Risk Factors.
−Removed: There have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 25, 2019 filed with the SEC on March 6, 2020, except for the addition of the risk factors that immediately follow.
−Removed: The recent outbreak of COVID-19 and measures intended to prevent its spread may have a significant negative impact on our business, sales, results of operations and financial condition.
−Removed: The global pandemic resulting from the outbreak of the novel coronavirus (“COVID-19”) has disrupted El Pollo Loco’s restaurant operations beginning in March 2020.
−Removed: In response to federal, state and local mandates (subject to exceptions for certain state and local mandates) aimed at limiting the spread of COVID-19, all of our dining rooms have closed.
−Removed: All of our restaurants are operating drive-thru (where available), delivery & take-away services only, with some restaurants operating with limited hours .
−Removed: Additionally, as of the date of this report, we have temporarily closed 18 restaurants, 15 of which have reopened and 3 remain closed at this time.
−Removed: Similarly, franchisees have temporarily closed 12 restaurants, 8 of which have reopened and 4 remain closed at this time.
−Removed: Furthermore, the decrease in discretionary consumer spending as a result of the COVID-19 outbreak has materially decreased demand for our products.
−Removed: This decrease in demand, as well as the actions described above, have resulted in declines in revenue and has led to us delaying April rent payments on the majority of our leased properties and we are currently negotiating rent abatement and/or deferment with our landlords for those properties.
−Removed: While we are not currently experiencing any supply chain or labor force shortages, our ability to maintain our supply chain and labor force may become challenging as a result of the COVID-19 pandemic.
−Removed: For example, if there are mandatory shutdowns in locations where our suppliers are located or if our suppliers are otherwise unable to supply us with the products we need to operate our business, we could see significant disruptions to our supply chain and our business would be negatively impacted.
−Removed: In addition, if we experience an outbreak of COVID-19 at a significant number of our locations that requires us to temporarily close those location for disinfection or if a large number of our employees become ill with COVID-19 and are unable to work, it may materially adversely affect our business or results of operations, and may impact our financial condition.
−Removed: COVID-19 may also adversely affect our ability to implement our growth plans, including delays in the opening or construction of new restaurants.
−Removed: As this situation is ongoing and the duration and severity of the COVID-19 pandemic is uncertain at this time, it is difficult to forecast any long-term impacts on our future operating results or predict when our operations will return to full service.
−Removed: However, we expect the COVID-19 pandemic to negatively impact our financial results and, depending on the severity and longevity of the COVID-19 pandemic, the efforts taken to reduce its spread and the possibility of a resurgence of the COVID-19 outbreak, such impact could impact our asset values, including goodwill, derivative instruments and long-lived assets, as well as our ability to meet certain covenant provisions in our debt arrangements in future periods and have a material adverse effect on our financial results, future operations and liquidity.
−Removed: Even after the COVID-19 pandemic has subsided, we may continue to experience negative impacts to our financial results due to COVID-19’s global economic impact, including the availability of credit generally, adverse impacts on our liquidity, and/or decreases in consumer discretionary spending that depress demand for our products.
−Removed: The global effects of the pandemic may also contribute to an economic slowdown or recession now or in the near-term future.
−Removed: Risks related to the impact of an economic downturn are described in our risk factors titled, “ A prolonged economic downturn could materially affect us in the future ” and “ We are vulnerable to changes in consumer preferences and economic conditions that could harm our business, financial condition, results of operations, and cash flow ” under “Risk Factors - Risks Related to our Business and Industry” in our Annual Report on Form 10-K for the year ended December 25, 2019.
−Removed: In addition, even after the COVID-19 pandemic has subsided, the perceived risk of infection or concern of a resurgence of the COVID-19 outbreak may continue to adversely affect traffic to our restaurants and, in turn, may have a material adverse effect on our business, liquidity, financial condition and results of operations, particularly if there is an actual recurrence of the COVID-19 virus.
+Added: There have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 25, 2019 filed with the SEC on March 6, 2020 and our quarterly report on Form 10-Q for the quarter ended March 25, 2020 filed with the SEC on May 1, 2020, except for the revision of the risk factor that immediately follows.
The resale of shares of common stock currently held by Trimaran Pollo Partners, L.L.C.
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Pursuant to the terms of the LLC’s limited liability company operating agreement (the “LLC Agreement”), the LLC agreement can terminate, in which case the LLC will begin the process of dissolving and winding up its affairs, at the earlier of (i) the election of the managing member, or (ii) six years following the completion of our initial public offering, or July 27, 2020.
−Removed: We expect the dissolution and winding up of the LLC to begin on July 27, 2020.
+Added: We expect the process of winding up of the LLC and distribution of the Company’s shares to begin on or after July 27, 2020.
If all or a substantial portion of these shares are resold into the public markets, or if it is perceived that they will be resold, the trading price of our common stock could decline.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.