What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2025-10-31 · 163 added, 248 removed, 270 unchanged (60% of the section changed)

5 unchanged sentences

You can identify forward-looking statements because they do not relate strictly to historical or current facts.

These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events..

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning used in connection with any discussion of the timing or nature of future operating or financial performance or other events.

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected.While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

1 unchanged sentence

These factors include, but are not limited to:

● our ability to open new restaurants in new and existing markets, including difficulty in finding sites and in negotiating acceptable leases;

● our ability to compete successfully with other quick-service and fast casual restaurants;

● global economic or other business conditions that may affect the desire or ability of our customers to purchase our products such as inflationary pressures, high unemployment levels, increases in gas prices, and declines in median income growth, consumer confidence and consumer discretionary spending, among other conditions;

our ability to open new restaurants in new and existing markets;

our ability to compete successfully;

global economic or other business conditions, including trade policies, tariff and import regulations by the United States, as well as consumer preferences;

our ability to attract, develop, assimilate, and retain employees;

● our vulnerability to changes in political and economic conditions and consumer preferences;

● our vulnerability to conditions in the greater Los Angeles area and to natural disasters given the geographic concentration and real estate intensive nature of our business;

● the possibility that we may continue to incur significant impairment of certain of our assets, in particular in our new markets;

our vulnerability to regional geographic conditions;

our ability to maintain business continuity in the event of a disaster or disruption;

impairment of our assets;

changes in food and supply costs, especially for chicken, labor, construction and utilities;

● the impacts of the uncertainty regarding pandemics, epidemics or infectious disease outbreaks (such as the COVID-19 pandemic) on our company, our employees, our customers, our partners, our industry and the economy as a whole, as well as our franchisees’ ability to operate their individual restaurants without disruption;

● social media and negative publicity, whether or not valid, and our ability to respond to and effectively manage the accelerated impact of social media;

the impacts public health crises;

potential negative publicity;

our ability to continue to expand our digital business, delivery orders and catering;

2 unchanged sentences

our ability to service our level of indebtedness;

● uncertainty related to the success of our marketing programs, new menu items, advertising campaigns and restaurant designs and remodels;

● changes in trade policies, tariff and import regulations by the United States and other countries from which we source some of our produce, packaging, and other items;

● our limited control over our franchisees and potential deterioration of our relations with existing or potential franchisees;

● potential exposure to unexpected costs and losses from our self-insurance programs;

● potential obligations under long-term and non-cancelable leases, and our ability to renew leases at the end of their terms;

● our ability to achieve our social and environmental sustainability goals;

● the impact of any failure of our information technology system or any breach of our network security;

● the impact of any security breaches on our ability to protect our customers’ payment method data or personal information;

● our ability to enforce and maintain our trademarks and protect our other proprietary intellectual property;

● adverse changes in the economic environment, including inflation and increased labor and supply costs, which may affect our franchisees, with adverse consequences to us;

● the impact of federal, state and local labors laws governing our relationships with our employees, including minimum wage laws, minimum standards for fast food workers or other similar laws;

● risks related to government regulation and litigation, including employment and labor laws;

● the impact of any liabilities arising from environmental laws;

● fluctuations in our quarterly operating results due to seasonality and other factors;

● any future offerings of debt or equity securities that may impact the market price of our common stock;

● the possibility that Delaware law, our organizational documents, and our existing and future debt agreements may impede or discourage a takeover;

the success of our marketing programs, new menu items, advertising campaigns and restaurant designs and remodels;

risks related to our dependence on our franchisees, including their vulnerability to economic changes;

exposure from our self-insurance programs;

obligations under long-term and non-cancelable leases, and our ability to renew leases at the end of their terms;

our ability to achieve our corporate responsibility goals;

information technology system failures, cybersecurity breaches, or failure to protect our customers’ data or personal information;

our ability to enforce and maintain our intellectual property;

the impact of federal, state and local laws, including those governing our relationships with our employees fluctuations in our quarterly operating results due to seasonality and other factors;

any future offerings of debt or equity securities that may impact the market price of our common stock or dilute existing shareholders’ ownership;

the possibility that Delaware law, our organizational documents, our shareholder rights agreement, and our existing and future debt agreements may impede or discourage a takeover;

the impact of shareholder activism on our expenses, business and stock price;

● other risks set forth in our filings with the SEC from time to time, including under Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 25, 2024, which filings are available online at www.sec.gov .

and the risks set forth in our filings with the SEC from time to time, including under Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 25, 2025, which filings are available online at www.sec.gov.

We caution you that the important factors referenced above may not contain all of the factors that are important to you.

4 unchanged sentences

We qualify all of our forward-looking statements by these cautionary statements.

El Pollo Loco is a differentiated and growing restaurant concept that specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant (“LSR”) segment.

We strive to make and serve food that is both high quality and flavorful.

Our distinctive menu features our signature product, citrus-marinated fire-grilled chicken, served in a variety of Mexican-inspired entrees, such as burritos and tostadas, healthier options, such as salads, and chicken meals, all available in a variety of sizes to feed individuals and larger groups.

Our entrees include favorites such as our Guacamole Chicken Burrito, Double Chicken Tostada, Crunchy Chicken Taco, and the Original Pollo Bowl®.

Our famous Creamy Cilantro dressing and salsas are prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience.

Our distinctive menu of quality, flavorful food that is affordable appeals to consumers across a wide variety of socio-economic backgrounds and drives our balanced composition of sales throughout the day (our “day-part mix”), including at lunch and dinner.

El Pollo Loco is a differentiated and growing restaurant concept that specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant segment.

We strive to offer quality chicken served fast and easy.

Our distinctive menu features our signature product--citrus-marinated fire-grilled chicken--and a variety of Mexican and LA-inspired entrees that we create from our chicken.

We serve individual and family-sized chicken meals, including a variety of entrees like our Double Chicken Tostada, Guacamole Chicken Burrito, and Salsa Verde Chicken Quesadilla.

Our famous Creamy Cilantro dressings and salsas are prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience.

We believe that our distinctive menu that features quality chicken is a flavorful and affordable option that appeals to consumers across a wide variety of socio-economic backgrounds and drives our balanced composition of sales throughout the day, including at lunch and dinner.

