Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15 (e) of the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the required time periods, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our disclosure controls and procedures are based on assumptions about the likelihood of future events, and even effective disclosure controls and procedures can only provide reasonable assurance of achieving their objectives. Because of their inherent limitations, we cannot guarantee that our disclosure controls and procedures will succeed in achieving their stated objectives in all cases, that they will be complied with in all cases, or that they will prevent or detect all misstatements.
Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 27, 2023.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of December 27, 2023 based on the criteria in Internal Control — Integrated Framework (“2013 Framework”) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 27, 2023 based on the criteria established in the 2013 Framework.
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The effectiveness of our internal control over financial reporting as of December 27, 2023 has been audited by BDO USA, P.C., the independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K, as stated in their report included herein.
Changes in Internal Control over Financial Reporting
No changes in our internal control over financial reporting occurred during the quarter ended December 27, 2023 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
El Pollo Loco Holdings, Inc.
Costa Mesa, California
Opinion on Internal Control over Financial Reporting
We have audited El Pollo Loco Holdings, Inc.’s (the “Company’s”) internal control over financial reporting as of December 27, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 27, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 27, 2023 and December 28, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 27, 2023, and the related notes and our report dated March 8, 2024, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ BDO USA, P.C.
Costa Mesa, California
March 8, 2024
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ITEM 9B. OTHER INFORMATION
N o n e .
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from our definitive proxy statement to be filed not later than 120 days after the end of our 2023 fiscal year. In addition, our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors, employees and officers, including our principal executive officer, principal financial officer, principal accounting officer, controller, and any persons performing similar functions. The current version of the Code of Business Conduct and Ethics is available on our website under the Corporate Governance section at www.elpolloloco .com . To the extent required by rules adopted by the SEC and The Nasdaq Stock Market LLC, we intend to promptly disclose future amendments to certain provisions of the Code of Business Conduct and Ethics, or waivers of such provisions granted to executive officers and directors, on our website under the Corporate Governance section at www.elpolloloco .com .
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from our definitive proxy statement to be filed not later than 120 days after the end of our 2023 fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from our definitive proxy statement to be filed not later than 120 days after the end of our 2023 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Incorporated by reference from our definitive proxy statement to be filed not later than 120 days after the end of our 2023 fiscal year.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from our definitive proxy statement to be filed not later than 120 days after the end of our 2023 fiscal year.
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PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as a part of this report:
(1) Financial Statements: Consolidated financial statements filed as part of this report are listed under Item 8. Financial Statements and Supplementary Data.
(2) Financial Statement Schedules: None.
(3) Exhibits:
Incorporated by Reference
Number
Description
Filed
Herewith
Form
Period
Ended
Exhibit
Filing
Date
SEC File Number
3.1
Amended and Restated Certificate of Incorporation of El Pollo Loco Holdings, Inc.
10-Q
6/25/2014
3.1
9/5/2014
001-36556
3.2
Certificate of Designations of Series A Preferred Stock of El Pollo Loco Holdings, Inc., as filed with the Secretary of State of the State of Delaware on August 9, 2023
8-K
N/A
3.1
8/9/2023
001-36556
3.3
Amended and Restated By-Laws of El Pollo Loco Holdings, Inc.
8-K
N/A
3.1
2/2/2024
001-36556
4.1
Description of El Pollo Loco Holdings, Inc. Capital Stock
X
4.2
Rights Agreement, dated as of August 8, 2023, between El Pollo Loco Holdings, Inc. and Equiniti Trust Company, LLC, as rights agent
8-K
N/A
4.1
8/9/2023
001-36556
10.1
Income Tax Receivable Agreement, dated July 30, 2014, between El Pollo Loco Holdings, Inc., and Trimaran Pollo Partners, L.L.C.
10-Q
9/24/2014
10.1
11/7/2014
001-36556
10.2
Franchise Development Agreement (Exclusive), dated August 20, 2014, between El Pollo Loco, Inc., as franchisor, and Anil Yadav and Atour Eyvazian, collectively, as developer
8-K
N/A
10.1
8/22/2014
001-36556
10.3
Consent to and Assignment of Development Rights (Initial Change of Entity), dated August 20, 2014, between El Pollo Loco, Inc., as franchisor, and (i) Anil Yadav and Atour Eyvazian, collectively, as
8-K
N/A
10.2
8/22/2014
001-36556
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assignor, and (ii) AA Pollo, Inc., as assignee
10.4
Franchise Development Option Agreement, dated July 11, 2014, between El Pollo Loco, Inc., and Trimaran Pollo Partners, L.L.C.
