




In
      August
      and September of 2007, the Company sold eight restaurants to franchisees for
      a
      total of $7.5 million. These restaurants had an aggregate net book value of
      $1.6
      million, and after a write off of goodwill of $8.8 million, which was the
      proportionate share of goodwill attributable to the eight restaurants, and
      a
      liability reduction of $0.1 million, the Company realized a $2.8 million loss
      that is included in other operating expenses in the accompanying consolidated
      statements of operations.




**6.
      PREPAID EXPENSES AND OTHER CURRENT ASSETS**




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




**December 27,**
              **2006**
            
            **December 27,**
              **2006**Prepaid
                rent
            
            $
            1,394
            
            $
            1,511Other
            
            
            2,441
            
            
            2,163$
            3,835
            
            $
            3,674


F-12




**7.
      PROPERTY**




The
      costs
      and related accumulated depreciation and amortization of major classes of
      property as of December 27, 2006 and December 26, 2007 are as follows (in
      thousands):




**December
                27,**
              **2006**
            
            **December
                26,**
              **2007**Property
                owned:Land
            
            $
            12,771
            
            $
            12,771Buildings
                and improvements
            
            
            42,439
            
            
            55,091Other
                property and equipment
            
            
            24,110
            
            
            30,353Construction
                in progress
            
            
            4,435
            
            
            3,31783,755
            
            
            101,532Accumulated
                depreciation and amortization
            
            
            (9,913)
            
            
            (19,315)Property
                owned—net
            
            $
            73,842
            
            $
            82,217Property
                held under capital leases
            
            $
            2,241
            
            $
            2,186Accumulated
                amortization
            
            
            (607)
            
            
            (1,081)Property
                held under capital leases—net
            
            $
            1,634
            
            $
            1,105




Property
      held under capital leases consists principally of buildings and improvements.
      The total depreciation and amortization expense for property for the Predecessor
      period December 30, 2004 to November 17, 2005 and the Successor periods November
      18, 2005 to December 28, 2005, December 27, 2006 and December 26, 2007, was
      approximately $11,364,000, $1,085,000, $9,674,000 and $11,195,000 respectively.


F-13


**8.
      GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES**




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




**December
                27, 2006**
            
            **December
                26, 2007**Beginning
                balance
            
            $
            272,204
            
            $
            277,514Purchase
                of the Company by CAC (See Note 2)
            
            
            —
            
            
            —Purchase
                price adjustments
            
            
            5,310
            
            
            —Purchase
                of franchise restaurants
            
            
            —
            
            
            8,213Sale
                of franchise restaurants
            
            
            —
            
            
            (8,816)Ending
                balance
            
            $
            277,514
            
            $
            276,911




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




**December
                27,**
              **2006**
            
            **December
                26,**
              **2007**Franchise
                network—net
            
            $
            7,490
            
            $
            7,032Favorable
                leasehold interest - net
            
            
            4,492
            
            
            3,575Other
                intangible assets—net
            
            $
            11,982
            
            $
            10,607Unfavorable
                leasehold interest liability—net
            
            $
            (7,434)
            
            $
            (6,047)




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 $150,000 for the Predecessor period
      December 30, 2004 to November 17, 2005. Amortization expense for franchise
      network was $1,034,000 $53,000, $457,000 and $457,000 for the Predecessor period
      December 30, 2004 to November 17, 2005 and the Successor period November 18,
      2005 to December 28, 2005 and the Successor years ended December 27, 2006 and
      December 26, 2007, 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**2008
            
            $
            2582009
            
            
            2542010
            
            
            1302011
            
            
            1672012
            
            
            182




**9.
      OTHER ASSETS**




Other
      assets consist of the following (in thousands):




**December
                27,**
              **2006**
            
            
            **December
                26,**
              **2007**Deferred
                financing costs - net
            
            $
            8,552
            
            $
            7,334Other
            
            
            2,043
            
            
            2,273$
            10,595
            
            $
            9,607




Amortization
      expense for deferred financing costs was $7,426,000, $152,000, $1,367,000 and
      $1,391,000 for the Predecessor period December 30, 2004 to November 17, 2005,
      the Successor period November 18, 2005 to December 28, 2005 and the years ended
      December 27, 2006 and December 26, 2007, respectively.


F-14


**10.
      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
      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 which are recorded on a straight-line basis.




Information
      regarding the Company’s future lease obligations at December 26, 2007 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**2008
            
            $
            1,711
            
            $
            783
            
            $
            15,925
            
            $
            1,6042009
            
            
            948
            
            
            490
            
            
            16,096
            
            
            1,5222010
            
            
            627
            
            
            225
            
            
            15,769
            
            
            1,1702011
            
            
            457
            
            
            115
            
            
            15,769
            
            
            9602012
            
            
            436
            
            
            114
            
            
            15,446
            
            
            743Subsequent
                years
            
            
            2,031
            
            
            401
            
            
            92,889
            
            
            967Total
            
            
            6,210
            
            $
            2,128
            
            $
            171,894
            
            $
            6,966Less
                imputed interest
            
            
            (2,263
            )Present
                value of capital lease obligations
            
            
            3,947Less
                current maturities
            
            
            (1,241
            )Noncurrent
                portion
            
            $
            2,706




Net
      rent
      expense for the Predecessor period December 30, 2004 to November 17, 2005 and
      the Successor period November 18, 2005 to December 28, 2005 and the Successor
      years ended December 27, 2006 and December 26, 2007 is as follows (in
      thousands):