In 2025, El Pollo Loco launched a brand refresh, inclusive of a new advertising campaign, restaurant design, new products, and an emphasis on hospitality in our restaurants.

1 unchanged sentence

Market Trends and Uncertainties

As a result of recent California legislation increasing wages of fast food workers, we experienced an increase in our labor and regulatory compliance costs in fiscal 2024 and fiscal 2025.

Although we have been able to substantially offset these cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements, we expect these cost pressures to continue for the remainder of 2025, and we may not be able to offset cost increases in the future.

As a result of California legislation increasing wages of fast food workers, we experienced an increase in our labor and regulatory compliance costs in recent periods.

Additionally, we are impacted by macroeconomic challenges, such as inflationary pressures and changes in trade policies, that have in the past affected, and may continue in the future, to affect our operations in certain areas such as food cost, labor costs, construction costs and other restaurant operating costs.

We have been able to substantially offset these inflationary and other cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements.

However, we expect these inflationary and other cost pressures to continue into the remainder of fiscal 2025 and we may not be able to offset cost increases in the future.

There is ongoing uncertainty regarding increased tariff duties on goods imported into the United States, which if imposed, may have an adverse effect on our Company.

However, we expect these inflationary and other cost pressures to continue in 2026 and we may not be able to offset cost increases in the future.

Global events, such as the recent outbreak of war in Iran, may also impact our business costs, including the costs of transportation and energy.

There is ongoing uncertainty regarding increased tariff duties on goods imported into the United States, which has caused substantial market uncertainty and in certain cases, retaliatory measures by trading partners.

Such changes include the imposition of tariffs under the authority of the International Emergency Economic Powers Act, which the U.S.

Supreme Court found unlawful in February 2026, the creation of a refund process for such tariff duties, and the imposition of new tariffs under other statutory authorities.

Certain of the produce, packaging materials, and other items procured by our Company are sourced from outside the United States, including from Canada, Mexico and Asia.

4 unchanged sentences

trade or tax policy could result in further increases to our food and supplies costs that would adversely impact our financial results.

For additional information, see “Item 1A.

Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, including the risk factor titled “ We are vulnerable to changes in political and economic conditions, such as trade policies, tariff and import regulations by the United States, as well as consumer preferences.”

Seasonal factors, including weather and the timing of holidays, cause our revenue to fluctuate from quarter to quarter.

2 unchanged sentences

Growth Strategies and Outlook

As of September 24, 2025, we had 498 locations in seven states.

In fiscal 2024, we opened two new company-operated restaurants in Nevada, and our franchisees opened two new restaurants, one in California and one in Texas.

Additionally, we completed the sale of one restaurant within California to existing franchisees during fiscal 2024.

For the thirty-nine weeks ended September 24, 2025, our franchisees opened one new restaurant in Arizona and two new restaurants in California, and they closed three restaurants in California.

Additionally, during the thirty-nine weeks ended September 24, 2025, we completed the acquisition of one restaurant in California from an existing franchisee.

Subsequent to quarter-end, the Company announced the opening of its 500 th restaurant on October 14, 2025.

This milestone reflects the continued execution of the Company’s growth strategy and marks a significant step in its expansion beyond its core California market.

As of April 1, 2026, we had 505 locations in nine states.

In fiscal 2025, we opened one new company-operated restaurants in California, and our franchisees opened eight new restaurants, two in California, two in Arizona, and one in each of the following states:

Colorado, Texas, New Mexico and Washington.

For the thirteen weeks ended April 1, 2026, our franchisees opened one new restaurant in California and the Company opened one new restaurant in Texas.

We plan to continue to expand our business, drive restaurant sales growth, and enhance our competitive positioning by executing the following five key strategies:

8 unchanged sentences

Revenue Overview

For the thirteen and thirty-nine weeks ended September 24, 2025, our total revenue was $121.5 million and $366.5 million, respectively.

For the thirteen weeks ended September 24, 2025, our company-operated restaurant revenue was $100.7 million and $303.4 million, respectively, and our franchise and franchise advertising fee revenue was $20.8 million and $63.1 million, respectively.

For the thirteen weeks ended April 1, 2026, our total revenue was $126.2 million.

For the thirteen weeks ended April 1, 2026, our company-operated restaurant revenue was $105.9 million, and our franchise revenue and franchise advertising fee revenue was $20.3 million.

Comparable Restaurant Sales

For the thirteen and thirty-nine weeks ended September 24, 2025, system-wide comparable restaurant sales decreased by 0.8% and 0.6%, respectively, from the comparable period in the prior year.

For company-operated restaurants, comparable restaurant sales for the thirteen and thirty-nine weeks ended September 24, 2025 decreased by 1.1% and increased by 0.2%, respectively.

For company-operated restaurants, the quarter’s change in comparable restaurant sales consisted of a 1.3% decrease in average check size, partially offset by a 0.1% increase in transactions, and the year-to-date change in comparable restaurant sales consisted of a 1.6% increase in average check size, partially offset by a 1.3% decrease in transactions .

For franchised restaurants, comparable restaurant sales decreased by 0.6% and 1.0% for the thirteen and thirty-nine weeks ended September 24, 2025, respectively.

For the thirteen weeks ended April 1, 2026, system-wide comparable restaurant sales increased by 5.8% from the comparable period in the prior year.

For company-operated restaurants, comparable restaurant sales for the thirteen weeks ended April 1, 2026 increased by 5.4% .

For franchise-operated restaurants, comparable restaurant sales increased by 6.1% for the thirteen weeks ended April 1, 2026.

A restaurant enters our comparable restaurant base the first full week after its 15-month anniversary.

System-wide comparable restaurant sales include restaurant sales at all comparable company-operated restaurants and at all comparable franchise-operated restaurants, as reported by franchisees.

Refer to “Comparable Restaurant Sales” definition in the section titled “Key Performance Indicators” below.

Thirteen Weeks Ended

April 1, 2026

March 26, 2025

Company-operated same store sales

Franchise-operated same store sales

System-wide same store sales

Restaurant Development

Our restaurant counts at the beginning and end of each of the last three fiscal years and the thirty-nine weeks ended September 24, 2025, were as follows:

Thirty-Nine Weeks Ended

Fiscal Year Ended

September 24, 2025

Our restaurant counts at the beginning and end of each of the last three fiscal years and the thirteen weeks ended April 1, 2026, were as follows:

Thirteen Weeks Ended

April 1, 2026

March 26, 2025

Company-operated restaurant activity (1) :

3 unchanged sentences

Restaurants at end of period

Franchised restaurant activity:

Franchise-operated restaurant activity:

Beginning of period

5 unchanged sentences

Restaurants at end of period

(1) Our restaurant count includes 498 domestic restaurants and excludes the eight licensed restaurants in the Philippines, as well as the two previously licensed restaurants in the Philippines that were closed during the thirty-nine weeks ended September 24, 2025.