S-1/A
N/A
10.14
7/14/2014
333-197001
10.5
Stockholders Agreement, dated as of November 18, 2005, by and among El Pollo Loco Holdings, Inc. (formerly Chicken Acquisition Corp.) and the stockholders listed therein
S-1
N/A
10.3
6/24/2014
333-197001
10.6
Amendment No. 1 to Stockholders Agreement, dated as of April 20, 2006, by and between El Pollo Loco Holdings, Inc. (formerly Chicken Acquisition Corp.) and Trimaran Pollo Partners, L.L.C.
S-1
N/A
10.4
6/24/2014
333-197001
10.7
Amendment No. 2 to Stockholders Agreement, dated as of December 26, 2007, by and between El Pollo Loco Holdings, Inc. (formerly Chicken Acquisition Corp.) and Trimaran Pollo Partners, L.L.C.
S-1
N/A
10.5
6/24/2014
333-197001
10.8
Second Amended and Restated Limited Liability Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated as of March 8, 2006
S-1
N/A
10.6
6/24/2014
333-197001
10.9
Amendment No. 1 to Second Amended and Restated Limited Liability Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated as of December 26, 2007
S-1
N/A
10.7
6/24/2014
333-197001
10.10
Amendment No. 2 to Second Amended and Restated Limited Liability Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated as of January 30, 2008
S-1
N/A
10.8
6/24/2014
333-197001
10.11
Amendment No. 3 to Second Amended and Restated Limited Liability Company Operating Agreement of Trimaran Pollo Partners, L.L.C., dated as of July 14, 2011
S-1
N/A
10.9
6/24/2014
333-197001
10.12
Form of Franchise Agreement
S-1
N/A
10.12
6/24/2014
333-197001
10.13
Form of Franchise Development Agreement
S-1
N/A
10.13
6/24/2014
333-197001
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10.14
Form of Franchise Agreement (2019)
10-K
12/25/2019
10.15
3/6/2020
001-36556
10.15
Form of Franchise Development Agreement (2019)
10-K
12/25/2019
10.16
3/6/2020
001-36556
10.16
Form of Franchise Agreement (2021)
10-K
N/A
10.17
3/11/2022
001-36556
10.17
Form of Franchise Development Agreement (2021)
10-K
N/A
10.18
3/11/2022
001-36556
10.18
Form of Franchise Agreement (2022)
X
10.19
Form of Franchise Development Agreement (2022)
X
10.20
Credit Agreement, dated as of July 27, 2022, among El Pollo Loco, Inc., as borrower, El Pollo Loco Holdings, Inc., as guarantor, the other guarantors party thereto, the lenders party thereto and Bank of America, as administrative agent, swingline lender and letter of credit issuer
8-K
N/A
10.1
8/2/2022
001-36556
10.21
Supplemental Agreement, dated as of August 31, 2022, by and among El Pollo Loco Holdings, Inc., FS Equity Partners V, L.P., and FS Affiliates V, L.P.
10-Q
N/A
10.4
11/4/2022
001-36556
10.22*
Form of Indemnification Agreement between El Pollo Loco Holdings, Inc. and each of its directors and executive officers
S-1/A
N/A
10.27
7/22/2014
333-197001
10.23*
2014 Omnibus Equity Incentive Plan
S-1/A
N/A
10.22
7/22/2014
333-197001
10.24*
Form of Option Award Agreement (Fair Market Value Options) under 2014 Omnibus Equity Incentive Plan
S-1/A
N/A
10.25
7/22/2014
333-197001
10.25*
Form of Non-Officer Director Restricted Share Agreement under 2014 Omnibus Equity Incentive Plan
S-1/A
N/A
10.26
7/22/2014
333-197001
10.26*
Form of Option Award Agreement (Fair Market Value Options) under 2014 Omnibus Equity Incentive Plan (Time Vesting Only)
10-Q
6/29/2016
10.27
8/5/2016
001-36556
10.27*
Form of Employee Restricted Share Agreement under 2014 Omnibus Equity Incentive Plan
10-Q
9/28/2016
10.28
11/4/2016
001-36556
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10.28*
2018 Omnibus Equity Incentive Plan
S-8
N/A
4.3
8/6/2018
333-226621
10.29*
Form of Restricted Stock Agreement under 2018 Omnibus Equity Incentive Plan
10-K
12/25/2019
10.24
3/6/2020
001-36556
10.30*
Form of Restricted Stock Agreement under 2018 Omnibus Equity Incentive Plan (Non-Employee Directors)
10-K
