3 unchanged sentences
(Amounts in thousands, except share data)
−Removed: September 29,
Current assets:
2 unchanged sentences
Prepaid expenses and other current assets
−Removed: Income tax receivable
Total current assets
11 unchanged sentences
Accrued income taxes payable
−Removed: Accrued interest
Current portion of income tax receivable agreement payable
13 unchanged sentences
Common stock, $ 0.01 par value, 200,000,000 shares authorized;
−Removed: 36,671,447 and 36,423,505 shares issued and outstanding as of September 29, 2021 and December 30, 2020, respectively
+Added: 36,743,496 and 36,601,648 shares issued and outstanding as March 30, 2022 and December 29, 2021, respectively
Additional paid-in-capital
Accumulated deficit
−Removed: Accumulated other comprehensive loss
+Added: Accumulated other comprehensive income (loss)
Total stockholders’ equity
5 unchanged sentences
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Company-operated restaurant revenue
6 unchanged sentences
Occupancy and other operating expenses
−Removed: Gain on recovery of insurance proceeds, lost profits
Company restaurant expenses
3 unchanged sentences
Loss on disposal of assets
−Removed: Recovery of securities lawsuits related legal expenses and other insurance claims
−Removed: Loss on disposition of restaurants
Impairment and closed-store reserves
2 unchanged sentences
Interest expense, net
−Removed: Income tax receivable agreement expense (income)
+Added: Income tax receivable agreement income
Income before provision for income taxes
7 unchanged sentences
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Other comprehensive income (loss)
Changes in derivative instruments
−Removed: Unrealized net (losses) gains arising during the period from interest rate swap
+Added: Unrealized net gains arising during the period from interest rate swap
Reclassifications of losses into net income
−Removed: Income tax (expense) benefit
−Removed: Other comprehensive income (loss), net of taxes
+Added: Income tax expense
+Added: Other comprehensive income, net of taxes
Comprehensive income
2 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
−Removed: (Amounts in thousands, except share data)
−Removed: Thirteen Weeks Ended September 29, 2021
−Removed: Comprehensive
−Removed: Stockholders’
−Removed: (Loss) Income
−Removed: Balance, June 30, 2021
−Removed: Stock-based compensation
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Shares repurchased for employee tax withholdings
−Removed: Forfeiture of common stock related to restricted shares
−Removed: Other comprehensive income, net of tax
−Removed: Balance, September 29, 2021
−Removed: Thirteen Weeks Ended September 23, 2020
−Removed: Comprehensive
−Removed: Stockholders’
−Removed: Balance, June 24, 2020
−Removed: Stock-based compensation
−Removed: Issuance of common stock related to restricted shares
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Shares repurchased for employee tax withholdings
−Removed: Forfeiture of common stock related to restricted shares
−Removed: Other comprehensive income, net of tax
−Removed: Balance, September 23, 2020
−Removed: Thirty-Nine Weeks Ended September 29, 2021
+Added: Thirteen Weeks Ended March 30, 2022
Comprehensive
3 unchanged sentences
Stock-based compensation
−Removed: Issuance of common stock related to restricted shares
Issuance of common stock upon exercise of stock options
−Removed: Shares repurchased for employee tax withholdings
−Removed: Forfeiture of common stock related to restricted shares
Other comprehensive income, net of tax
−Removed: Balance, September 29, 2021
−Removed: Thirty-Nine Weeks Ended September 23, 2020
+Added: Balance, March 30, 2022
+Added: Thirteen Weeks Ended March 31, 2021
Comprehensive
Stockholders’
−Removed: (Loss) Income
+Added: Income (Loss)
Balance, December 30, 2020
Stock-based compensation
−Removed: Issuance of common stock related to restricted shares
Issuance of common stock upon exercise of stock options
−Removed: Shares repurchased for employee tax withholdings
Forfeiture of common stock related to restricted shares
−Removed: Other comprehensive income, net of tax
−Removed: Balance, September 23, 2020
+Added: Other comprehensive loss, net of tax
+Added: Balance, March 31, 2021
See notes to condensed consolidated financial statements (unaudited).
2 unchanged sentences
(Amounts in thousands)
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: Thirteen Weeks Ended
+Added: March 30, 2022
+Added: March 31, 2021
Cash flows from operating activities:
−Removed: Adjustments to reconcile net income to net cash flows provided by operating activities:
+Added: Adjustments to reconcile net income to net cash flows (used in) provided by operating activities:
Depreciation and amortization
−Removed: Bad debt expense
Stock-based compensation expense
−Removed: Income tax receivable agreement (income) expense
−Removed: Loss on disposition of restaurants
+Added: Income tax receivable agreement income
Loss on disposal of assets
10 unchanged sentences
Other accrued expenses and liabilities
−Removed: Net cash flows provided by operating activities
+Added: Net cash flows (used in) provided by operating activities
Cash flows from investing activities:
−Removed: Proceeds from disposition of restaurants
Purchase of property and equipment
1 unchanged sentence
Cash flows from financing activities:
−Removed: Proceeds from borrowings on revolver and swingline loans
Payments on revolver and swingline loan
−Removed: Minimum tax withholdings related to net share settlements
Proceeds from issuance of common stock upon exercise of stock options, net of expenses
Payment of obligations under finance leases
−Removed: Net cash flows used in financing activities
−Removed: Increase in cash and cash equivalents
+Added: Net cash flows provided by (used in) financing activities
+Added: Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: Thirteen Weeks Ended
+Added: March 30, 2022
+Added: March 31, 2021
Supplemental cash flow information
8 unchanged sentences
(“Holdings”) is a Delaware corporation headquartered in Costa Mesa, California.
−Removed: Holdings and its direct and indirect subsidiaries are collectively referred to herein as “we,” “us” or the “Company.” The Company’s activities are conducted principally through its indirect wholly-owned subsidiary, El Pollo Loco, Inc.
+Added: Holdings and its direct and indirect subsidiaries are collectively referred to herein as the “Company.” The Company’s activities are conducted principally through its indirect wholly-owned subsidiary, El Pollo Loco, Inc.
(“EPL”), which develops, franchises, licenses, and operates quick-service restaurants under the name El Pollo Loco® and operates under one operating segment.
−Removed: At September 29, 2021, the Company operated 190 and franchised 290 El Pollo Loco restaurants.
+Added: At March 30, 2022, the Company operated 188 and franchised 293 El Pollo Loco restaurants.
Basis of Presentation
1 unchanged sentence
generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
−Removed: In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position and results of operations and cash flows for the periods presented.
+Added: In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position and results of operations and cash flows for the periods presented.
Interim results of operations are not necessarily indicative of the results that may be achieved for the full year.
5 unchanged sentences
Every six or seven years, a 53-week fiscal year occurs.
−Removed: Fiscal 2021 is a 52-week year ending on December 29, 2021, and fiscal 2020 was a 53-week year ended on December 30, 2020.
+Added: Fiscal 2022 and 2021 are both 52-week years, ending on December 28, 2022 and December 29, 2021, respectively.
Revenues, expenses, and other financial and operational figures may be elevated in a 53-week year.
11 unchanged sentences
The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, insurance reserves, lease accounting matters, stock-based compensation, income tax receivable agreement liability, contingent liabilities and income tax valuation allowances.
−Removed: During the COVID-19 pandemic, the Company has experienced periods of significant disruption to its restaurant operations.
−Removed: Following the pandemic declaration in March 2020, federal, state and local governments have periodically responded to the public health crisis by requiring social distancing, issuing “stay at home” directives, and implementing restaurant restrictions - including government-mandated dining room closures - that limited business to off-premise services only (take-out, drive-thru and delivery).
−Removed: Many state and local governments continue to periodically implement certain restrictions to try and contain the spread of the virus.
−Removed: As of September 29, 2021, all of the Company’s restaurants have dining rooms open at full capacity and continue to maintain take-away, mobile pick-up, delivery, and drive-thru operations where available.