(1) Our restaurant count includes 505 domestic restaurants and excludes the eight licensed restaurants in the Philippines, as well as the two previously licensed restaurants in the Philippines that were closed during the thirteen weeks ended March 26, 2025.

Restaurant Remodeling

During the thirty-nine weeks ended September 24, 2025, we completed a total of 34 remodels 7 of which were company-operated restaurant remodels.

Considering our efforts to finalize our new prototype design, we currently expect to complete at least 55 company-operated restaurant and franchise remodels for fiscal 2025.

The cost of our restaurant

remodels varies depending on the scope of the work required, but on average the investment is approximately $0.4 million per restaurant.

During the thirteen weeks ended April 1, 2026, we completed a total of 13 remodels of which 7 were company-operated restaurant remodels.

In fiscal 2026, we plan to continue our standard practices for remodels, which includes completing a total of 25 to 35 company-operated restaurants and 30 to 40 franchise-operated remodels.

Remodeling is a use of cash and has implications for our net property and depreciation line items on our consolidated balance sheets and consolidated statements of income, among others.

The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is approximately $0.4 million per restaurant.

Our Loco Rewards loyalty program offers rewards that incentivize customers to visit our restaurants more often each month.

Customers earn points for each dollar spent, and points can be redeemed for multiple redemption options.

If a customer does not earn or use points within a one-year period, their account is deactivated and all points expire.

When a customer is part of the rewards program, the obligation to provide future discounts related to points earned is considered a separate performance obligation, to which a portion of the transaction price is allocated.

The performance obligation related to loyalty points is deemed to have been satisfied, and the amount deferred in the balance sheet is recognized as revenue, when the points are transferred to a reward and redeemed, the reward or points have expired, or the likelihood of redemption is remote.

A portion of the transaction price is allocated to loyalty points on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty point’s terms.

In addition, customers can earn additional points and free entrées for a variety of engagement activities.

As points are available for redemption past the quarter earned, a portion of the revenue associated with the earned points will be deferred until redemption or expiration.

As of September 24, 2025 and December 25, 2024, the revenue allocated to loyalty points that had not been redeemed was $1.1 million and $0.8 million, respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

We had over 4.6 million loyalty program members as of September 24, 2025.

A portion of the transaction price is then allocated to loyalty points, if necessary, on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty point’s terms.

As of April 1, 2026 and December 31, 2025, the revenue allocated to loyalty points that had not been redeemed was $1.2 million and $1.1 million, respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

We had over 5.4 million loyalty program members as of April 1, 2026.

Critical Accounting Policies and Use of Estimates

22 unchanged sentences

Occupancy costs include rent, common area maintenance (“CAM”), and real estate taxes.

Other restaurant operating expenses include the costs of utilities, advertising, credit card processing fees, delivery service provide fees, restaurant supplies, repairs and maintenance, and other restaurant operating costs.

Other restaurant operating expenses include the costs of utilities, advertising, credit card processing fees, delivery service provider fees, restaurant supplies, repairs and maintenance, and other restaurant operating costs.

General and Administrative Expenses

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support the development and operations of our restaurants, including compensation and benefits, travel expenses, stock compensation costs, legal and professional fees, and other related corporate costs.

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support the development and operations of our restaurants, including compensation and benefits, travel expenses, stock-based compensation expense, legal and professional fees, and other related corporate costs.

Also included are pre-opening costs, and expenses above the restaurant level, including salaries for field management, such as area and regional managers, and franchise field operational support.

Franchise Expenses

Franchise expenses are primarily comprised of rent expenses incurred on properties leased by us and then sublet to franchisees, expenses incurred in support of franchisee information technology systems, and the franchisee’s portion of advertising expenses.

Franchise expenses are primarily comprised of rent expenses incurred on properties leased or owned by us and then sublet to franchisees, expenses incurred in support of franchisee information technology systems, and the franchisee’s portion of advertising expenses.

Depreciation and Amortization

3 unchanged sentences

Impairment and Closed-Store Reserves

We review long-lived assets such as property, equipment, and intangibles on a unit-by-unit basis for impairment when events or circumstances indicate the carrying value of the assets may not be recoverable.

We review long-lived assets such as property, and equipment, right-of-use (“ROU”) assets and intangibles on a unit-by-unit basis for impairment when events or circumstances indicate the carrying value of the assets may not be recoverable.

We determine if there is impairment at the restaurant level by comparing undiscounted future cash flows from the related long-lived assets to their respective carrying values and record an impairment charge when appropriate.

3 unchanged sentences

If these assumptions change in the future, we may be required to record impairment charges for these assets and these charges could be material.

When we close a restaurant, we will evaluate the right of use (“ROU”) asset for impairment, based on anticipated sublease recoveries.

The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense, in addition to property tax and CAM charges for closed restaurants.

When we close a restaurant, we will evaluate the ROU asset for impairment, based on anticipated sublease recoveries.

The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense, in addition to property tax and CAM expenses for our closed restaurants.

Interest Expense, Net

2 unchanged sentences

Provision for Income Taxes

Provision for income taxes consists of federal and state taxes on our income.

Provision for income taxes consists of federal and state taxes on our pre-tax income.

Comparison of Results of Operations

Our operating results for the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024 are expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, and are compared in the tables below.

Our operating results for the thirteen weeks ended April 1, 2026 and March 26, 2025 are expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, and are compared in the tables below.

Thirteen Weeks Ended

September 24, 2025

September 25, 2024

Increase / (Decrease)

Statements of Income Data

Company-operated restaurant revenue

Franchise revenue

Franchise advertising fee revenue

Total revenue

Cost of operations (1)

Food and paper costs

Labor and related expenses

Occupancy and other operating expenses

Company restaurant expenses (1)

General and administrative expenses

Franchise expenses

Depreciation and amortization

Loss on disposal of assets

Impairment and closed-store reserves

Total expenses

Income from operations

Interest expense, net of interest income

Income before provision for income taxes

Provision for income taxes

(1) Percentages for line items relating to cost of operations and company restaurant expenses are calculated with company-operated restaurant revenue as the denominator.