**Predecessor**
              
              
              **Successor****Years
                  Ended****December
                  30, 2004**
                **to
                  November 17,**
                **2005**
              
              
              **December
                  30, 2004**
                **to
                  November 17,**
                **2005**
              
              
              **December
                  27, 2006**
              
              
              **December
                  26, 2007**Base
                  rent
              
              $
              13,315
              
              $
              1,561
              
              $
              15,969
              
              $
              17,246Contingent
                  rent
              
              
              420
              
              
              42
              
              
              518
              
              
              630Less
                  sublease income
              
              
              (3,860
              )
              
              (345
              )
              
              (4,221
              )
              
              (4,288
              )Net
                  rent expense
              
              $
              9,875
              
              $
              1,258
              
              $
              12,266
              
              $
              13,588




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. Sublease income includes contingent rental income
      of
      $1,700,000, $154,000, $1,980,000 and $2,060,000 for the Predecessor period
      December 30, 2004 to November 17, 2005 the Successor period November 18, 2005
      to
      December 28, 2005 and the years ended December 27, 2006 and December 26, 2007,
      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 3 to 9 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
      $346,000, $38,000, $385,000 and $414,000 for the Predecessor period December
      30,
      2004 to November 17, 2005, the Successor period November 18, 2005 to December
      28, 2005 and the years ended December 27, 2006 and December 26, 2007,
      respectively.




Minimum
      future rental income for company-owned properties under noncancelable operating
      leases, which is recorded on a straight-line basis, in effect as of December
      26,
      2007 is as follows (in thousands):




**Year
                Ending December 31**2008
            
            $
            2912009
            
            
            3022010
            
            
            2342011
            
            
            1662012
            
            
            166Thereafter
            
            
            347Total
                future minimum rental income
            
            $
            1,506


F-15


**11.
      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,
      Intermediate 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.




**12.
      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,
      and the 2013 Notes and the 2014 Notes (see Note 14) 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 $8.5 million available under the
      revolving line of credit at December 26, 2007 (Note 13).




**13.
      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. Future principal payments under the term loan at December 26,
      2007
      are as follows (in thousands).


F-16


**Year
                Ending December 31**2008
            
            $
            1,0352009
            
            
            1,0352010
            
            
            1,0352011
            
            
            98,348$
            101,453




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
      7.70%. 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 26, 2007, EPL
      was
      in compliance with all of the financial covenants contained in its senior credit
      facility and has $8.5 million available for borrowings under the revolving
      line
      of credit.




**14.
      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 12).




At
      December 26, 2007, the Company had $30,274,000 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.




**15.
      OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES**




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




**December
                27,**
              **2006**
            
            **December
                26,**
              **2007**Accrued
                sales and property taxes
            
            $
            2,561
            
            $
            2,601Other
            
            
            1,746
            
            
            2,475$
            4,307
            
            $
            5,076


F-17


**16.
      OTHER NONCURRENT LIABILITIES**




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




**December
                27,**
              **2006**
            
            **December
                26,**
              **2007**Closed
                restaurant reserve
            
            
            322
            
            
            171Deferred
                rent
            
            
            2,779
            
            
            4,498Other
            
            
            1,802
            
            
            4,702$
            4,903
            
            $
            9,371




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.




**17.
      INCOME TAXES -**




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




**Predecessor**
            
            **Successor****December
                    30, 2004 to**
                  **November
                    17, 2005**
            
            **November
                    18,**
                  **2005
                    to**
                  **December
                    28, 2005**
            
            **Year
                    Ended**
                  **December
                    27,
                    2006**
            
            **Year
                    Ended**
                  **December
                    26,
                    2007**Current
                income taxes:Federal
            
            $
            (467
            )
            $
            —
            
            $
            22
            
            $
            12State
            
            
            663
            
            
            —
            
            
            13
            
            
            23196
            
            
            —
            
            
            35
            
            
            35Deferred
                income taxes:Federal
            
            
            (5,524
            )
            
            (307
            )
            
            994
            
            
            1,933State
            
            
            (2,323
            )
            
            (86
            )
            
            43
            
            
            1,125(7,847
            )
            
            (393
            )
            
            1,037
            
            
            3,058$
            (7,651
            )
            $
            (393
            )
            $
            1,072
            
            $
            3,093


F-18


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):




**Predecessor**
              
              
              **Successor****December
                      30, 2004 to**
                    **November
                        17, 2005**
              
              
              **November
                      18, 2005 to**
                    **December
                        28, 2005**
              
              
              **Year
                      Ended**
                    **December
                        27, 2006**
              
              
              **Year
                      Ended**
                    **December
                        26, 2007**Provision
                  for income taxes at statutory rate
              
              $
              (6,595
              )
              $
              (343
              )
              $
              598
              
              $
              (329
              )State
                  income taxes—net of federal income tax benefit
              
              
              (1,079
              )
              
              (55
              )
              
              37
              
              
              746Disqualified
                  interest expense
              
              
              —
              
              
              —
              
              
              353
              
              
              —Non-deductible
                  goodwill
              
              
              —
              
              
              —
              
              
              —
              
              
              2,785Other
              
              
              23
              
              
              5
              
              
              84
              
              
              (109
              )$
              (7,651
              )
              $
              (393
              )
              $
              1,072
              
              $
              3,093




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.