−Removed: The Company continues to experience staffing challenges which resulted in reduced operating hours and service channels.
−Removed: Further, there have been inflationary pressures due to supply chain disruptions that impacted the Company’s business and results of operations during the thirteen and thirty-nine weeks ended September 29, 2021 .
−Removed: During the thirteen and thirty-nine weeks ended September 29, 2021, the Company incurred $ 0.5 million and $ 3.5 million, respectively, in COVID-19 related expenses, primarily due to leaves of absence and overtime pay.
−Removed: During the thirteen and thirty-nine weeks ended September 23, 2020, the Company incurred $ 0.9 million and $ 2.0 million, respectively, in COVID-19 related expenses, primarily due to leaves of absence and overtime pay.
−Removed: Subsequent Events
−Removed: Bernard Acoca, the Company’s Chief Executive Officer and President, resigned from his position as Chief Executive Officer and President and as a member of the Board of Directors of the Company (the “Board”), effective as of October 15, 2021.
−Removed: In connection with Mr.
−Removed: Acoca’s resignation, the Board appointed Laurance Roberts as interim Chief Executive Officer of the Company (“Interim CEO”), effective as of October 15, 2021.
−Removed: Roberts currently also serves as Chief Financial Officer of the Company and will continue in that role during his tenure as Interim CEO.
−Removed: The Company has evaluated subsequent events that have occurred after September 29, 2021, and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the condensed consolidated financial statements.
+Added: While all of the Company’s restaurants had dining rooms open as of March 30, 2022, the Company continues to experience staffing challenges, which resulted in reduced operating hours and service channels at some of the Company restaurants and resulted in higher wage inflation, overtime costs and other labor related costs.
+Added: Further, the Company experienced inflationary pressures due to supply chain disruptions that resulted in increased commodity prices and impacted the Company’s business and results of operations during the thirteen weeks ended March 30, 2022.
+Added: The Company expects these pressures to continue during the rest of fiscal 2022.
+Added: During the thirteen weeks ended March 30, 2022, the Company incurred $ 2.3 million in COVID-19 related expenses, primarily due to leaves of absence and overtime pay.
+Added: During the thirteen weeks ended March 31, 2021, the Company incurred $ 2.8 million in COVID-19 related expenses, primarily due to leaves of absence and overtime pay.
+Added: Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on the Company’s condensed consolidated financial condition, liquidity, and future results of operations, and therefore any prediction as to the ultimate materiality of the adverse impact on the Company’s condensed consolidated financial condition, liquidity, and future results of operations is uncertain.
Cash and Cash Equivalents
1 unchanged sentence
The Company’s principal liquidity and capital requirements are new restaurants, existing restaurant capital investments (remodels and maintenance), interest payments on its debt, lease obligations and working capital and general corporate needs.
−Removed: At September 29, 2021, the Company’s total debt was $ 40.0 million.
+Added: At March 30, 2022, the Company’s total debt was $ 40.0 million.
The Company’s ability to make payments on its indebtedness and to fund planned capital expenditures depends on available cash and its ability to generate adequate cash flows in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond the Company’s control.
−Removed: Based on current operations, the Company believes that its cash flow from operations and available cash of $ 24.7 million at September 29, 2021 will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.
+Added: Based on current operations, the Company believes that its cash flow from operations and available cash of $ 25.5 million at March 30, 2022 will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.
However, depending on the severity and longevity of the COVID-19 pandemic, the Company’s financial performance and liquidity could be further impacted and could impact the Company’s ability to meet certain covenants required in its 2018 Credit Agreement (as defined below), specifically the lease-adjusted coverage ratio and fixed-charge coverage ratio.
−Removed: Loss on Disposition of Restaurants
−Removed: On July 1, 2021 the Company completed the sale of eight restaurants within the Sacramento area to an existing franchisee.
−Removed: The Company has determined that these restaurant dispositions represent multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on their relative standalone selling price.
−Removed: Cash proceeds included upfront consideration for the sale of the restaurants and franchise fees, as well as
−Removed: future cash consideration for royalties.
−Removed: The cash consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements.
−Removed: The Company initially defers and subsequently recognizes the franchise fees over the term of the franchise agreement.
−Removed: Future royalty income is also recognized in revenue as earned.
−Removed: This sale resulted in cash proceeds of $ 4.6 million and a net loss on sale of restaurants of less than $ 0.1 million and $ 1.5 million for the thirteen and thirty-nine weeks ended September 29, 2021, respectively.
−Removed: These restaurants are now included in the total number of franchised El Pollo Loco restaurants.
Recently Adopted Accounting Pronouncements
−Removed: In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
−Removed: 2021-05, “Leases (Topic 842):
−Removed: Lessors – Certain Leases with Variable Lease Payments” which no longer requires a lessor to recognize a selling loss upon commencement of a lease with variable lease payments that prior to the amendment would have been classified as a sales-type or direct financing lease.
−Removed: The Company adopted this ASU during the third quarter of 2021.
−Removed: The adoption of ASU 2021-05 did not have a significant impact on the Company’s consolidated financial position or results of operations.
−Removed: In January 2021, the FASB issued ASU No.
−Removed: 2021-01, “Reference Rate Reform (Topic 848):
−Removed: Scope” which clarifies the FASB’s recent rate reform guidance in Topic 848, Reference Rate Reform, that optional expedients and exceptions therein for contract modification and hedge accounting apply to derivatives that are affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) and the use of new interest rate benchmarks.
−Removed: ASU 2021-01 is effective immediately.
−Removed: Entities may choose to apply the amendments retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively to new modifications from any date within an interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued.
−Removed: The Company adopted this ASU on January 7, 2021.
−Removed: The adoption of ASU 2021-01 did not have a significant impact on the Company’s consolidated financial position or results of operations.
−Removed: In October 2020, the FASB issued ASU No.
−Removed: 2020-10, “Codification Improvements,” which improve the consistency of the codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50).
−Removed: ASU 2020-10 is effective for annual periods beginning after December 15, 2020, and for interim periods within annual periods beginning after December 15, 2020.
−Removed: The Company adopted this ASU during the first quarter of 2021.
−Removed: The adoption of ASU 2020-10 did not have a significant impact on the Company’s consolidated financial position or results of operations.
−Removed: In December 2019, the FASB issued ASU No.
−Removed: 2019-12, “Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes”, which modifies Topic 740 to simplify the accounting for income taxes.
−Removed: ASU 2019-12 is effective for financial statements issued for annual periods beginning after December 15, 2020, and for the interim periods therein.
−Removed: The Company adopted this ASU during the first quarter of 2021.
−Removed: The adoption of ASU 2019-12 did not have a significant impact on the Company’s consolidated financial position or results of operations.
Concentration of Risk
1 unchanged sentence
The Company has never experienced any losses related to these balances.
−Removed: The Company had no suppliers to whom amounts due totaled greater than 10% of the Company’s accounts payable at September 29, 2021.
−Removed: At December 30, 2020, the Company had two suppliers to whom amounts due totaled 24.2 % and 11.4 % of the Company’s accounts payable.
−Removed: Purchases from the Company’s largest supplier totaled 27.0 % and 28.1 % of total expenses for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, and 26.7 % and 26.8 % of total expenses for the thirteen and thirty-nine weeks ended September 23, 2020, respectively.
−Removed: Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.6 % and 70.8 % of total revenue for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, and 71.2 % and 71.5 % for the thirteen and thirty-nine weeks ended September 23, 2020, respectively.
+Added: The Company had one supplier to whom amounts due totaled 20.6 % and 26.1 % of the Company’s accounts payable at March 30, 2022 and December 29, 2021, respectively.
+Added: Purchases from the Company’s largest supplier totaled 29.7 % of total expenses for the thirteen weeks ended March 30, 2022, and 25.5 % of total expenses for the thirteen weeks ended March 31, 2021.