All other percentages use total revenue.

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Increase / (Decrease)

13 unchanged sentences

Loss on disposal of assets

Gain on recovery of insurance proceeds, net

Loss on disposition of restaurants

Impairment and closed-store reserves

7 unchanged sentences

Company-Operated Restaurant Revenue

For the quarter ended September 24, 2025, company-operated restaurant revenue decreased $0.5 million, or 0.5%, from the comparable period in the prior year.

The decrease in company-operated restaurant revenue was mainly due to a decrease in company-operated comparable restaurant revenue of $1.2 million, or 1.1%, partially offset by $0.7 million of additional sales from the opening of two restaurants during or after the third quarter of 2024.

The company-operated comparable restaurant sales decrease consisted of a 1.3% decrease in average check size, partially offset by a 0.1% increase in transactions.

Year-to-date, company-operated restaurant revenue increased $2.8 million, or 0.9%, from the comparable period in the prior year.

The increase in company-operated restaurant revenue was mainly due to $2.5 million of additional sales from the opening of two restaurants during or after the first quarter of 2024, as well as an increase in company-operated comparable restaurant revenue of $0.6 million, or 0.2%.

The company-operated comparable restaurant sales increase consisted of a 1.6% increase in average check size due to increases in menu prices, partially offset by a 1.3% decrease in transactions.

This company-operated restaurant revenue increase was partially offset by a $0.2 million decrease in revenue recognized for our loyalty program.

For the quarter ended April 1, 2026, company-operated restaurant revenue increased $7.6 million, or 7.7%, from the comparable period in the prior year.

The increase in company-operated restaurant revenue was mainly due to an increase in company-operated comparable restaurant revenue of $5.4 million, or 5.4%, as well as $0.7 million of additional sales from the opening of two restaurants after the first quarter of 2025.

The company-operated comparable restaurant sales increase consisted of a 5.7% increase in average check size, partially offset by a 0.3% decrease in transactions.

Franchise Revenue

For the quarter ended September 24, 2025, franchise revenue increased $1.5 million, or 13.5%, from the comparable period in the prior year.

This increase was primarily due to the $0.9 million in franchisee IT pass through revenue related to the franchisee rollout of the new Point of Sale (“POS”) system, which was offset by a corresponding increase in franchise expenses.

In addition, the increase in franchise revenue was due to the five franchise-operated restaurant openings during or subsequent to the third quarter of 2024 and a true up of royalty rates, partially offset by a franchise comparable restaurant sales decrease of 0.6% .

Year-to-date, franchise revenue increased $5.1 million, or 14.8%, from the comparable period in the prior year.

This increase was primarily due to the $4.3 million in franchisee IT pass through revenue related to the franchisee rollout of the new POS system which is offset by a corresponding increase in franchise expenses.

In addition, the increase in franchise revenue was due to the five franchise-operated restaurant openings during or subsequent to the first quarter of 2024.

The increase in franchise revenue was partially offset by a franchise comparable restaurant sales decrease of 1.0% .

For the quarter ended April 1, 2026, franchise revenue decreased $1.2 million, or 8.8%, from the comparable period in the prior year.

This decrease was primarily due to the $1.9 million in franchisee IT pass-through revenue related to the franchise rollout of the new Point of Sale (“POS”) system completed in 2025, which was offset by a corresponding decrease in related franchise expenses.

The decrease was also partially offset by the increase in franchise revenue related to the 9 franchise-operated restaurant openings during or subsequent to the first quarter of 2025 and by a franchise comparable restaurant sales increase of 6.1%.

The franchise comparable restaurant increase consisted of a 4.9% increase in average check size, combined with a 1.1% increase in transactions.

Franchise Advertising Fee Revenue

For the quarter ended September 24, 2025, franchise advertising fee revenue increased less than $0.1 million, or 0.6%, from the comparable period in the prior year.

Year-to-date, franchise advertising fee revenue decreased less than $0.1 million, or 0.2%, from the comparable period in the prior year.

For the quarter ended April 1, 2026, franchise advertising fee revenue increased $0.6 million, or 8.0%, from the comparable period in the prior year.

As advertising fee revenue is a percentage of franchisees’ revenue, the fluctuations for the quarter were due to the increases and decreases noted in franchise revenue above.

Food and Paper Costs

For the quarter ended September 24, 2025, food and paper costs decreased $0.5 million, or 2.1%, from the comparable period in the prior year.

Year-to-date, food and paper costs decreased $1.6 million, or 2.1%, from the comparable period in the prior year.

The decrease in food and paper costs for both the quarter and year-to-date periods was primarily due to lower sales combined with cost-management initiatives and commodity deflation, partially offset by increased discounts.

For the quarter ended April 1, 2026, food and paper costs increased $1.7 million, or 6.7%, from the comparable period in the prior year.

The increase in food and paper costs was primarily due to higher sales, increased discounts and higher produce pricing.

For the quarter, food and paper costs as a percentage of company-operated restaurant revenue were 24.9%, down from 25.2% in the comparable period of the prior year.

Year-to-date, food and paper costs as a percentage of company-operated restaurant revenue were 24.8%, down from 25.5% in the comparable period of the prior year.

The percentage decrease for both the quarter and year-to-date periods was primarily due to menu price increases and the cost decreases highlighted above, partially offset by increased discounts.

The percentage decrease was primarily due to menu price increases partially offset by the increased discounts and cost increases highlighted above.

Labor and Related Expenses

For the quarter ended September 24, 2025, labor and related expenses decreased $2.1 million, or 6.4%, from the comparable period in the prior year.

The decrease in labor and related expenses for the quarter was primarily due to a $1.3 million reduction in costs related to improved labor efficiencies as part of our cost-management initiatives and $0.5 million decrease related to the decrease in sales and a $0.3 million decrease in other labor-related expenses.

Year-to-date, labor and related expenses decreased $1.2 million, or 1.3%, from the comparable period in the prior year.

The decrease for the year-to-date period was due primarily to $3.8 million reduction in costs related to the improved labor efficiencies discussed above, as well as a $0.6 million decrease in other labor-related expenses.