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




**December
                28,**
            
            
            **December
                27,**
            
            
            **December
                26,****2005**
            
            
            **2006**
            
            
            **2007**Negative
                leasehold liability
            
            $
            1,489
            
            $
            1,460
            
            $
            3,706Capital
                leases
            
            
            1,462
            
            
            1,167
            
            
            1,242Accrued
                vacation
            
            
            628
            
            
            658
            
            
            683Accrued
                bonus
            
            
            966
            
            
            —
            
            
            798Deferred
                rent
            
            
            727
            
            
            1,138
            
            
            1,597Accrued
                workers’ compensation
            
            
            1,441
            
            
            1,509
            
            
            1,448Enterprise
                zone and other credits
            
            
            208
            
            
            351
            
            
            525State
                taxes
            
            
            2,217
            
            
            2,205
            
            
            —Net
                operating losses
            
            
            8,789
            
            
            9,463
            
            
            7,595Interest
                expense
            
            
            —
            
            
            1,155
            
            
            —Other
            
            
            243
            
            
            522
            
            
            4,145Deferred
                income tax assets
            
            
            18,170
            
            
            19,628
            
            
            21,739Other
                identifiable intangibles
            
            
            (47,860
            )
            
            (49,828
            )
            
            (51,262
            )Prepaid
                expense
            
            
            (1,446
            )
            
            (1,522
            )
            
            —Basis
                difference in fixed assets
            
            
            (1,659
            )
            
            (1,658
            )
            
            (2,393
            )Other
            
            
            (68
            )
            
            (69
            )
            
            (4,591
            )Deferred
                income tax liabilities
            
            
            (51,033
            )
            
            (53,077
            )
            
            (58,246
            )Net
                deferred income tax liability
            
            $
            (32,863
            )
            $
            (33,449
            )
            $
            (36,507
            )


F-19


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 26, 2007, the Successor has federal and state net operating loss
      carryforwards of approximately $14,812,000 and $27,574,100, 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.




On
          December 28, 2006, the Company adopted the provisions of FIN 48, which
          clarifies
          the accounting for uncertain tax positions. FIN 48 requires that the Company
          recognize the impact of a tax position in our financial statement if the
          position is more likely than not of being sustained upon examination and
          on the
          technical merits of the position. The impact of the adoption of FIN 48
          was
          immaterial to the Company’s consolidated financial statements. The total amount
          of unrecognized tax benefits as of December 26, 2007, was $2,098,000, which
          if
          recognized, would affect
          other tax accounts, primarily deferred taxes in
          future periods and would not affect the Company’s effective tax
          rate.
 
 A
        reconciliation of the beginning and ending balance of unrecognized tax benefits
        is as follows:
 
 Balance
                  at December 28, 2006
              
              $
              0Gross
                  Increases - tax positions in prior period
              
              
              1,900,000Gross
                  Increases - tax positions in current period
              
              
              198,000Balance
                  at December 26, 2007
              
              $
              2,098,000
 
 The
        Company does not anticipate any material change in the total amount of
        unrecognized tax benefits to occur within the next twelve months.
 
 FIN
          48
          requires the Company to accrue interest and penalties where there is an
          underpayment of taxes based on the Company’s best estimate of the amount
          ultimately to be paid. The Company’s policy is to recognize interest accrued
          related to unrecognized tax benefits and penalties as income tax expense.
          The
          Company has uncertain tax positions as of December 26, 2007, however, the
          Company has sufficient net operating losses to offset additional amounts
          owed,
          if any. Consequently no interest or penalties has been accrued by the
          Company.
 
 The
        Company is subject to taxation in the U.S. and various state jurisdictions.
        The
        Company’s tax years for 2003 through 2007 are subject to examination by various
        tax authorities. The Company is no longer subject to U.S. examination for
        years
        before 2004, and years before 2003 by state taxing
        authorities.




**18.
      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 period December 30, 2004 to November 17, 2005, and the Successor
      period November 18, 2005 to December 28, 2005 and the Successor years ended
      December 27, 2006 and December 26, 2007, were approximately $259,000, $34,000,
      $393,000 and $416,000, respectively.




**19.
      STOCK-BASED COMPENSATION**




As
      of
      November 17, 2005, options to purchase 82,617 shares of common stock of Holdings
      were outstanding. As of December 28, 2005, December 27, 2006, and December
      26,
      2007, options to purchase 277,608, 302,772 and 304,287 shares, respectively
      of
      common stock of CAC were outstanding. Included in that amount are 80,831 options
      that are fully vested; the remaining options partially vest upon the Company’s
      attaining annual financial or other goals, with the remaining unvested portion
      vesting on the seventh anniversary of the grant date, and vest 100% upon the
      occurrence of an initial public offering of at least $50 million or a change
      in
      control of CAC. All options were granted at fair value on the date of
      grant.




Changes
      in stock options for the Predecessor period December 30, 2004 to November 17,
      2005, the Successor period November 18, 2005 to December 28, 2005, and the
      Successor years ended December 27, 2006 and December 26, 2007 are as
      follows:




**Predecessor**
            
            **Shares**
            
            **Weighted-Average**
              **Exercise
                Price (2)**
            
            **Weighted-**
              **Average**
              **Remaining**
              **Contractual
                Life**
              **(in
                Years)**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding—December
                29, 2004
            
            
            84,117
            
            $
            15.96Grants
                (weighted-average fair value of $12.28 per share)
            
            
            1,250
            
            $
            36.56Exercised
            
            
            (2,500
            )
            $
            11.27Canceled
            
            
            (250
            )
            $
            17.61Outstanding—November
                17, 2005
            
            
            82,617
            **(1)**
            $
            20.70**Successor**Outstanding—November
                18, 2005
            
            
            —
            
            $Converted
                from Holdings options**(1)**
            
            
            81,835
            
            $
            8.75Grants
                (weighted-average fair value of $29.56 per share)
            