+Added: Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 70.8 % of total revenue for the thirteen weeks ended March 30, 2022, and 70.1 % thirteen weeks ended March 31, 2021.
Goodwill and Indefinite Lived Intangible Assets
17 unchanged sentences
These assumptions are subject to change as a result of changing economic and competitive conditions.
−Removed: The Company determined that there were no indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 29, 2021.
−Removed: Accordingly, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 29, 2021.
+Added: The Company determined that there were no indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen weeks ended March 30, 2022.
+Added: Accordingly, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen weeks ended March 30, 2022.
T he ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.
11 unchanged sentences
key inputs for the valuation models are observable market prices, discount rates, and forward yield curves.
−Removed: See Note 4, “Long-Term Debt” for further discussion regarding our interest rate swaps.
−Removed: The following table presents fair value for the interest rate swap at September 29, 2021 (in thousands):
+Added: See Note 4, “Long-Term Debt” for further discussion regarding the Company’s interest rate swap.
+Added: The following table presents fair value for the interest rate swap at March 30, 2022 (in thousands):
Fair Value Measurements Using
−Removed: Other non-current liabilities - Interest rate swap
+Added: Other assets - Interest rate swap
The following table presents fair value for the interest rate swap at December 29, 2021 (in thousands):
3 unchanged sentences
In other words, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances (e.g., when there is evidence of impairment).
−Removed: The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the thirteen and thirty-nine weeks ended September 29, 2021, reflecting certain property and equipment assets and right-of-use (“ROU”) assets for which certain assets were classified as held for sale, and an impairment loss was recognized during the corresponding periods, as discussed under Note 2, “Property and Equipment” and immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):
−Removed: Thirteen Weeks
−Removed: Thirty-Nine Weeks
−Removed: Fair Value Measurements at September 29, 2021 Using
−Removed: Ended September 29, 2021
−Removed: Ended September 29, 2021
−Removed: Impairment Losses
+Added: The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the thirteen weeks ended March 30, 2022, reflecting certain property and equipment assets and right-of-use (“ROU”) assets for which an impairment loss was recognized during the corresponding periods, as discussed under Note 2, “Property and Equipment” and immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):
Impairment Losses
Certain property and equipment, net
−Removed: Certain ROU assets, net
−Removed: The following non-financial instruments were measured at fair value on a nonrecurring basis as of and for the thirteen and thirty-nine weeks ended September 23, 2020, reflecting certain property and equipment assets and ROU assets for which an impairment loss was recognized during the corresponding periods, as discussed immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):
−Removed: Thirteen Weeks
−Removed: Thirty-Nine Weeks
−Removed: Fair Value Measurements at September 23, 2020 Using
−Removed: Ended September 23, 2020
−Removed: Ended September 23, 2020
−Removed: Impairment Losses
+Added: The following non-financial instruments were measured at fair value on a nonrecurring basis as of and for the thirteen weeks ended March 31, 2021, reflecting certain property and equipment assets and ROU assets for which an impairment loss was recognized during the corresponding periods, as discussed immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):
Impairment Losses
3 unchanged sentences
The Company reviews its long-lived and ROU assets for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain long-lived and ROU assets may not be recoverable.
−Removed: The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.
+Added: The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s average unit volume for the last twelve months is less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.
Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than lease payments under the head lease.
−Removed: If the Company concludes that the carrying value of certain long-lived and
−Removed: ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value.
+Added: If the Company concludes that the carrying value of certain long-lived and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value.
The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs.
1 unchanged sentence
If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.
−Removed: The Company determined that triggering events occurred for certain restaurants during the thirteen and thirty-nine weeks ended September 29, 2021 that required an impairment review of certain of the Company’s long-lived and ROU assets.
−Removed: Based on the results of the analysis, the Company recorded non-cash impairment charges of $ 0.1 million and $ 0.7 million for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, primarily related to the carrying value of the ROU assets of one restaurant in Texas that closed in 2019, the carrying value of the ROU assets of one restaurant in California and the long-lived assets of three restaurants in California.
−Removed: The Company recorded a non-cash impairment charge of $ 1.5 million and $ 3.5 million for the thirteen and thirty-nine weeks ended September 23, 2020, respectively, primarily related to the carrying value of the ROU assets of one restaurant in Texas and the long-lived assets of four restaurants in California.
+Added: The Company determined that triggering events occurred for certain restaurants during the thirteen weeks ended March 30, 2022 that required an impairment review of certain of the Company’s long-lived and ROU assets.
+Added: Based on the results of the analysis, the Company recorded non-cash impairment charges of $ 0.1 million for the thirteen weeks ended March 30, 2022, primarily related to the long-lived assets of one restaurant in California.
+Added: The Company recorded a non-cash impairment charge of $ 0.3 million for the thirteen weeks ended March 31, 2021, primarily related to the carrying value of the ROU assets of one restaurant in Texas closed in 2019 and the long-lived assets of three restaurants in California.
Given the inherent uncertainty in projecting results for newer restaurants in newer markets, as well as the impact of the COVID-19 pandemic, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.
4 unchanged sentences
Additionally, any property tax and common area maintenance (“CAM”) payments relating to closed restaurants are included within closed-store expense.
−Removed: During the thirteen and thirty-nine weeks ended September 29, 2021, the Company recognized less than $ 0.1 million and $ 0.4 million, respectively, of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
−Removed: During the thirteen and thirty-nine weeks ended September 23, 2020, the Company recognized $ 0.3 million and $ 1.1 million of closed-store reserve expense, respectively, primarily related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
+Added: During the thirteen weeks ended March 30, 2022, the Company recognized less than $ 0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
+Added: During the thirteen weeks ended March 31, 2021, the Company recognized $ 0.3 million of closed-store reserve expense, primarily related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
Derivative Financial Instruments
5 unchanged sentences
If a derivative previously designated as a hedge is terminated, or no longer meets the qualifications for hedge accounting, any balances in AOCI will be reclassified to earnings immediately.
−Removed: As a result of the use of an interest rate swap, the Company is exposed to risk that the counterparty will fail to meet their contractual obligations.
+Added: As a result of the use of an interest rate swap, the Company is exposed to risk that the counterparty will fail to meet its contractual obligations.
To mitigate the counterparty credit risk, the Company will only enter into contracts with major financial institutions, based upon their credit ratings and other factors, and will continue to assess the creditworthiness of the counterparty.
−Removed: As of September 29, 2021, the counterparty to the Company’s interest rate swap has performed in accordance with its contractual obligation.
+Added: As of March 30, 2022, the counterparty to the Company’s interest rate swap has performed in accordance with its contractual obligation.
The provision for income taxes, income taxes payable and deferred income taxes is determined using the asset and liability method.
−Removed: Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the
−Removed: temporary differences are expected to reverse.
+Added: Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered.
6 unchanged sentences
The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution.
−Removed: Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained.
−Removed: The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect the Company’s consolidated financial position, results of operations, and cash flows.
+Added: Unrecognized tax benefits
+Added: involve management’s judgment regarding the likelihood of the benefit being sustained.
+Added: The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect the Company’s condensed consolidated financial position, results of operations, and cash flows.
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
−Removed: The Company had no accrual for interest or penalties at September 29, 2021 or at December 30, 2020.
−Removed: During fiscal 2020 the Company recognized interest of $ 0.1 million related to the Notice of Proposed Adjustment (“NOPA”), discussed below.
−Removed: The Company did not recognize interest or penalties during the thirteen and thirty-nine weeks ended September 23, 2020, since there were no material unrecognized tax benefits.
+Added: The Company had no accrual for interest or penalties at March 30, 2022 or at December 29, 2021.
+Added: The Company did no t recognize interest or penalties during the thirteen weeks ended March 30, 2022 and March 31, 2021, respectively, since there were no material unrecognized tax benefits.
Management believes no significant changes to the amount of unrecognized tax benefits will occur within the next twelve months.