The decrease in labor and related expenses for the year was partially offset by a $3.2 million increase due to higher wage rates during fiscal 2025 as a result of legislative increases in the California state minimum wage, which became effective April 1, 2024.

For the quarter ended September 24, 2025, labor and related expenses as a percentage of company-operated restaurant revenue were 30.4%, down from 32.4% in the comparable period in the prior year.

Year-to-date labor and related expenses as a percentage of company-operated restaurant revenue were 31.3%, down from 32.0% in the comparable period in the prior year primarily.

The percentage change for both the quarter and year-to-date periods was driven by higher menu prices and the improved labor efficiencies , partially offset by the higher wage rates and higher labor-related costs.

For the quarter ended April 1, 2026, labor and related expenses decreased $0.3 million, or 1.1%, from the comparable period in the prior year.

The decrease in labor and related expenses for the quarter was primarily due to a $0.5 million reduction in group insurance and workers compensation claims, $0.5 million costs related to improved labor efficiencies as part of our cost-management initiatives partially offset by a $0.7 million increase in other labor-related expenses related to an increase in training, overtime and wage inflation and labor related expenses from the opening of two restaurants after the first quarter of 2025.

For the quarter ended April 1, 2026, labor and related expenses as a percentage of company-operated restaurant revenue were 30.1%, down from 32.7% in the comparable period in the prior year.

The percentage change was driven by leverage on the comparable store sales increase, higher menu prices, reduced group insurance and workers compensation claims and the improved labor efficiencies , partially offset by higher other labor-related costs.

Occupancy and Other Operating Expenses

For the quarter ended September 24, 2025, occupancy and other operating expenses increased $0.6 million, or 2.5%, from the comparable period in the prior year.

The increase was primarily due to increases of $0.3 million in software maintenance, $0.3 million in occupancy and $0.2 million in marketplace delivery fees, partially offset by $0.2 million decrease in utilities and repairs and maintenance costs.

Year-to-date, occupancy and other operating expenses increased $4.5 million, or 6.1%, from the comparable period in the prior year primarily due to increases of $1.0 million in occupancy, $0.9 million in marketplace delivery fees, $0.8 million in software maintenance, $0.6 million in utilities, $0.3 million in operating supplies, $0.2 million in credit card charges and $0.7 million in other operating expenses.

For the quarter ended September 24, 2025, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 26.5%, up from 25.8% in the comparable period in the prior year.

Year-to-date, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 26.1%, up from 24.8% in the comparable period of the prior year.

Both the quarter and year-to-date period increases resulted from the cost increases highlighted above.

For the quarter ended April 1, 2026, occupancy and other operating expenses increased $1.7 million, or 6.5%, from the comparable period in the prior year.

The increase was primarily due to a $0.8 million increase in other operating expenses primarily from marketplace delivery fees, mobile order fees, and credit card fees, an increase of $0.5 million in utilities and repairs and maintenance costs, and an increase of $0.4 million in advertising and occupancy costs.

For the quarter ended April 1, 2026, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 25.8%, down from 26.1% in the comparable period in the prior year.

The decrease as a percentage of sales resulted from the leverage on the comparable store sales increase highlighted above.

General and Administrative Expenses

For the quarter ended September 24, 2025, general and administrative expenses increased $0.9 million, or 8.1%, from the comparable period in the prior year.

The increase for the quarter was primarily due to a $0.3 million increase in stock

compensation expenses, a $0.2 million increase in legal and professional fee costs related to shareholder activism and related matters, a $0.2 million increase in restructuring costs, a $0.1 million increase related to additional rent expense in connection with our corporate office relocation and a $0.1 million increase due to the implementation of enterprise resource planning (“ERP”) system.

Year-to-date, general and administrative expenses increased $2.0 million, or 5.7%, from the comparable period in the prior year.

The increase for the year-to-date period was due primarily to a $1.6 million increase in legal and professional fee costs related to shareholder activism and related matters and $1.2 million increase in stock compensation expenses.

The general and administrative expenses increase was partially offset by $0.6 million received from a legal settlement, net of legal expenses and a $0.3 million decrease in restructuring and executive transition costs.

For the quarter ended September 24, 2025, general and administrative expenses as a percentage of total revenue were 10.2%, up from 9.5% in the comparable period of the prior year .

Year-to-date, general and administrative expenses as a percentage of total revenue were 10.1%, up from 9.8% in the comparable period of the prior year.

The percentage increase for both the quarter and year-to-date periods is primarily due to the cost increases discussed above.

For the quarter ending April 1, 2026, general and administrative expenses increased $1.5 million, or 13.6%, from the comparable period in the prior year.

The increase for the quarter was primarily due to a $0.6 million received from a legal settlement in the prior year, a $0.7 million increase in legal fees and other general and administrative costs, $0.3 million increase to outside services and software maintenance, a $0.2 million increase to stock-based compensation expense, and a combined $0.2 million increase related to our corporate office relocation and the implementation of a new enterprise resource planning (“ERP”) system, partially offset by $0.6 million of lower shareholder activism.

For the quarter ended April 1, 2026, general and administrative expenses as a percentage of total revenue were 10.1%, up from 9.5% in the comparable period of the prior year .

The percentage increase is primarily due to the cost increases discussed above.

Franchise Expenses

For the quarter ended September 24, 2025, franchise expenses increased $0.9 million, or 8.8%, from the comparable period in the prior year .

Year-to-date, franchise expenses increased $4.5 million, or 14.1%, from the comparable period in the prior year.

The increase for both quarterly and year-to-date periods was due to the $0.9 million and $4.3 million in IT pass-through expenses, respectively, primarily resulting from franchisees rolling out the new POS system.

Loss on Disposition of Restaurants

During the thirty-nine weeks ended September 25, 2024, we completed the sale of one restaurant within California to an existing franchisee due to an expiring lease term on April 30, 2024.

This sale resulted in cash proceeds of $0.1 million and a net loss on sale of restaurant of less than $0.1 million for the thirteen and thirty-nine weeks ended September 25, 2024.

Since the date of the sale, this restaurant is now included in the total number of franchised El Pollo Loco restaurants.

For the quarter ended April 1, 2026, franchise expenses decreased $1.3 million, or 10.1%, from the comparable period in the prior year .