            
            195,773
            
            $
            86.43Outstanding—December
                28, 2005
            
            
            277,608
            
            $
            63.53Grants
                (weighted-average fair value of $45.86 per share)
            
            
            32,153
            
            $
            96.48Exercised
            
            
            (295
            )
            $
            10.80Canceled
            
            
            (6,694
            )
            $
            86.43Outstanding—December
                27, 2006
            
            
            302,772
            
            $
            66.58
            
            
            7.9
            
            
            11,306Grants
                (weighted-average fair value of $49.95 per share)
            
            
            22,246
            
            $
            113.29Exercised
            
            
            (709
            )
            $
            10.39Canceled
            
            
            (20,022
            )
            $
            88.93Outstanding—December
                26, 2007
            
            
            304,287
            
            $
            68.65
            
            
            7.0
            
            
            13,044**Vested
                and expected to vest in the future - December 26, 200**7
            
            
            304,287
            
            $
            68.65
            
            
            7.0
            
            
            13,044Exercisable
                - December 26, 2007
            
            
            80,831
            
            $
            8.74
            
            
            3.9
            
            
            8,309







**(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. 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.




F-20


**(2)**
            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 11,
                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 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 26, 2007,
                the
                Company had no further obligations.




Outstanding
      stock options at December 26, 2007 are summarized as follows:




**Range
                of Exercise Prices**
            
            **Number**
              **Outstanding**
            
            **Weighted-**
              **Average**
              **Remaining**
              **Contractual
                Life**
              **(in
                Years)**
            
            **Weighted-**
              **Average**
              **Exercise
                Price**
            
            **Number**
              **Exercisable**
            
            **Weighted-**
              **Average**
              **Exercise
                Price**$2.98
            
            
            17,694
            
            2.1
            
            
            $
            2.98
            
            
            17,694
            
            $
            2.98$7.56
            
            
            24,026
            
            3.3
            
            
            $
            7.56
            
            
            24,026
            
            $
            7.56$9.68-$11.77
            
            
            32,365
            
            4.7
            
            
            $
            10.68
            
            
            32,365
            
            $
            10.68$15.48-$20.60
            
            
            6,746
            
            6.8
            
            
            $
            18.59
            
            
            6,746
            
            $
            18.59$86.43
            
            
            189,059
            
            8.0
            
            
            $
            86.43
            
            
            —
            
            $
            —$108.84-$117.75
            
            
            34,397
            
            9.2
            
            
            $
            111.75
            
            
            —
            
            $
            —304,287
            
            7.0
            
            
            $
            68.65
            
            
            80,831
            
            $
            8.74




The
      intrinsic value is calculated as the difference between the market value as
      of
      December 26, 2007 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 on December 15, 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 would have vested immediately upon
      consummation of the offering. The remaining unvested options would have
      automatically terminated and the optionees would have been 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 on December 15, 2005 that would have been cancelled and replaced
        with restricted stock upon completion of an initial public offering before
        November 18, 2007, the Company used variable accounting to recognize expense
        based on the change in incremental value of the award at each reporting period
        until November 18, 2007. As the Company did not undertake an initial public
        offering prior to November 18, 2007, the future compensation expense is
        calculated based on the intrinsic value of the award as of that date.
        Compensation expense of $245,000 and $381,000 and a corresponding decrease
        in
        net income of $91,000 and $155,000 was recognized for the years ended December
        27, 2006 and December 26, 2007, respectively, related to such options. As
        of
        December 26, 2007, the total unamortized compensation expense related to
        these
        options was approximately $1.5 million, which will be amortized over the
        remaining vesting period of approximately 5.0 years, or earlier in the event
        of
        an initial public offering of our common stock or a change in
        control.




SFAS
      123(R): SFAS
      123(R) 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 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 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 the simplified method per Staff Accounting Bulletin
      No.
      107 “SAB 107”. 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 26, 2007 was $49.95 per share using the Black-Scholes
      model with the following weighted-average assumptions used to value the option
      grants: Expected volatility of 32%; Expected term life - 7.0 years; Forfeiture
      rate - 1.22%; Risk-free interest rates ranged from 4.5% to 5.0%; and Expected
      dividends - 0%.


F-21


The
      weighted-average estimated fair value of employee stock options granted during
      the year ended December 27, 2006 was $45.86 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 123(R), compensation expense was recognized during
        the year ended December 26, 2007 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). During the years ended December 27, 2006
        and
        December 26, 2007, the Company recognized share-based compensation expense
        before tax of $112,000 and $373,000, respectively, related to stock option
        grants after December 28, 2005. These expenses were 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 and $152,000 for the years ended December 27, 2006 and December 26,
        2007, respectively. The adoption of SFAS 123(R) did not impact the Company’s
        cash flows.




Upon
      consummation of an initial public offering of at least $50 million 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.




As
      of
      December 26, 2007, there was total unrecognized compensation expense of $3.6
      million related to unvested stock options which the Company expects to recognize
      over a weighted average period of 5.2 years.