On July 30, 2014, the Company entered into the income tax receivable agreement (the “TRA”), which calls for the Company to pay to its pre-initial public offering (“IPO”) stockholders 85 % of the savings in cash that the Company realizes in its income taxes as a result of utilizing its net operating losses (“NOLs”) and other tax attributes attributable to preceding periods.
−Removed: For both the thirteen and thirty-nine weeks ended September 29, 2021, the Company recorded income tax receivable agreement income of less than $ 0.1 million, and for the thirteen and thirty-nine weeks ended September 23, 2020, the Company recorded income tax receivable agreement income of $ 0.1 million and income tax receivable agreement expense of less than $ 0.1 million, respectively, related to the amortization of interest expense related to the total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income.
−Removed: On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law as a stimulus package, and contained several tax provisions, including a correction of a previous drafting error related to quality improvement property (“QIP”) and immediate refundability of all remaining alternative minimum tax (“AMT”) credits.
+Added: For the thirteen weeks ended March 30, 2022, the Company recorded income tax receivable agreement income of $ 0.1 million, and for the thirteen weeks ended March 31, 2021, the Company recorded income tax receivable agreement income of less than $ 0.1 million, in each case, related to the amortization of interest expense related to the total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income.
+Added: On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law as a stimulus package, and contained several tax provisions, including a correction of a previous drafting error related to quality improvement property and immediate refundability of all remaining alternative minimum tax credits.
The new provisions did not have a material impact on the Company’s condensed consolidated financial statements.
−Removed: During fiscal 2020, the Company received a NOPA for the years ended December 27, 2017 and December 28, 2016, related to the Company’s methodology regarding its ordering of utilization of AMT NOLs.
−Removed: Resolution of this NOPA resulted in a payment of $ 0.4 million, and the audit is closed.
−Removed: As a result of the CARES Act, this amount was immediately refundable upon filing of a Form 1139.
−Removed: The Company filed the Form 1139 during the year ended December 30, 2020 and received a refund totaling $ 0.5 million.
The CARES Act also provides for the deferral of employer Social Security taxes that are otherwise owed for wage payment and the creation of refundable employee retention credits.
−Removed: The total amount deferred as of December 30, 2020 is $ 4.9 million, of which 50 % is due by December 31, 2021 and another 50 % is due by December 31, 2022.
−Removed: The Company assessed its eligibility for the business relief provision under the CARES Act known as the Employee Retention Credit ("ERC"), a refundable payroll tax credit for 50% of qualified wages paid during 2020.
−Removed: The American Rescue Plan passed into law on March 11, 2021 extended the ERC through December 31, 2021, and the credit was increased to 70 % of qualified wages paid from January 1, 2021 through December 31, 2021.
−Removed: During the third quarter of 2021, the Company filed amended Form 941s with the Internal Revenue Service and recognized a credit of $ 3.2 million for the thirteen and thirty-nine weeks ended September 29, 2021 for the ERC, which is recorded as an offset to the
−Removed: deferred portion of the employer social security tax liability and corresponding payroll tax expense and is classified as part of the labor and other operating expenses on the condensed consolidated statements of income and condensed consolidated balance sheet, respectively.
+Added: The total amount deferred as of December 30, 2020 was $ 4.9 million, of which 50 % was paid at the end of 2021 and another 50 % is due by December 31, 2022.
PROPERTY AND EQUIPMENT
The costs and related accumulated depreciation and amortization of major classes of property and equipment are as follows (in thousands):
−Removed: September 29, 2021
+Added: March 30, 2022
December 29, 2021
3 unchanged sentences
accumulated depreciation and amortization
−Removed: Depreciation expense was $ 3.7 million and $ 4.1 million for the thirteen weeks ended September 29, 2021 and September 23, 2020, respectively, and $ 11.5 million and $ 12.6 million for the thirty-nine weeks ended September 29, 2021 and September 23, 2020, respectively.
−Removed: Based on the Company’s review of its long-lived assets for impairment, the Company recorded non-cash impairment charges of less than $ 0.1 million and $ 0.3 million for the thirteen and thirty-nine weeks ended September 29, 2021, primarily related to the carrying value of the long-lived assets of three restaurants in California.
−Removed: During the thirteen and thirty-nine weeks ended September 23, 2020, the Company recorded non-cash impairment charges of $ 1.5 million and $ 2.9 million, respectively, primarily related to the carrying value of the long-lived assets of four restaurants in California.
+Added: Depreciation expense was $ 3.6 million and $ 3.9 million for the thirteen weeks ended March 30, 2022 and March 31, 2021, respectively.
+Added: Based on the Company’s review of its long-lived assets for impairment, the Company recorded non-cash impairment charges of $ 0.1 million for the thirteen weeks ended March 30, 2022, primarily related to the carrying value of the long-lived assets of one restaurant in California.
+Added: During the thirteen weeks ended March 31, 2021, the Company recorded non-cash impairment charges of $ 0.2 million, primarily related to the carrying value of the long-lived assets of three restaurants in California.
D epending on the severity and longevity of the COVID-19 pandemic, the Company’s financial performance could be further impacted and it is possible that material impairments could be identified in future periods.
1 unchanged sentence
STOCK-BASED COMPENSATION
−Removed: At September 29, 2021, options to purchase 1,112,730 shares of common stock were outstanding, including 698,329 vested and 414,401 unvested.
+Added: At March 30, 2022, options to purchase 836,230 shares of common stock were outstanding, including 557,322 vested and 278,908 unvested.
Unvested options vest over time;
however, upon a change in control, the Board of Directors may accelerate vesting.
−Removed: At September 29, 2021, 212,196 premium options, which are options granted above the stock price at date of grant, remained outstanding.
−Removed: A summary of stock option activity as of September 29, 2021 and changes during the thirty-nine weeks ended September 29, 2021 is as follows:
+Added: At March 30, 2022, 212,196 premium options, which are options granted above the stock price at date of grant, remained outstanding.
+Added: A summary of stock option activity as of March 30, 2022 and changes during the thirteen weeks ended March 30, 2022 is as follows:
Weighted-Average
5 unchanged sentences
Outstanding - December 29, 2021
−Removed: Forfeited, cancelled or expired
−Removed: Outstanding - September 29, 2021
−Removed: Vested and expected to vest at September 29, 2021
−Removed: Exercisable at September 29, 2021
−Removed: The fair value of each stock option was estimated on the grant date using an exercise price of the closing stock price on the day prior to date of grant and the Black-Scholes option-pricing model with the following weighted average assumptions:
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: Expected volatility
−Removed: Risk-free interest rate
−Removed: Expected term (years)
−Removed: Expected dividends
−Removed: At September 29, 2021, the Company had total unrecognized compensation expense of $ 2.2 million related to unvested stock options, which it expects to recognize over a weighted-average period of 3.03 years.
−Removed: A summary of restricted share activity as of September 29, 2021 and changes during the thirty-nine weeks ended September 29, 2021 is as follows:
+Added: Outstanding - March 30, 2022
+Added: Vested and expected to vest at March 30, 2022
+Added: Exercisable at March 30, 2022
+Added: At March 30, 2022, the Company had total unrecognized compensation expense of $ 1.2 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.73 years.
+Added: A summary of restricted share activity as of March 30, 2022 and changes during the thirteen weeks ended March 30, 2022 is as follows:
Weighted-Average
Unvested shares at December 29, 2021
−Removed: Forfeited, cancelled, or expired
−Removed: Unvested shares at September 29, 2021
−Removed: Unvested shares at September 29, 2021 included 568,006 unvested restricted shares, 36,058 unvested performance stock units and 24,039 unvested restricted units.
−Removed: At September 29, 2021, the Company had unrecognized compensation expense of $ 6.6 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.66 years, unrecognized compensation expense of $ 0.1 million related to unvested performance stock units, which it expects to recognize over a weighted-average period of 1.61 years, and unrecognized compensation expense of $ 0.2 million related to unvested restricted units, which it expects to recognize over a weighted-average period of 0.61 years.