The decrease was primarily due to the $1.9 million in franchise IT pass-through expense related to the franchise rollout of the new POS system completed in 2025.

Depreciation and Amortization

For the quarter ended April 1, 2026, depreciation and amortization increased $0.4 million, or 11.0%, from the comparable period in the prior year .

The increase was primarily due to the completion of 17 company-operated restaurant remodels in 2025 and 7 company-operated restaurant remodels in the first quarter of 2026, along with the rollout of the new POS system to company-operated restaurants completed in 2025.

Impairment and Closed-Store Reserves

During the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, we did not record any non-cash impairment charges.

During both the thirteen weeks ended April 1, 2026 and March 26, 2025, we did not record any non-cash impairment charges.

Given the inherent uncertainty in projecting results for newer restaurants in newer markets, we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.

For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

When a restaurant is closed, we will evaluate the ROU asset for impairment, based on anticipated sublease recoveries.

The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense.

Additionally, any property tax and CAM payments relating to closed restaurants are included within closed-store expense.

During both the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, we recognized less than $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

During both the thirteen weeks ended April 1, 2026 and March 26, 2025, we recognized less than $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM expenses for our closed locations.

Interest Expense, Net

For the quarter ended September 24, 2025, interest expense, net, decreased $0.4 million from t he comparable period in the prior year .

For the year-to-date period, interest expense, net, decreased $1.1 million from the comparable period in the prior year.

Both the quarter and year-to-date period decrease in interest expense was primarily related to the lower interest rates in the fiscal 2025 and lower outstanding balances on our 2022 Revolver (as defined below) versus t he comparable periods in the prior year .

Income Tax Receivable Agreement

On May 29, 2024, we terminated most of the obligations under the Tax Receivable Agreement (“TRA”), with respect to any payments or obligations owed to the FS Equity Partners V, L.P.

and FS Affiliates V, L.P.

(together, the “Sellers”) thereunder in exchange for a payment to the Sellers of $398,896.

As of September 24, 2025, there was no remaining obligation owed on our condensed consolidated balance sheets.

For the quarter ended April 1, 2026, interest expense, net, decreased $0.4 million from t he comparable period in the prior year .

The decrease in interest expense was primarily related to the lower interest rates in fiscal quarter of 2026 and lower outstanding balances on our 2022 Revolver (as defined below) versus t he comparable period in the prior year .

Provision for Income Taxes

For the quarter ended September 24, 2025, we recorded an income tax provision of $3.0 million, reflecting an estimated effective tax rate of 28.8%.

For the quarter ended September 25, 2024, we recorded an income tax provision of $2.4 million, reflecting an estimated effective tax rate of approximately 28.1%.

For the year-to-date period ended September 24, 2025, we recorded an income tax provision of $8.3 million, reflecting an estimated effective tax rate of approximately 29.3%.

For the year-to-date period ended September 25, 2024, we recorded an income tax provision of $7.8 million, reflecting an estimated effective tax rate of approximately 28.3%.

The difference between the 21.0% statutory rate and our effective tax rate of 29.3% for the year-to-date period ended September 24, 2025 is primarily a result of state taxes and the impact of non-tax deductible executive compensation expense, and the impact of lower stock compensation expense related to vesting of restricted stock awards deductible for tax as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by a Work Opportunity Tax Credit benefit .

For the quarter ended April 1, 2026, we recorded an income tax provision of $3.3 million, reflecting an estimated effective tax rate of 29.0%.

For the quarter ended March 26, 2025, we recorded an income tax provision of $2.3 million, reflecting an estimated effective tax rate of approximately 29.7%.

The difference between the 21.0% statutory rate and our effective tax rate of 29.0% for the quarter ended April 1, 2026 is primarily a result of state tax rate based on apportioned income and the impact of non-tax deductible executive compensation expense, partially offset by the impact of higher stock compensation expense deductible for tax related to vesting of restricted stock awards as compared to the cumulative amount recorded as stock-based compensation expense, and federal targeted job credits.

Key Performance Indicators

3 unchanged sentences

System-wide sales are neither required by, nor presented in accordance with GAAP.

System-wide sales are the sum of company-operated restaurant revenue and sales from franchised restaurants.

System-wide sales are the sum of company-operated restaurant revenue and sales from franchise-operated restaurants.

Our total revenue in our condensed consolidated statements of income is limited to company-operated restaurant revenue and franchise revenue from our franchisees.

2 unchanged sentences

System-wide sales do not include the eight licensed stores in the Philippines.

The total number of currently licensed stores reflects the closure of two licensed restaurants during the thirty-nine weeks ended September 24, 2025.

The following table reconciles system-wide sales to company-operated restaurant revenue and total revenue (in thousands):

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Company-operated restaurant revenue

4 unchanged sentences

Franchise advertising fee revenue

Sales from franchised restaurants

Sales from franchise-operated restaurants

System-wide sales (1)

4 unchanged sentences

Comparable Restaurant Sales

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchised, and system-wide restaurants.

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchise-operated, and system-wide restaurants.

A restaurant enters our comparable restaurant base the first full week after it has operated for fifteen months.

Comparable restaurant sales exclude restaurants closed during the applicable period.

At September 24, 2025 and September 25, 2024, there were 485 and 482 comparable restaurants, 171 and 168 company-operated restaurants, and 314 and 314 franchised restaurants, respectively.

At April 1, 2026 and March 26, 2025, there were 485 and 484 system-wide comparable restaurants in both periods, 171 and 170 company-operated restaurants, respectively, and 313 and 314 franchise-operated restaurants, respectively.

Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded.

5 unchanged sentences

Restaurant contribution is defined as company-operated restaurant revenue less company restaurant expenses which includes food and paper cost, labor and related expenses and occupancy and other operating expenses, where applicable.

Restaurant contribution therefore excludes franchise revenue, franchise advertising fee revenue and franchise expenses as well as certain other costs, such as general and administrative expenses, franchise expenses, depreciation and amortization, asset impairment and closed-store reserve, loss on disposal of assets and other costs that are considered corporate-level expenses and are not considered normal operating costs of our restaurants.

Restaurant contribution therefore excludes franchise revenue, franchise advertising fee revenue and franchise expenses as well as certain other costs, such as general and administrative expenses, franchise expenses, depreciation and amortization, impairment and closed-store reserves, loss on disposal of assets and other costs that are considered corporate-level expenses and are not considered normal operating costs of our restaurants.