12/25/2019
10.25
3/6/2020
001-36556
10.31*
Form of Restricted Stock Unit Agreement under 2018 Omnibus Equity Incentive Plan
10-K
12/25/2019
10.26
3/6/2020
001-36556
10.32*
Form of Stock Option Awards Agreement under 2018 Omnibus Equity Incentive Plan
10-K
12/25/2019
10.27
3/6/2020
001-36556
10.33*
El Pollo Loco Holdings, Inc. Equity Incentive Plan
8-K
N/A
10.1
6/14/2021
001-36556
10.34*
Form of Stock Option Awards Agreement under 2021 Equity Incentive Plan
10-K
N/A
10.31
3/11/2022
001-36556
10.35*
Form of Restricted Share Agreement under 2021 Equity Incentive Plan
10-K
N/A
10.32
3/11/2022
001-36556
10.36*
Form of Restricted Stock Agreement under 2021 Equity Incentive Plan (Non-Employee Directors)
10-K
N/A
10.33
3/11/2022
001-36556
10.37*
Form of Restricted Stock Agreement under 2023 Equity Incentive Plan (Non-Employee Directors)
X
10.38*
Employment Agreement, dated March 9, 2022, between El Pollo Loco, Inc. and Laurance Roberts
10-K
3/9/2022
10.37
3/11/2022
001-36556
10.39*
Release and Consulting Agreement, dated November 1, 2023, between El Pollo Loco Holdings, Inc. and Laurance Roberts
8-K
N/A
10.2
11/2/2023
001-36556
10.40*
Employment Agreement, dated June 28, 2022, between El Pollo Loco Holdings, Inc. and Ira Fils
8-K
N/A
10.1
7/1/2022
001-36556
10.41*
Employment Agreement, dated November 1, 2023, between El Pollo Loco Holdings, Inc and Maria Hollandsworth
8-K
N/A
10.1
11/2/2023
001-36556
10.42*
Retention Award Agreement, dated November 2, 2023, between El Pollo Loco Holdings, Inc. and Ira Fils
8-K
N/A
10.3
11/2/2023
001-36556
10.43
Stock Repurchase Agreement, dated November 29, 2023, between El Pollo Loco
8-K
N/A
99.1
12/4/2023
001-36556
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Holdings, Inc., FS Equity Partners V, L.P. and FS Affiliates V, L.P.
21.1
Subsidiaries of El Pollo Loco Holdings, Inc.
S-1
N/A
21.1
6/24/2014
333-197001
23.1
Consent of BDO USA, P.C.
X
31.1
Certification of Chief Executive Officer under section 302 of the Sarbanes–Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer under section 302 of the Sarbanes–Oxley Act of 2002
X
32.1
Certification of Chief Executive Officer and Chief Financial Officer under 18 U.S.C. section 1350, adopted by section 906 of the Sarbanes–Oxley Act of 2002
**
97.1
El Pollo Loco Holdings, Inc. Clawback Policy
X
101.INS
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X
101.SCH
XBRL Taxonomy Extension Schema Document
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
X
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
X
104
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*
This exhibit is a management contract or a compensatory plan or arrangement.
**
Furnished herewith.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EL POLLO LOCO HOLDINGS, INC.
By:
/s/ Maria Hollandsworth
Maria Hollandsworth
President, Interim Chief Executive Officer and Chief Operating Officer
Date:
March 8, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Maria Hollandsworth
President and Interim Chief Executive Officer and Chief Operating Officer (principal executive officer)
March 8, 2024
Maria Hollandsworth
/s/ Ira Fils
Chief Financial Officer (principal financial and accounting officer)
March 8, 2024
Ira Fils
/s/ William R. Floyd
Chairman and Director
March 8, 2024
William R. Floyd
/s/ Douglas J. Babb
Director
March 8, 2024
Douglas J. Babb
/s/ Samuel N. Borgese
Director
March 8, 2024
Samuel N. Borgese
/s/ Mark Buller
Director
March 8, 2024
Mark Buller
/s/ Michael G. Maselli
Director
March 8, 2024
Michael G. Maselli
/s/ Nancy Faginas-Cody
Director
March 8, 2024
Nancy Faginas-Cody
/s/ Deborah Gonzalez
Director
March 8, 2024
Deborah Gonzalez
/s/ Carol Lynton
Director
March 8, 2024
Carol Lynton
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