−Removed: Total stock-based compensation expense was $ 1.0 million and $ 2.9 million for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, and $ 0.9 million and $ 2.2 million for the thirteen and thirty-nine weeks ended September 23, 2020, respectively.
+Added: Unvested shares at March 30, 2022
+Added: At March 30, 2022, the Company had unrecognized compensation expense of $ 4.7 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.31 years.
+Added: Total stock-based compensation expense was 0.8 million for the thirteen weeks ended March 30, 2022, and $ 0.9 million for the thirteen weeks ended March 31, 2021.
LONG-TERM DEBT
2 unchanged sentences
The 2018 Revolver and 2018 Credit Agreement will mature on July 13, 2023 .
−Removed: The obligations under the 2018 Credit Agreement and related loan documents are guaranteed by the Company and Intermediate.
−Removed: The obligations of the Company, EPL and Intermediate under the 2018 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.
−Removed: Under the 2018 Revolver, Holdings may not make certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $ 1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates) of the Company upon death, disability, or termination of employment, (ii) pay under its TRA, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $ 0.5 million in any 12 month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $ 2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $ 5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2018 Revolver.
+Added: The obligations under the 2018 Credit Agreement and related loan documents are guaranteed by Holdings and Intermediate.
+Added: The obligations of Holdings, EPL and Intermediate under the 2018 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.
+Added: Under the 2018 Revolver, Holdings may not make certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $ 1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates) of the Company upon death, disability, or termination of employment, (ii) pay under its TRA, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $ 0.5 million in any 12 month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $ 2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $ 5.0 million in other restricted payments per year, and (e) make other restricted payments, subject
+Added: to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2018 Revolver.
Borrowings under the 2018 Credit Agreement (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either LIBOR or a base rate, plus, for each rate, a margin determined in accordance with a lease-adjusted consolidated leverage ratio-based pricing grid.
2 unchanged sentences
Borrowings under the 2018 Revolver may be repaid and reborrowed.
−Removed: The interest rate range was 1.34 % to 1.35 % and 1.34 % to 1.65 % for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, and 1.67 % to 1.68 % and 1.67 % to 3.29 % for the thirteen and thirty-nine weeks ended September 23, 2020, respectively.
+Added: The interest rate range was 1.35 % to 1.70 % for the thirteen weeks ended March 30, 2022, and 1.36 % to 1.65 % for the thirteen weeks ended March 31, 2021.
The 2018 Credit Agreement contains certain financial covenants.
−Removed: The Company was in compliance with the financial covenants as of September 29, 2021.
−Removed: At September 29, 2021, $ 8.4 million of letters of credit and $ 40.0 million in borrowings under the 2018 Revolver were outstanding.
−Removed: The Company had $ 101.6 million in borrowing availability under the 2018 Revolver at September 29, 2021.
−Removed: During the thirty-nine weeks ended September 29, 2021, the Company elected to pay down $ 22.8 million on its 2018 Revolver.
−Removed: No amounts were paid on the 2018 Revolver during the thirteen weeks ended September 29, 2021.
−Removed: During the thirteen weeks ended September 23, 2020, the Company elected to pay down $ 55.0 million on its 2018 Revolver.
−Removed: During the thirty-nine weeks ended September 23, 2020, the Company paid down $ 13.2 million, net of borrowings of $ 52.5 million on the Company’s 2018 Revolver.
+Added: The Company was in compliance with the financial covenants as of March 30, 2022.
+Added: At March 30, 2022, $ 10.0 million of letters of credit and $ 40.0 million in borrowings under the 2018 Revolver were outstanding.
+Added: The Company had $ 100.0 million in borrowing availability under the 2018 Revolver at March 30, 2022.
+Added: No amounts were paid on the 2018 Revolver during the thirteen weeks ended March 30, 2022.
+Added: During the thirteen weeks ended March 31, 2021, the Company paid down $ 9.0 million on the 2018 Revolver.
There are no required principal payments prior to maturity for the 2018 Revolver.
2 unchanged sentences
The objective of the interest rate swap was to reduce the Company’s exposure to interest rate risk for a portion of its variable-rate interest payments on its borrowings under the 2018 Revolver.
−Removed: Under the terms of the swap agreement, the variable LIBOR-based component of interest payments was converted to a fixed rate of 1.31 %, plus applicable margin, which was 1.5 % for the thirteen and thirty-nine weeks ended September 29, 2021.
+Added: Under the terms of the swap agreement, the variable LIBOR-based component of interest payments was converted to a fixed rate of 1.31 %, plus applicable margin, which was 1.5 % for the thirteen weeks ended March 30, 2022.
The interest rate swap was designated as a cash flow hedge, as the changes in the future cash flows of the swap were expected to offset changes in expected future interest payments on the related variable-rate debt, in accordance with Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging.”
1 unchanged sentence
These changes in fair value are subsequently reclassified into net earnings as a component of interest expense as the hedged interest payments are made on the variable rate borrowings.
−Removed: For the thirty-nine weeks ended September 29, 2021, the swap was a highly effective cash flow hedge.
−Removed: As of September 29, 2021, the estimated net loss included in AOCI related to the Company’s cash flow hedge that will be reclassified into earnings in the next 12 months is $ 0.6 million, based on current LIBOR interest rates.
+Added: For the thirteen weeks ended March 30, 2022, the swap was a highly effective cash flow hedge.
+Added: As of March 30, 2022, the estimated net gain included in AOCI related to the Company’s cash flow hedge that will be reclassified into earnings in the next 12 months is $ 0.5 million, based on current LIBOR interest rates.
The following table shows the financial statement line item and amount of the Company’s cash flow hedge accounting on the condensed consolidated balance sheets (in thousands):
−Removed: September 29, 2021
+Added: March 30, 2022
December 29, 2021
+Added: Other assets - Interest rate swap
Other liabilities - Interest rate swap
The following table summarizes the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income (in thousands):
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Interest expense on hedged portion of debt
1 unchanged sentence
Interest expense on debt and derivatives, net
−Removed: The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the thirteen and thirty-nine weeks ended September 29, 2021 and September 23, 2020 (in thousands):
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: Loss Reclassified from
−Removed: Loss Reclassified from
−Removed: Net Loss Recognized in OCI
−Removed: AOCI into Interest expense
+Added: The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the thirteen weeks ended March 30, 2022 and March 31, 2021 (in thousands):
+Added: Gain (Loss) Reclassified from
Net Gain (Loss) Recognized in OCI
AOCI into Interest expense
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
+Added: March 30, 2022
+Added: March 31, 2021
Interest rate swap
2 unchanged sentences
Other accrued expenses and current liabilities consist of the following (in thousands):
−Removed: September 29, 2021
+Added: March 30, 2022
December 29, 2021
1 unchanged sentence
Gift card liability
+Added: Loyalty rewards program liability
Accrued advertising
1 unchanged sentence
Deferred franchise and development fees
−Removed: Current portion of lease payment deferrals
Total other accrued expenses and current liabilities
1 unchanged sentence
Other noncurrent liabilities consist of the following (in thousands):
−Removed: September 29, 2021
+Added: March 30, 2022
December 29, 2021
7 unchanged sentences
El Pollo Loco, Inc., et al (Case No.
−Removed: 30-2014-00707367-CU-
−Removed: OE-CXC) on behalf of all putative class members (all hourly employees from 2010 to the present) alleging certain violations of California labor laws, including failure to pay overtime compensation, failure to provide meal periods and rest breaks, and failure to provide itemized wage statements.
−Removed: The putative lead plaintiff’s requested remedies include compensatory and punitive damages, injunctive relief, disgorgement of profits, and reasonable attorneys’ fees and costs.
−Removed: No specific amount of damages sought was specified in the complaint.