Accordingly, restaurant contribution is not indicative of overall Company results and does not accrue directly to the benefit of stockholders because of the exclusion of certain corporate-level expenses.

Restaurant contribution margin is defined as restaurant contribution as a percentage of net company-operated restaurant revenue.

Restaurant contribution margin is defined as restaurant contribution as a percentage of company-operated restaurant revenue.

Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of our restaurants, and our calculations thereof may not be comparable to those reported by other companies.

1 unchanged sentence

Management uses restaurant contribution and restaurant contribution margin as key metrics to evaluate the profitability of incremental sales at our restaurants, to evaluate our restaurant performance across periods, and to evaluate our restaurant financial performance compared with our competitors.

Management believes that restaurant contribution and restaurant

contribution margin are important tools for investors, because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance.

Management believes that restaurant contribution and restaurant contribution margin are important tools for investors, because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance.

Management further believes restaurant level operating margin is useful to investors to highlight trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures.

1 unchanged sentence

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

(Dollar amounts in thousands)

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Restaurant contribution:

4 unchanged sentences

Loss on disposal of assets

Gain on recovery of insurance proceeds, net

Franchise revenue

1 unchanged sentence

Impairment and closed-store reserves

Loss on disposition of restaurants

Restaurant contribution

16 unchanged sentences

EBITDA and Adjusted EBITDA as presented in this report are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.

EBITDA and Adjusted EBITDA are not measurements of

our financial performance under GAAP and should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity.

EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity.

In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate EBITDA and Adjusted EBITDA.

6 unchanged sentences

These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense).

We also present EBITDA and Adjusted EBITDA because (i) we believe that these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe that investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use EBITDA and Adjusted EBITDA internally for a number of benchmarks, including to compare our performance to that of our competitors.

We also present EBITDA and Adjusted EBITDA because (i) we believe that these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) management believes that investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use EBITDA and Adjusted EBITDA internally for a number of benchmarks, including to compare our performance to that of our competitors.

The following table sets forth reconciliations of our net income to our EBITDA and Adjusted EBITDA:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

(Amounts in thousands)

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Non-GAAP adjustments:

Provision for income taxes

Interest expense, net of interest income

Interest expense, net

Depreciation and amortization

2 unchanged sentences

Impairment and closed-store reserves (c)

Loss on disposition of restaurants (d)

Legal settlements (e)

Special legal and professional fees expense (f)

Duplicate rent expense for corporate office relocation (g)

ERP software implementation costs (h)

Gain on recovery of insurance proceeds, net (i)

Restructuring and executive transition costs (j)

Pre-opening costs (k)

Legal settlements (d)

Special legal and professional fees expense (e)

Duplicate rent expense for corporate office relocation (f)

ERP software implementation costs (g)

Pre-opening costs (h)

Adjusted EBITDA

1 unchanged sentence

(b) Loss on disposal of assets includes the loss or gain on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

During both the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, we did not record any non-cash impairment charges.

(d) During the thirty-nine weeks ended September 25, 2024, we completed the sale of one restaurant within California to an existing franchisee due to an expiring lease term on April 30, 2024.

This sale resulted in cash proceeds of $0.1 million and a net loss on sale of restaurant of less than $0.1 million for the thirty-nine weeks ended September 25, 2024.

(e) Includes $0.6 million received from legal settlement, net of legal expenses.

(f) Consists of legal and professional costs related to shareholder activism and related matters.

(g) Consists of duplicate rent expense for the corporate headquarter relocation.

(h) Represents costs incurred in connection with the implementation of new ERP system which are included in general and administrative expenses.

(i) During the thirty-nine weeks ended September 25, 2024, the Company recognized gains of less than $0.1 million related to the reimbursement of property and equipment and expenses.

The gain on recovery of insurance proceeds and lost profits, net of the related costs, is included in the accompanying condensed consolidated statements of income, for the thirty-nine weeks ended September 25, 2024, as a reduction of company restaurant expenses.

(j) Consists of costs associated with the transition of certain executive officers, such as severance and stock-based compensations costs and costs associated with restructuring certain positions in the organization during the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, respectively.

(k) Pre-opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs, and other related pre-opening costs.

We did not record any non-cash impairment charges during either the thirteen weeks ended April 1, 2026 or March 26, 2025.

(d) Includes $0.6 million received from legal settlement, net of legal expenses.

(e) Consists of legal and professional costs related to shareholder activism and related matters.

(f) Consists of duplicate rent expense for the corporate headquarter relocation.

(g) Represents costs incurred in connection with the implementation of a new ERP system which are included in general and administrative expenses.

(h) Pre-opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs, and other related pre-opening costs.

These are generally incurred over the three to five months prior to opening.

2 unchanged sentences

Our primary sources of liquidity and capital resources have been cash provided from operations, cash and cash equivalents, and the 2022 Revolver (as defined below) .

Our primary requirements for liquidity and capital are new restaurants, existing restaurant capital investments (remodels and maintenance), legal defense costs, lease obligations, interest payments on our debt, working capital and general corporate needs.

Our primary requirements for liquidity and capital are new restaurants, existing restaurant capital investments (remodels and maintenance), lease obligations, interest payments on our debt, working capital and general corporate needs.

Our working capital requirements are not significant, since our customers pay for their purchases in cash or by payment card (credit or debit) at the time of sale.

2 unchanged sentences

We believe that these sources of liquidity and capital are sufficient to finance our continued operations, including planned capital expenditures, for at least the next 12 months and beyond from the issuance of the condensed consolidated financial statements.

However, depending on macroeconomic conditions, our financial performance and liquidity could be further impacted and could impact our ability to meet certain financial covenants required in our 2022 Credit Agreement (as defined in Note 5 “Long-Term Debt”), specifically the lease-adjusted coverage ratio and fixed-charge coverage ratio.

The following table presents summary cash flow information for the periods indicated (in thousands):

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

(Amounts in thousands)

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Net cash provided by (used in):

2 unchanged sentences

Financing activities

Net increase in cash

Net change in cash and cash equivalents

Operating Activities

For the thirty-nine weeks ended September 24, 2025, net cash from operating activities decreased by $7.0 million from the comparable period of the prior year.