**20.
      COMMITMENTS AND CONTINGENCIES**




*Legal
      Matters*




On
        or
        about April 16, 2004, a purported class action lawsuit was filed in the Superior
        Court of the State of California, County of Los Angeles, against EPL on behalf
        of all putative class members (former and current general managers and
        restaurant managers from April 2000 to present) alleging certain violations
        of
        California labor laws, including alleged improper classification of general
        managers and restaurant managers as exempt employees. Plaintiffs’ requested
        remedies include compensatory damages for unpaid wages, interest, certain
        statutory penalties, disgorgement of alleged profits, punitive damages and
        attorneys’ fees and costs as well as certain injunctive relief. The complaint
        was served on us on April 19, 2004. The court has lifted the stay on the
        class
        action pursuant to a recent California Supreme Court decision. The matter
        is now
        proceeding in Superior Court, and the parties are conducting limited discovery
        on the issue of class certification. While we intend to defend against this
        action vigorously, the ultimate outcome of this case is presently not
        determinable as it is in a preliminary phase. Thus, we cannot at this time
        determine the likelihood of an adverse judgment or a likely range of damages
        in
        the event of an adverse judgment.




On
        or
        about October 18, 2005, Salvador Amezcua, on behalf of 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. Amezcua as the named class representative on August 16, 2006.
        This
        action alleges certain violations of California labor laws and the California
        Business and Professions Code, based on, among other things, failure to pay
        overtime compensation, failure to provide meal periods, unlawful deductions
        from
        earnings and unfair competition. Plaintiffs’ requested remedies include
        compensatory and punitive damages, injunctive relief, disgorgement of profits
        and reasonable attorneys’ fees and costs. We were served with this complaint on
        December 16, 2005. The court denied EPL’s motion to compel arbitration, and the
        Company has appealed that decision. This matter is subject to an automatic
        stay
        while it is pending before the Court of Appeal. While we intend to defend
        against this action vigorously, the ultimate outcome of this case is presently
        not determinable as it is in a preliminary phase. Thus, we cannot at this
        time
        determine the likelihood of an adverse judgment or a likely range of damages
        in
        the event of an adverse judgment.




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 EPL-Mexico, 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
        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. Trial in this matter was completed on
        July
        26, 2007 with a jury verdict awarding damages in favor of EPL-Mexico in the
        amount of $21.3 million. Final judgment was issued by the Court on November
        30,
        2007 in the amount of $20,251,000 plus attorneys fees. In addition, the Court
        terminated the 1996 agreement and ordered EPL to assign all intellectual
        property defined in that agreement to EPL-Mexico. The trial court issued
        a
        further order awarding EPL-Mexico a total of $3,031,350 in attorneys’ fees and
        costs. In January 2008, EPL filed an appeal of these judgments in the U.S.
        Fifth
        Circuit Court of Appeals. The appeal process could take 12 to 18 months.
        If the
        judgments are upheld on appeal, EPL will be required to pay such judgments,
        which could result in an event of default under our credit facility and our
        long-term notes and materially adversely affect our liquidity, financial
        condition and business. In addition, the loss of the rights to use the
        trademarks and intellectual property in Mexico could adversely affect our
        brand
        in the U.S. and elsewhere.




In
      connection with our appeal of these judgments, EPL posted an appeal bond in
      the
      amount of $24,301,450. A portion of the appeal bond was collateralized by a
      $17,900,000 letter of credit arranged by Trimaran Fund II, LLC (“Trimaran
      Fund”). Trimaran Fund is a 20.6% member of the LLC and an affiliate of Trimaran. To
      compensate Trimaran Fund for this accommodation, on December 19, 2007, EPL
      and
      CAC entered into two agreements with Trimaran Fund: a Fee Agreement and a
      Payment and Subscription Agreement. Pursuant to the Fee Agreement, in January
      2008 EPL paid Trimaran Fund an up-front fee of $536,000, representing 3% of
      the
      amount of the letter of credit. EPL must also reimburse Trimaran Fund for any
      amounts it must pay in connection with the letter of credit. If Trimaran Fund
      provides cash collateral to secure the appeal bond, rather than a letter of
      credit, EPL must pay Trimaran Fund an annual fee equal to 13.25% of the cash
      collateral, payable quarterly. The cash collateral fee is payable, at Trimaran
      Fund’s option, in accordance with the Payment Options described
      below.


F-22


The
      purpose of the Payment and Subscription Agreement is to provide for the
      possibility that after all appeals EPL will be required to pay the judgments.
      If
      the appeal bond is used to satisfy the judgment, EPL or CAC would be required
      repay Trimaran Fund in one or more of the following forms, at the option of
      Trimaran Fund (“Payment Options”):




·
            cash;




·
            a
                two-year promissory note, accruing interest at a rate of 13.25% per
                annum,
                compounded annually, increasing by 0.50% per calendar quarter to
                a maximum
                of 17.5% per annum, convertible into or payable with, at the holder’s
                option, convertible preferred stock or common stock of CAC;
                or




·
              convertible
                  preferred stock or common stock of
                  CAC.




Trimaran
          Fund may choose any combination of the Payment Options only to the extent
          that
          such options do not result in a default under the terms of the Company’s
          indebtedness outstanding at the time. The Company’s indentures require that
          transactions with affiliates, such as Trimaran Fund, must be on terms that
          are
          no less favorable than the Company would have obtained in a transaction
          with an
          unrelated party. If the terms of these agreements, including any Payment
          Option
          chosen by Trimaran Fund, do not comply with this provision in the indentures,
          the parties have agreed to modify the terms of these agreements to the
          extent
          required to comply with the indentures. Any
          CAC
          shares or debt securities issued under the foregoing agreements are subject
          to
          applicable pre-emptive rights under the stockholders agreement and LLC
          operating
          agreement described above.




Pursuant
      to a Contribution Agreement dated December 26, 2007 among Trimaran Fund and
      the
“FS Funds” FS Equity Partners V, L.P. and FS Affiliates V, L.P., the FS Funds
      are required to contribute their pro rata share (based on their percentage
      interest in the LLC) of any amounts Trimaran Fund pays in connection with the
      appeal bond or its letter of credit, and the FS Funds will share pro rata in
      any
      payments received by Trimaran Fund pursuant to the foregoing
      agreements.




Our
        appeal will cite a number of key findings by the jury and actions by the
        plaintiff’s attorney that reinforce the Company’s firm belief that the damage
        findings were not supported by the facts in this case as a matter of
        law. Based on the arguments we will make on our appeal, we believe
        that the likelihood that the appeals court will affirm the amount of the
        judgment is not probable, and, accordingly, that the amount of any loss
        cannot be reasonably estimated at this time. Because we believe
        that these potential losses are not probable or estimable, we
        have not recorded any reserves or contingencies related to these legal matters.
        In the event that our assumptions used to evaluate these matters as neither
        probable nor estimable change in future periods, we may be required to record
        a
        liability for an adverse outcome, which could have a material adverse effect
        on
        our results of operations and financial position.




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




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 claimed all rights, title and interest to the musical composition
“Guantanamera,” and alleged that the music used by EPL in its advertisements was
      an infringement of Fall River’s copyrights. The parties settled the matter and
      the lawsuit was dismissed on November 15, 2007.




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.
      Plaintiff 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. The Court issued an order on November
      1, 2007, striking the class allegations on its own motion. This matter is
      therefore no longer a purported class action and will have no material
      impact.




On
        April
        10, 2007, Shawn Monroe filed purported class action in state court in Los
        Angeles County. Plaintiff had dismissed his individual ADA action against
        a
        single EPL restaurant when the Court denied his request to convert that lawsuit
        to a class action. He then filed this lawsuit alleging ADA violations on
        behalf
        of all disabled individuals who utilize wheelchairs or electric scooters
        for
        mobility at all EPL company-owned restaurants in the state of California.
        The
        Court issued an order on February 14, 2008 striking plaintiff’s class
        allegations without leave to amend his compliant. This case is an individual
        claim for a single restaurant location and therefore will have no material
        impact.




In
      April
      2007, Dora Santana filed a purported class action in state court in Los Angeles
      County on behalf of all “Assistant Shift Managers.” Plaintiff alleges wage and
      hour violations including working off the clock, failure to pay overtime, and
      meal break violations on behalf of the purported class, currently defined as
      all
      Assistant Managers from April 2003 to present. Written discovery has just begun
      on the limited issue of class certification. While we intend to defend against
      this action vigorously, the ultimate outcome of this case is presently not
      determinable as it is in a preliminary phase. Thus, we cannot at this time
      determine the likelihood of an adverse judgment or a likely range of damages
      in
      the event of an adverse judgment. Any settlement of or judgment with a negative
      outcome arising from such lawsuit could be material, and we cannot give any
      assurance that we would have the resources available to pay such settlement
      or
      judgment.




In
      October 2004, five individual plaintiffs initially filed an employment related
      lawsuit against EPL in Los Angeles County Superior Court. The case was compelled
      to arbitration, and is now proceeding before a private arbitrator. Three
      plaintiffs settled for $3,000 each, leaving Syed Rahman, a former Assistant
      Manager and Celso Diaz, a former delivery driver claiming discrimination in
      a
      variety of forms including race, religion, national origin and gender at the
      restaurant located in North Hollywood. EPL has a motion for summary judgment
      pending on each claim, and the arbitration has been taken off calendar to
      accommodate the required briefing timeline. While we intend to vigorously defend
      this action, 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 4, 2007, Robyn James, a former General Manager, filed a lawsuit
      in
      Superior Court for the County of Los Angeles. EPL was served on January 31,
      2008. Plaintiff alleges race discrimination as well as retaliation and negligent
      hiring and supervision. In addition to suing EPL, plaintiff has named as
      individual defendants, the Area Leader of the two stores where she was assigned
      and an Assistant Manager. This case is in the preliminary stage. 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.


F-23


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 $8,607,000.




**21.
      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 Predecessor period from
        December 30, 2004 to November 17, 2005, $435,000 was expensed and paid to
        ASCP
        for managerial services and expenses. On November 18, 2005, CAC entered into
        a
        Monitoring and Management Services Agreement with Trimaran Fund Management,
        L.L.C. (“Trimaran”), an affiliate of the majority owner of CAC, which provides
        for annual fees of $500,000 plus reasonable expenses. This Agreement was
        amended
        on December 26, 2007 to add an affiliate of the Purchasers (see Note 3) as
        a
        party to the Agreement. Such party shares in the fees payable under the
        Agreement. During the years ended December 28, 2005, December 27, 2006 and
        December 26, 2007, $59,000, $570,000 and $624,000, respectively, was expensed
        and paid pursuant to this Agreement. These amounts are included in other
        operating expenses in the accompanying consolidated statements of
        operations.




See
        Note
        20 regarding certain agreements relating to an appeal bond.




The
        Company had receivables from affiliates of $0 and $115,000 as of December
        27,
        2006 and December 26, 2007, respectively.




**22.
      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 26, 2007:


**2007****1st**
            
            **2nd**
            
            **3rd**
            
            **4th**Operating
                revenue
            
            $
            66,819
            
            $
            69,706
            
            $
            72,314
            
            $
            70,186Operating
                income
            
            
            7,798
            
            
            8,626
            
            
            6,174
            
            
            5,628Income
                (loss) before provision for income taxes
            
            
            470
            
            
            1,450
            
            
            (1,249)
            
            
            (1,612)Net
                income (loss)
            
            
            234
            
            
            1,354
            
            
            (4,012)
            
            
            (1,610)




For
      the
      year ended December 27, 2006:




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


F-24


**EXHIBIT
      INDEX**





**Exhibit
                No.**
            **Footnote**
            **Description******2.1
            (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.2.1
            (8)
            Unit
                Purchase Agreement, dated December 26, 2007, among EPL Intermediate,
                Inc.,
                Trimaran Pollo Partners, L.L.C., Chicken Acquisition Corp., El Pollo
                Loco,
                Inc., FS Equity Partners V, L.P., FS Affiliates V, L.P., Peter Starrett,
                and certain members of Trimaran Pollo Partners, L.L.C.2.2
            (5)
            Agreement
                and Plan of Merger, dated November 18, 2005, of EPL Intermediate
                Finance
                Corp., to be merged with and into EPL Intermediate,
                Inc.3.1
            (2)
            Certificate
                of Incorporation of EPL Intermediate, Inc.3.2
            (2)
            Certificate
                of Designations, Preferences and Rights of 6% Series A Preferred
                Stock3.3
            (12)
            Amended
                and Restated Bylaws of EPL Intermediate, Inc. effective January 30,
                2008.4.1
            (5)
            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.4.2
            (5)
            Form
                of Note (included as Exhibit A to Exhibit 4.1)4.3
            (5)
            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 LLC4.4
            (3)
            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
                Trustee4.5
            (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.4.6
            (5)
            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 LLC4.7
            (6)
            Supplemental
                Indenture, dated November 2, 2005, between El Pollo Loco, Inc. and
                The
                Bank of New York as Trustee10.1
            (5)+
            Employment
                Agreement, dated September 27, 2005, between El Pollo Loco, Inc.
                and
                Stephen E. Carley10.2
            (5)+
            Employment
                Agreement, dated September 27, 2005, between El Pollo Loco, Inc.
                and
                Joseph Stein10.3
            (5)
                +
            Amendment
                No. 1 to Stein Employment Agreement, dated October 10, 2005, between
                El
                Pollo Loco, Inc. and Joseph Stein10.4
            (5)
                +
            Employment
                Agreement, dated November 1, 2005, between El Pollo Loco, Inc. and
                Brian
                Berkhausen10.5
            (5)
                +
            Employment
                Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and
                Karen
                Eadon10.6
            +
            Employment
                Agreement, dated June 28, 2007, between El Pollo Loco, Inc. and Jerry
                Lovejoy.10.7
            +
            Personal
                Travel Stipend for Stephen Carley.10.8
            (5)
                +
            Employment
                Agreement, dated October 10, 2005, between El Pollo Loco, Inc. and
                Jeanne
                Scott10.9
            (5)
                +
            Employment
                Agreement, dated January 9, 2006, between El Pollo Loco, Inc. and
                Stephen
                Sather10.10
            (5)
                +
            Form
                of Exchange Agreement, entered into between Chicken Acquisition Corp.
                and
                certain executive officers10.11
            (5)
                +
            Amendment
                No. 1 to Form of Exchange Agreement, entered into between Chicken
                Acquisition Corp. and certain executive officers10.12
            (5)
                +
            Form
                of Exchange Stock Option Agreement, entered into between Chicken
                Acquisition Corp. and certain executive officers10.13
            (5)
                +
            Amendment
                No. 1 to Form of Exchange Stock Option Agreement, entered into between
                Chicken Acquisition Corp. and certain executive
                officers





10.14
              (5)
                  +
              Amendment
                  No. 2 to Form of Exchange Stock Option Agreement, entered into
                  between
                  Chicken Acquisition Corp. and certain executive
                  officers10.15
              (5)
                  +
              Stockholders
                  Agreement, dated November 18, 2005, among Chicken Acquisition Corp.,
                  Trimaran Pollo Partners, LLC and other shareholders10.16
              +
              Amendment
                  No. 1 to Stockholders Agreement, dated on or about April 20,
                  2006,
                  between Chicken Acquisition Corp. and Trimaran Pollo Partners,
                  LLC.10.17
              (7)
              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
                  investors10.18
              (5)
              Monitoring
                  and Management Services Agreement, dated November 18, 2005, between
                  Chicken Acquisition Corp. and Trimaran Fund Management,
                  L.L.C.10.19
              (5)
              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
                  thereto10.20
              (5)
              Security
                  Agreement, dated as of November 18, 2005, with Merrill Lynch Capital
                  Corporation10.21
              (5)
              Securities
                  Pledge Agreement, dated as of November 18, 2005, with Merrill Lynch
                  Capital Corporation10.22
              (5)
              Guaranty,
                  dated as of November 18, 2005, with Merrill Lynch Capital
                  Corporation10.23
              (9)
                  +
              Form
                  of Non-Qualified Stock Option Agreement for directors with Chicken
                  Acquisition Corp.10.24
              (5)
                  +
              Form
                  of Non-Qualified Stock Option Agreement for officers with Chicken
                  Acquisition Corp.10.25
              (5)
                  +
              Chicken
                  Acquisition Corp. 2005 Stock Option Plan10.26
              (3)*
              Letter
                  Agreement, dated February 15, 2005, between Pilgrim’s Pride Corporation
                  and El Pollo Loco, Inc.10.27
              (5)*
              Amendment
                  dated January 11, 2006 to Letter Agreement dated February 15, 2005,
                  between Pilgrim’s Pride Corporation and El Pollo Loco,
                  Inc.10.28
              (3)
              Form
                  of Franchise Development Agreement10.29
              (3)
              Form
                  of Franchise Agreement10.30
              +
              Compensation
                  of Independent Directors10.31
              (9)
              Fiesta
                  Brands Development Agreement dated August 10, 2006.10.32
              (8)
              Amendment
                  No. 1 to the Monitoring and Management Services Agreement, dated
                  December
                  26, 2007, among Chicken Acquisition Corp., Trimaran Fund Management,
                  LLC,
                  and Freeman Spogli & Co. V, L.P.10.33
              (8)
              Amendment
                  No. 1 to the Second Amended and Restated Limited Liability Company
                  Operating Agreement of Trimaran Pollo Partners, L.L.C., dated December
                  26,
                  2007, among Trimaran Pollo Partners, LLC, certain members of Trimaran
                  Pollo Partners, LLC, FS Equity Partners V, L.P. and  FS
                  Affiliates V, L.P.10.34
              (8)
              Amendment
                  No. 2 to the Stockholders Agreement, dated December 26, 2007, between
                  Chicken Acquisition Corp. and Trimaran Pollo Partners, LLC. Note:
                  this
                  exhibit was incorrectly identified as Amendment No. 1 to the Stockholders
                  Agreements in the Form 8-K filed on January 2, 2008. Amendment
                  No. 1 to
                  the Stockholders Agreement is filed as Exhibit No. 10.16
                  hereto.10.35
              
              Payment
                  and Subscription Agreement, dated December 19, 2007, among El Pollo
                  Loco,
                  Inc., Chicken Acquisition Corp. and Trimaran Fund II,
                  LLC.10.36
              
              Fee
                  Agreement, dated December 19, 2007, among El Pollo Loco, Inc.,
                  Chicken
                  Acquisition Corp. and Trimaran Fund II, LLC.10.37
              (10)*
              Letter
                  Agreement dated February 27, 2007 between El Pollo Loco, Inc. and
                  Pilgrim’s Pride Corporation.10.38
              (10)
                  +
              Independent
                  Directors Stock Plan10.39
              (10)
              Lease
                  dated May 18, 2007, between El Pollo Loco, Inc. and C.J. Segerstrom
&
                  Sons.





10.40
              (11)
              Amendment
                  No. 1 and Agreement dated March 14, 2007 relating to Credit Agreement
                  dated November 18, 2005.10.41
              (11)*
              Agreement
                  dated February 21, 2007 between El Pollo Loco, Inc. and Koch Foods,
                  Inc.10.42
              (12)
              Amendment
                  No. 2 to Second Amended and Restated Limited Liability Company
                  Operating
                  Agreement of Trimaran Pollo Partners, L.L.C., dated January 30,
                  2008,
                  among Trimaran Pollo Partners, LLC, certain members of Trimaran
                  Pollo
                  Partners, LLC, FS Equity Partners V, L.P. and  FS Affiliates V,
                  L.P.10.43
              +
              Form
                  of Amendment dated March 19,2008,
                  to the Officer Employment Agreements filed as exhibits 10.1, 10.2,
                  10.4,
                  10.5, 10.6, 10.8 and 10.9 hereto.10.44
              +
              Adjustment
                  to Calculation of EBITDA Applicable to Executive Bonus Awards effective
                  February 6, 2008.10.45
              +
              Definition
                  of EBITDA applicable to Executive Bonus Awards pursuant to Amendment
                  to
                  Employment Agreements (Exhibit 10.43 hereto).12.1
              
              Computation
                  of Ratio of Earnings to Fixed Charges14.1
              (4)
              El
                  Pollo Loco, Inc. Code of Business Ethics & Conduct21.1
              (2)
              Subsidiaries
                  of EPL Intermediate, Inc.31.1
              
              Certification
                  Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
                  Exchange
                  Act of 193431.2
              
              Certification
                  Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
                  Exchange
                  Act of 193432.1
              
              Certification
                  Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities
                  Exchange
                  Act of 193432.2
              
              Certification
                  Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities
                  Exchange
                  Act of 193499.1
              
              Press
                  Release dated March 20, 2008.








Footnotes:


(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)
                filed
                on November 14, 2005.




(2)
            Incorporated
                by reference to EPL Intermediate, Inc.’s Registration Statement on Form
                S-4 (File No. 333-115644) 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) filed on May 14, 2004.




(4)
            Incorporated
                by reference to El Pollo Loco, Inc.’s Annual Report on Form 10-K for the
                year ended December 29, 2004 (File No. 333-115486) filed on March
                28,
                2005.




(5)
            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.




(6)
            Incorporated
                by reference to El Pollo Loco, Inc.’s Form 8-K filed on November 4, 2005.




(7)
            Incorporated
                by reference to EPL Intermediate Inc.’s Registration Statement on Form S-4
                (File No. 333-133318) filed on April 14, 2006.




(8)
            Incorporated
                by reference to EPL Intermediate Inc.’s Form 8-K (File No. 333-115644)
                filed on January 2, 2008.




(9)
            Incorporated
                by reference to EPL Intermediate Inc.’s Form 10-K (File No. 333-115644)
                filed March 23, 2007.




(10)
            Incorporated
                by reference to EPL Intermediate Inc.’s Form 10-Q (File No. 333-115644)
                filed August 10, 2007.




(11)
            Incorporated
                by reference to EPL Intermediate Inc.’s Form 10-Q (File No. 333-115644)
                filed May 14, 2007.




(12)
            Incorporated
                by reference to EPL Intermediate, Inc.’s Form 8-K (File No. 333-115644)
                filed February 5, 2008.




+
            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.