−Removed: The court recently certified two classes of plaintiffs - one class encompasses restaurant employees who were not provided proper rest breaks because they were not allowed to leave the premises during their breaks and the other class encompasses restaurant employees who were required to wait at the restaurant after they finished working for the night until the manager set the alarm for safety purposes.
+Added: 30-2014-00707367-CU-OE-CXC) on behalf of all putative class members (all hourly employees from 2010 to the present) alleging certain violations of California labor laws, including failure to pay overtime compensation, failure to provide meal periods and rest breaks, and failure to provide itemized wage statements.
The parties reached a settlement in principle on January 24, 2019 of all claims brought on behalf of the 32,000+ putative class members in Olvera, as well as all claims for failure to pay overtime compensation, failure to provide meal periods and rest breaks, and failure to provide itemized wage statements brought in the class actions captioned Martha Perez v.
El Pollo Loco, Inc.
−Removed: (Los Angeles Superior Court Case No.
+Added: (Los Angeles Superior Court Case
BC624001), Maria Vega, et al.
21 unchanged sentences
On January 17, 2018, the court entered an order granting the parties’ stipulation staying all proceedings in the Diep action for five months or until the completion of an investigation of the allegations in the action by a special litigation committee of the Holdings board of directors (the “SLC”).
−Removed: On February 13, 2019, after concluding its investigation, the SLC filed a motion to dismiss the Diep action.
−Removed: The SLC filed its investigative report under seal as an exhibit to the motion to dismiss.
−Removed: Following discovery related to the SLC’s motion, on September 25, 2020, the SLC filed a motion to dismiss the Diep action.
+Added: On September 25, 2020, after concluding its investigation, the SLC filed a motion to dismiss the Diep action and filed its investigative report under seal as an exhibit to the motion to dismiss.
On May 21, 2021, while the SLC’s motion to dismiss the Diep action was pending, the Company filed a notice of proposed partial settlement of the Diep action with respect to defendants Kay Bogeajis, Laurance Roberts, Stephen J.
5 unchanged sentences
The court approved the settlement of $ 625,000 , less Plaintiffs’ fees of $ 156,250 , on September 10, 2021, and dismissed all claims brought, or that could have been brought, against Settling Defendants.
−Removed: In connection with this settlement, the Company received $ 469,000 in insurance proceeds, which was recorded within general and administrative expenses in the Company’s statement of operations for the thirty-nine weeks ended September 29, 2021.
+Added: In connection with this settlement, the Company received $ 469,000 in insurance proceeds, which was recorded within general and administrative expenses in the Company’s statement of income for the year ended December 29, 2021.
On July 30, 2021, the court granted the SLC’s motion to dismiss with respect to the claims asserted against remaining defendant Trimaran.
On October 4, 2021, Plaintiffs filed a notice of appeal of the court’s granting of the motion to dismiss against defendant Trimaran.
−Removed: Handlers-Bryman and Michael D.
−Removed: El Pollo Loco, Inc.
−Removed: , Los Angeles Superior Court (Case No.
−Removed: MC026045) (the “Lancaster Lawsuit”) was filed on February 9, 2016.
−Removed: Existing El Pollo Loco franchisees, Janice P.
−Removed: Handlers-Bryman and Michael D.
−Removed: Bryman, as individuals and in their capacities as trustees of the Handlers Bryman Trust (collectively, “Plaintiffs”), filed suit against us alleging, among other things, that we “imposed unreasonable time limitations” on their development of additional restaurant locations in Lancaster, California, and that we thereafter developed company-operated El Pollo Loco restaurants in the “market area” of Plaintiffs’ existing El Pollo Loco restaurant in Lancaster.
−Removed: Plaintiffs asserted claims against us for, among other things, (i) breach of the implied covenant of good faith and fair dealing, (ii) intentional interference with prospective business, and (iii) unfair business practices.
−Removed: In addition to an unspecified amount of damages and costs of the lawsuit, Plaintiffs sought reformation of the contract, declaratory relief, disgorgement of alleged revenues and profits, injunctive relief, and a judicial mandate requiring us to either transfer the company-operated locations to Plaintiffs or to continuously disgorge to Plaintiffs the unjust enrichment allegedly obtained by us through the operation of the company-operated restaurants in Lancaster.
−Removed: We denied Plaintiffs’ allegations as the franchise agreement did not grant Plaintiffs any exclusive territorial rights and, instead, expressly reserved for us the right to open and operate - and the right to grant others the right to open and operate - El Pollo Loco restaurants “in the immediate vicinity of or adjacent to” Plaintiffs’ restaurant in Lancaster.
−Removed: On April 24, 2017, four days before the commencement of trial, Plaintiffs filed a voluntary dismissal, without prejudice, of the Lancaster Lawsuit without any payment or other concession by us.
−Removed: The corresponding dismissal was entered by the court on April 25, 2017.
−Removed: On May 22, 2017, Plaintiffs filed a motion for relief from the dismissal which was granted by the court on June 29, 2017.
−Removed: The trial in the case was bifurcated between the liability and damages phases.
−Removed: The liability phase commenced on November 16, 2017.
−Removed: The only cause of action that the court allowed to go to the jury was the cause of action for breach of the covenant of good faith and fair dealing.
−Removed: The court elected not to present the cause of action for intentional interference with prospective business to the jury.
−Removed: (The causes of action for reformation due to mistake and unconscionability, unfair business practices under California Business & Professions Code §17200 et seq., and declaratory relief were not presented to the jury as these types of equitable claims are to be decided by the court as a matter of law.) On December 11, 2017, the jury returned a verdict in favor of Plaintiffs finding that the Company breached the implied covenant of good faith and fair dealing by (1) constructing the two new company-operated El Pollo Loco restaurants in Lancaster, and (2) not offering the two new company-operated El Pollo Loco restaurants in Lancaster to Plaintiffs.
−Removed: Because the trial was bifurcated, the December 11, 2017 verdict did not include a determination of damages.
−Removed: The damages phase of the trial commenced on April 20, 2018.
−Removed: On May 1, 2018, the jury returned a verdict on damages in favor of Plaintiffs in the following amounts:
−Removed: (1) $ 4,356,600 in “impact damages” arising out of our construction of the two new company-owned El Pollo Loco restaurants in Lancaster, and (2) $ 4,481,206 in “lost opportunity damages” arising out of our failure to offer the two new company-operated El Pollo Loco restaurants in Lancaster to Plaintiffs.
−Removed: On August 1, 2018, the court issued a final judgment and decision on the unfair business practices claim under California Business & Professions Code § 17200 et seq.
−Removed: As part of the final judgment, the court found El Pollo Loco liable and issued injunctive relief requiring El Pollo Loco to revise its franchise disclosure document and franchise agreement.
−Removed: The court also awarded Plaintiffs restitution of $ 4,356,600 for “impact damages” arising out of the Company’s construction of the two new company-operated El Pollo Loco restaurants in Lancaster.
−Removed: The court, reversing its previous position, held that these damages could be awarded in addition to the “lost opportunity damages” awarded by the jury.
−Removed: Thus, the court entered a total monetary judgment of $ 8,837,806 .
−Removed: There was no ruling on the causes of action for reformation due to mistake and declaratory relief, and on January 27, 2020, the court entered an amended judgment dismissing these claims.
−Removed: The trial court subsequently awarded the Plaintiffs $ 249,728 in costs and $ 1,391,703 in attorney fees.
−Removed: Post judgment interest is running at 10 % simple interest per year on the total amount of the monetary judgment, costs, and attorney fees.
−Removed: On August 27, 2018, the Company filed a notice of appeal as to the entire judgment.
−Removed: As required by California law, on or about August 16, 2018, the Company obtained an appeal bond through a Surety company to secure the trial court’s judgment during the pendency of the appeal.
−Removed: On March 19, 2020, the Surety, One Beacon, from whom the Company procured the appeal bond to secure the judgment against the Company in the matter of Janice P.
−Removed: Handlers-Bryman and Michael D.
−Removed: El Pollo Loco, Inc., issued a collateral demand to the Company.
−Removed: On April 17, 2020, the Company provided to One Beacon a Letter of Credit in the amount of $ 2,651,342 to satisfy the Surety’s collateral demand.
−Removed: On July 13, 2020, One Beacon agreed to release its collateral demand and returned the Letter of Credit to the Company.
−Removed: During fiscal 2020, the Company reached an agreement with the Plaintiffs to resolve the lawsuit for a payment by the Company of $ 2.5 million, which was recorded within operating expenses in the Company’s statement of operations for the fiscal year ended December 30, 2020.
−Removed: Additionally, during fiscal 2020, the matter was formally resolved.
−Removed: On September 2, 2020, the California Court of Appeals entered an order, following a motion for stipulated reversal of the trial court’s judgment jointly filed by the parties, reversing the trial court’s judgment in the case and instructing the trial court to dismiss the matter with prejudice.
−Removed: On September 10, 2020, the trial court entered an order reversing its judgment and dismissing the case with prejudice.
−Removed: The settlement payment of $ 2.5 million has been made in the third quarter of 2020 and the appeal bond has been released.
+Added: Plaintiff filed its opening brief on December 6, 2021.
+Added: SLC filed its answering brief on December 20, 2021 and the public version of the brief was filed on January 7, 2022.
+Added: Plaintiffs filed the reply brief on January 4, 2022.
+Added: The hearing on the appeal took place on March 30, 2022, and the parties are awaiting a ruling.
The Company is also involved in various other claims such as wage and hour and other legal actions that arise in the ordinary course of business.
The outcomes of these actions are not predictable but the Company does not believe that the ultimate resolution of these other actions will have a material adverse effect on its financial position, results of operations, liquidity, or capital resources.
−Removed: A significant increase in the number of claims, or an increase in amounts owing under successful claims, could materially and adversely affect its business, consolidated financial condition, results of operations, and cash flows.
+Added: A significant increase in the number of claims, or an increase in amounts owing under successful claims, could materially and adversely affect its business, condensed consolidated financial condition, results of operations, and cash flows.
Purchasing Commitments
2 unchanged sentences
These contracts have terms extending through the end of 2024.
−Removed: At September 29, 2021, the Company’s total estimated commitment to purchase chicken was $ 11.0 million.
+Added: At March 30, 2022, the Company’s total estimated commitment to purchase chicken was $ 30.4 million.
Contingent Lease Obligations
1 unchanged sentence
These leases have various terms, the latest of which expires in 2036 .
−Removed: As of September 29, 2021, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $ 2.6 million.
−Removed: The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at September 29, 2021 was $ 2.4 million.
+Added: As of March 30, 2022, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $ 2.6 million.
+Added: The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at March 30, 2022 was $ 2.3 million.
The Company’s franchisees are primarily liable on the leases.
1 unchanged sentence
The Company believes that these cross-default provisions reduce the risk that payments will be required to be made under these leases.
−Removed: Due to the current uncertainty related to the COVID-19 pandemic and the impact it has had on the ability of the Company’s franchisees to make their lease payments, the Company recorded a $ 0.1 million liability in the Company’s condensed consolidated financial statements related to these contingent liabilities.
Employment Agreements
−Removed: As of September 29, 2021, the Company had employment agreements with three of the officers of the Company.
+Added: As of March 30, 2022, the Company had employment agreements with two of the officers of the Company.
These agreements provide for minimum salary levels, possible annual adjustments for cost-of-living changes, and incentive bonuses that are payable under certain business conditions.
4 unchanged sentences
EARNINGS PER SHARE
−Removed: Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen and thirty-nine weeks ended September 29, 2021 and September 23, 2020.
+Added: Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen weeks ended March 30, 2022 and March 31, 2021.
Diluted EPS is calculated using the weighted-average number of shares of common stock outstanding and potentially dilutive during the period, using the treasury stock method.
1 unchanged sentence
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Weighted-average shares outstanding—basic
5 unchanged sentences
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Weighted-average shares outstanding—basic
3 unchanged sentences
Trimaran Pollo Partners, L.L.C.
−Removed: (“LLC”) owns approximately 45.7 % of the Company’s outstanding common stock.
+Added: (“LLC”) owns approximately 45.6 % of the Company’s outstanding common stock as of March 30, 2022.
This large position means that LLC and its majority owners—predecessors and affiliates of, and certain funds managed by, Trimaran Capital Partners and Freeman Spogli & Co.
9 unchanged sentences
The Company offers a loyalty rewards program, which awards a customer points for dollars spent.
−Removed: Customers earn points for each dollar spent and as of August 4, 2020, 50 points can be redeemed for a $ 5 reward to be used for a future purchase.
−Removed: Prior to August 4, 2020, 100 points could be redeemed for a $ 10 reward.
+Added: Customers earn points for each dollar spent and 50 points can be redeemed for a $ 5 reward to be used for a future purchase.
If a customer does not earn or use points within a one-year period, their account is deactivated and all points expire.
3 unchanged sentences
A portion of the transaction price is allocated to loyalty points, if necessary, on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty points terms.
−Removed: As of September 29, 2021 and December 30, 2020, the revenue allocated to loyalty points that have not been redeemed was $ 0.7 million and $ 0.9 million, respectively, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.
+Added: As of March 30, 2022 and December 29, 2021, the revenue allocated to loyalty points that have not been redeemed was $ 0.6 million and $ 0.7 million, respectively, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.
The Company expects the loyalty points to be redeemed and recognized over a one-year period.
22 unchanged sentences
As the Company is considered the principal in this relationship, payment for the hardware is considered revenue, and is received upon transfer of the goods from the Company to the franchisee.
−Removed: As of September 29, 2021, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.
+Added: As of March 30, 2022, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.
Disaggregated revenue
−Removed: The following table presents our revenues disaggregated by revenue source and market (in thousands):
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29,
−Removed: September 23,
−Removed: September 29,
−Removed: September 23,
+Added: The following table presents the Company’s revenues disaggregated by revenue source and market (in thousands):
Core Market (1) :
11 unchanged sentences
(2) Non-Core Market includes markets entered into by the Company subsequent to the IPO date.
−Removed: The following table presents our revenues disaggregated by geographic market:
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: The following table presents the Company’s revenues disaggregated by geographic market:
+Added: March 30, 2022
+Added: March 31, 2021
Greater Los Angeles area market
1 unchanged sentence
Contract balances
−Removed: The following table provides information about the change in the franchise contract liability balances during the thirty-nine weeks ended September 29, 2021 and September 23, 2020 (in thousands) :
+Added: The following table provides information about the change in the franchise contract liability balances during the thirteen weeks ended March 30, 2022 and March 31, 2021 (in thousands) :
December 29, 2021
1 unchanged sentence
Additional contract liability
−Removed: September 29, 2021
+Added: March 30, 2022
December 30, 2020
1 unchanged sentence
Additional contract liability
−Removed: September 23, 2020
+Added: March 31, 2021
The Company’s franchise contract liability includes development fees, initial franchise and license fees, franchise renewal fees, lease subsidies and royalty discounts and is included within other accrued expenses and current liabilities and other noncurrent liabilities within the accompanying condensed consolidated balance sheets.
The Company receives area development fees from franchisees when they execute multi-unit area development agreements.
−Removed: Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise
+Added: Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise agreement.
Revenue is recognized from these agreements as the underlying performance obligation is satisfied, which is over the term of the agreement.
−Removed: The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of September 29, 2021 (in thousands):
+Added: The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of March 30, 2022 (in thousands):
Franchise revenues:
−Removed: Remainder of 2021
Changes in the loyalty rewards program liability included in deferred revenue within other accrued expenses and current liabilities on the condensed consolidated balance sheets were as follows (in thousands):
−Removed: September 29,
Loyalty rewards liability, beginning balance
2 unchanged sentences
Loyalty rewards liability, ending balance
−Removed: The Company expects all loyalty points revenue related to performance obligations unsatisfied as of September 29, 2021 to be recognized within one year .
+Added: The Company expects all loyalty points revenue related to performance obligations unsatisfied as of March 30, 2022 to be recognized within one year .
The gift card liability included in other accrued expenses and current liabilities on the condensed consolidated balance sheets was as follows (in thousands):
−Removed: September 29,
Gift card liability
Revenue recognized from the redemption of gift cards that was included in other accrued expenses and current liabilities at the beginning of the year was as follows (in thousands):
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
Revenue recognized from gift card liability balance at the beginning of the year
4 unchanged sentences
Additionally, the Company has various contracts with vendors that have been determined to contain an embedded lease in accordance with Topic 842.
−Removed: As of September 29, 2021, the Company had one lease that it had entered into, but had not yet commenced.
+Added: As of March 30, 2022, the Company had three leases that it had entered into, but had not yet commenced.
The Company does not have control of the property until lease commencement.
1 unchanged sentence
The majority of the Company’s building and facilities leases are classified as operating leases;
−Removed: however, the Company currently has two facilities and nine equipment leases that are classified as finance leases.
+Added: however, the Company currently has two facilities and ten equipment leases that are classified as finance leases.
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 net revenues in excess of a defined amount.
5 unchanged sentences
Furthermore, there are no residual value guarantees and no restrictions imposed by the lease.
−Removed: During the thirteen and thirty-nine weeks ended September 29, 2021, the Company reassessed the lease terms on four and 16 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew.
−Removed: As a result of the reassessment, an additional $ 2.6 million and $ 13.8 million of ROU asset and lease liabilities for the thirteen and thirty-nine weeks ended September 29, 2021, respectively, were recognized and will be amortized over the new lease term.
−Removed: During the thirteen and thirty-nine weeks ended September 23, 2020, the Company reassessed the lease terms on two and nine restaurants, respectively, due to the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease or the decision to renew leases.
−Removed: This reassessment resulted in an additional $ 0.3 million and $ 2.0 million of ROU asset and lease liability for the thirteen and thirty-nine weeks ended September 23, 2020, respectively, which will be recognized over the new lease term.
+Added: During the thirteen weeks ended March 30, 2022, the Company reassessed the lease terms on four restaurants due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew.
+Added: As a result of the reassessment, an additional $ 2.5 million of ROU asset and lease liabilities for the thirteen weeks ended March 30, 2022, were recognized and will be amortized over the new lease term.
+Added: During the thirteen weeks ended March 31, 2021, the Company reassessed the lease terms on seven restaurants due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew.
+Added: This reassessment resulted in an additional $ 4.7 million of ROU asset and lease liabilities for the thirteen weeks ended March 31, 2021, which were recognized and will be amortized over the new lease term.
The reassessments did not have any impact on the original lease classification.
5 unchanged sentences
The Company does not have any related party leases.
−Removed: During the thirty-nine weeks ended September 29, 2021, the Company determined that the carrying value of ROU assets at two restaurants was not recoverable.
−Removed: As a result, the Company recorded a $ 0.4 million non-cash impairment charge for the thirty-nine weeks ended September 29, 2021 related to one restaurant closed in Texas in 2019 and one restaurant in California.
−Removed: The Company recorded a $ 0.5 million non-cash impairment charge for the thirty-nine weeks ended September 23, 2020 related to one restaurant in Texas sold to franchisees in the prior year.
−Removed: See Note 1, “Basis of
−Removed: Presentation and Summary of Significant Accounting Policies – Impairment of Long-Lived Assets and ROU Assets” for additional information.
+Added: During the thirteen weeks ended March 30, 2022, the Company did no t record any non-cash impairment charges.
+Added: The Company recorded a less than $ 0.1 million non-cash impairment charge for the thirteen weeks ended March 31, 2021 related to one restaurant closed in 2019.
+Added: See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies – Impairment of Long-Lived Assets and ROU Assets” for additional information.
Leases of equipment primarily consist of restaurant equipment, copiers and vehicles.
6 unchanged sentences
These included using a consistent discount rate for a portfolio of leases entered into at varying dates, using the full 20-year term of the lease, excluding any options, and using the total minimum lease payments.
−Removed: The Company utilizes a third-party valuation firm in determining the discount rate, based on the above assumptions.
+Added: utilizes a third-party valuation firm in determining the discount rate, based on the above assumptions.
For all other leases, the Company uses the discount rate implicit in the lease, or the Company’s incremental borrowing rate.
2 unchanged sentences
Thirteen Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: Finance lease cost:
−Removed: Amortization of right-of-use assets
−Removed: Interest on lease liabilities
−Removed: Operating lease cost
−Removed: Short-term lease cost
−Removed: Variable lease cost
−Removed: Sublease income
−Removed: Total lease cost
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Finance lease cost:
7 unchanged sentences
The following table presents the Company’s total lease cost on the condensed consolidated statements of income (in thousands):
−Removed: Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: September 29, 2021
−Removed: September 23, 2020
−Removed: September 29, 2021
−Removed: September 23, 2020
+Added: March 30, 2022
+Added: March 31, 2021
Lease cost – Occupancy and other operating expenses
4 unchanged sentences
Total lease cost
−Removed: During the thirty-nine weeks ended September 29, 2021 and September 23, 2020, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):
−Removed: Thirty-Nine Weeks Ended September 29, 2021
−Removed: Thirty-Nine Weeks Ended September 23, 2020
+Added: During the thirteen weeks ended March 30, 2022 and March 31, 2021, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):
+Added: March 30, 2022
+Added: March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities
8 unchanged sentences
Other Information
−Removed: Weighted-average remaining lease term—finance leases
−Removed: Weighted-average remaining lease term—operating leases
+Added: Weighted-average remaining years in lease term—finance leases
+Added: Weighted-average remaining years in lease term—operating leases
Weighted-average discount rate—finance leases
Weighted-average discount rate—operating leases
−Removed: Information regarding the Company’s minimum future lease obligations as of September 29, 2021 is as follows (in thousands):
+Added: Information regarding the Company’s minimum future lease obligations as of March 30, 2022 is as follows (in thousands):
Operating Leases
11 unchanged sentences
The Company has multiple short-term leases, which have terms of less than 12 months, and thus were excluded from the recognition requirements of Topic 842.
−Removed: The Company has recognized these lease payments in its consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments was incurred.
−Removed: In April 2020, the FASB issued guidance allowing entities to make a policy election whether to account for lease concessions related to the COVID-19 pandemic as lease modifications.
−Removed: The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee.
−Removed: During fiscal 2020, the Company received non-substantial concessions from certain landlords in the form of rent deferrals and abatements.
−Removed: The Company elected to not account for these rent concessions as lease modifications.
−Removed: The rent concessions are recorded as part of other accrued expenses.
−Removed: The recognition of rent concessions did not have a material impact on the Company’s condensed consolidated financial statements as of September 29, 2021.
+Added: The Company has recognized these lease payments in its condensed consolidated statements of income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments was incurred.
The Company is a lessor for certain property, facilities and equipment owned by the Company and leased to others, principally franchisees, under non-cancelable leases with initial terms ranging from three to 20 years .
4 unchanged sentences
Additionally, there are no related party leases.
−Removed: The Company received $ 0.1 million of lease income from company-owned locations for each of the thirteen weeks ended September 29, 2021 and September 23, 2020.
−Removed: The Company received $ 0.3 million and $ 0.4 million of lease income from company-owned locations for the thirty-nine weeks ended September 29, 2021 and September 23, 2020, respectively.
+Added: The Company received $ 0.1 million of lease income from company-owned locations for each of the thirteen weeks ended March 30, 2022 and March 31, 2021.
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.