This change was due to unfavorable working capital fluctuations compared to the same period in the prior year.

For the thirteen weeks ended April 1, 2026, net cash from operating activities increased by $8.3 million from the comparable period of the prior year.

This change was due to improvement in working capital compared to the same period in the prior year as well as an increase in net income and deferred income taxes.

Investing Activities

For the thirty-nine weeks ended September 24, 2025, net cash used in investing activities decreased by $0.6 million from the comparable period of the prior year.

This change was primarily due to a decrease in purchase of property and equipment mostly related to restaurant remodeling during the thirty-nine weeks ended September 24, 2025 when compared to the prior year.

For the thirteen weeks ended April 1, 2026, net cash used in investing activities decreased by $6.9 million from the comparable period of the prior year.

This change was primarily due to a increase in purchase of property and equipment mostly related to restaurant remodeling and new restaurant development during the thirteen weeks ended April 1, 2026 when compared to the prior year.

Financing Activities

For the thirty-nine weeks ended September 24, 2025, net cash used in financing activities changed by $14.1 million from the comparable period of the prior year.

The change was primarily due to repurchases of shares of our common stock of $1.8 million during the thirty-nine weeks ended September 24, 2025 compared to repurchases of shares of our common stock of $19.3 million during the thirty-nine weeks ended September 25, 2024.

The change was offset by a $10.0 million in net paydown on the 2022 Revolver during the thirty-nine weeks ended September 24, 2025 compared to a $8.0 million net pay downs during the thirty-nine weeks ended September 25, 2024.

For the thirteen weeks ended April 1, 2026, net cash used in financing activities decreased by $5.6 million from the comparable period of the prior year.

The change was primarily due to paydowns of $7.0 million on the 2022 Revolver during the thirteen weeks ended April 1, 2026 compared to a net borrowings of $2.0 million on the 2022 Revolver during the thirteen weeks ended March 26, 2025 partially offset by an increase of $1.8 million of proceeds from the issuance of common stock upon exercise of stock options during the thirteen weeks ended April 1, 2026 as compared to the thirteen weeks ended March 26, 2025 as well as no repurchases of common stock during the thirteen weeks ended April 1, 2026 as compared repurchases of common stock of $1.8 million during the thirteen weeks ended March 26, 2025.

Debt and Other Obligations

5 unchanged sentences

The obligations under the 2022 Credit Agreement and related loan documents are guaranteed by us.

The obligations of our company, EPL and Intermediate under the 2022 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.

Under the 2022 Revolver, we are restricted from making certain payments such as cash dividends or share repurchases, except that we may, inter alia, (i) pay up to $1.0 million per year to repurchase or redeem our qualified equity interests held by our past or present officers, directors, or employees (or their estates) upon death, disability, or termination of employment, (ii) pay under the 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 our 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 2022 Revolver.

The obligations of our company, EPL and Intermediate under the 2022 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets subject to certain customary exceptions.

Under the 2022 Revolver, we are restricted from making certain payments such as cash dividends or share repurchases, except that we may, inter alia, (i) pay up to $1.0 million per year to repurchase or redeem our qualified equity interests held by our past or present officers, directors, or employees (or their estates) upon death, disability, or termination of employment, and (ii) 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 our 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 2022 Revolver.

Borrowings under the 2022 Credit Agreement (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either the secured overnight financing rate (“SOFR”) 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 2022 Revolver may be repaid and reborrowed.

The interest rate range under the 2022 Revolver was 5.63% to 5.96% and 5.63% to 7.75% for the thirteen and thirty-nine weeks ended September 24, 2025 , respectively, and 6.52% to 6.95% and 6.52% to 6.96% for the thirteen and thirty-nine weeks ended September 25, 2024, respectively.

The interest rate range under the 2022 Revolver was 5.01% to 7.00% and 5.65% to 7.75% for the thirteen weeks ended April 1, 2026 and March 26, 2025 , respectively .

The 2022 Credit Agreement contains certain financial covenants.

We were in compliance with the financial covenants as of September 24, 2025.

At September 24, 2025, we had $61.0 million in outstanding borrowings under the 2022 Revolver and two letters of credit in the amount of $10.3 million outstanding, and as a result, we had $78.7 million in borrowing availability.

See Note 5, “Long-term debt” in the “Notes to Condensed Consolidated Financial Statements” for additional information.

We were in compliance with the financial covenants as of April 1, 2026.

At April 1, 2026, we had $44.0 million in outstanding borrowings under the 2022 Revolver and one letter of credit in the amount of $10.3 million outstanding, and as a result, we had $95.7 million in borrowing availability.

See Note 5, Long-Term Debt , to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements , of this Quarterly Report on Form 10-Q for additional information.

Material Cash Requirements

Our material cash requirements as of September 24, 2025 have not changed materially since those disclosed under “Material Cash Requirements” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 25, 2024.

Our material cash requirements as of April 1, 2026 have not changed materially since those disclosed under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Material Cash Requirements , of our Annual Report on Form 10-K for the year ended December 31, 2025.

Our material cash requirements relate mostly to future (i) debt payments, including expected interest expense, calculated based on current interest rates, (ii) restaurant operating lease payments, (iii) purchasing commitments for chicken, (iv) restaurant finance lease payments, and (v) capital expenditures.

Share Repurchases

Share Repurchase Program

On November 2, 2023, we announced that our Board of Directors approved a share repurchase program (“Share Repurchase Program”) under which we were authorized to repurchase up to $20,000,000 of shares of our common stock.

On November 2, 2023, we announced that our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) under which we were authorized to repurchase up to $20,000,000 of shares of our common stock.

Under the Share Repurchase Program, we were permitted to repurchase our common stock from time to time, in amounts and at prices that we deemed appropriate, subject to market conditions and other considerations.

1 unchanged sentence

The Share Repurchase Program did not obligate us to acquire any particular number of shares.

During the 13 weeks ended March 26, 2025, the Company repurchased 159,750 shares pursuant to the Share Repurchase Program.

The Company did not repurchase any shares pursuant to the Share Repurchase Program during the 13 weeks ended April 1, 2026.

The Share Repurchase Program expired on March 31, 2025.

For the thirty-nine weeks ended September 24, 2025, we repurchased 163,229 of common stock under the Share Repurchase Program, using open market purchases, for total consideration of approximately $1.8 million.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis