0001606366-23-000047 | 10-Q | XBRL Viewer | EL Pollo Loco Holdings INC

Other Accrued Expenses and Current Liabilities

5. OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

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


	September 27, 2023		December 28, 2022
Accrued sales and property taxes	$	5,950	$	5,270
Gift card liability		4,047		4,667
Loyalty rewards program liability		633		526
Accrued advertising		710		831
Accrued legal settlements and professional fees		1,091		1,303
Deferred franchise and development fees		599		610
Other		1,945		1,913
Total other accrued expenses and current liabilities	$	14,975	$	15,120

LEASES - Minimum Future Lease Obligations (Details) - USD ($) $ in Thousands	Sep. 27, 2023	Dec. 28, 2022
Finance Minimum Lease Payments
For the Years Ending December 27, 2023	$ 38
For the Years Ending December 25, 2024	151
For the Years Ending December 31, 2025	147
For the Years Ending December 30, 2026	114
For the Years Ending December 29, 2027	104
Thereafter	1,479
Total	2,033
Less: imputed interest	(380)
Present value of lease obligations	1,653
Less: current maturities	(111)	$ (110)
Noncurrent portion	1,542	1,626
Operating Leases Minimum Lease Payments
For the Years Ending December 27, 2023	7,050
For the Years Ending December 25, 2024	27,867
For the Years Ending December 31, 2025	26,149
For the Years Ending December 30, 2026	23,778
For the Years Ending December 29, 2027	22,314
Thereafter	134,298
Total	241,456
Less: imputed interest	(55,167)
Present value of lease obligations	186,289
Less: current maturities	(19,425)	(19,995)
Noncurrent portion	166,864	$ 165,149
Operating Leases Minimum Sublease Payments
For the Years Ending December 27,2023	1,021
For the Years Ending December 25,2024	4,041
For the Years Ending December 31, 2025	3,653
For the Years Ending December 30, 2026	3,289
For the Years Ending December 29, 2027	3,239
Thereafter	21,645
Total	$ 36,888
Minimum
Operating Leases Minimum Sublease Payments
Imputed interest rate	1.53%
Maximum
Operating Leases Minimum Sublease Payments
Imputed interest rate	4.85%

PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 27, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

2. PROPERTY AND EQUIPMENT

The costs and related accumulated depreciation and amortization of major classes of property and equipment are as follows (in thousands):


	September 27, 2023		December 28, 2022
Land	$	12,323	$	12,323
Buildings and improvements		145,589		153,377
Other property and equipment		84,085		83,035
Construction in progress		7,406		3,196
		249,403		251,931
Less: accumulated depreciation and amortization		(167,216)		(173,287)
	$	82,187	$	78,644

Depreciation expense was $3.9 million and $3.5 million for the thirteen weeks ended September 27, 2023 and September 28, 2022, respectively, and $11.3 million and $10.7 million for the thirty-nine weeks ended September 27, 2023 and September 28, 2022, respectively.

Based on the Company’s review of its long-lived assets for impairment, the Company recorded non-cash impairment charges of $1.0 million for both the thirteen and thirty-nine weeks ended September 27, 2023, primarily related to the carrying value of the long-lived assets of one restaurant in Nevada. During the thirteen and thirty-nine weeks ended September 28, 2022, the Company recorded non-cash impairment charges of $0.1 million and $0.4 million, respectively, primarily related to the carrying value of the long-lived assets of one restaurant in California. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies – Impairment of Long-Lived Assets and ROU Assets” for additional information.

LONG-TERM DEBT (Details) $ in Thousands			3 Months Ended		9 Months Ended
LONG-TERM DEBT (Details) $ in Thousands	Sep. 28, 2023 USD ($)	Jul. 27, 2022 USD ($)	Sep. 27, 2023 USD ($)	Sep. 28, 2022 USD ($)	Sep. 27, 2023 USD ($)	Sep. 28, 2022 USD ($)	Nov. 02, 2023 USD ($)	Dec. 28, 2022 USD ($)
Debt Instrument [Line Items]
Revolving line of credit			$ 80,000		$ 80,000			$ 66,000
Repayments of Lines of Credit					11,000	$ 20,000
2022 Credit Agreement \| Letter of Credit
Debt Instrument [Line Items]
Letters of credit outstanding			9,800		$ 9,800
2022 Credit Agreement \| SOFR \| Minimum
Debt Instrument [Line Items]
Debt instrument basis percentage					1.25%
2022 Credit Agreement \| SOFR \| Maximum
Debt Instrument [Line Items]
Debt instrument basis percentage					2.25%
2022 Credit Agreement \| Base Rate \| Minimum
Debt Instrument [Line Items]
Debt instrument basis percentage					0.25%
2022 Credit Agreement \| Base Rate \| Maximum
Debt Instrument [Line Items]
Debt instrument basis percentage					1.25%
Revolving Credit Facility \| 2022 Credit Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 150,000
Senior secured revolving facility term		5 years
Debt Instrument, Maturity Date					Jul. 27, 2027
Revolving line of credit			80,000		$ 80,000
Amount of borrowings available			60,200		60,200
Repayments of Lines of Credit			3,000	$ 20,000	11,000	20,000
Proceeds from lines of credit			$ 23,000		$ 25,000	$ 0
Debt Instrument, Restrictive Covenants, Maximum Annual Repurchase or Redemption of Qualified Entity Interests		$ 1,000
Debt Instrument, Restrictive Covenants, Maximum Annual Redemption, Repurchase, Acquired Equity Interests		500
Debt Instrument, Restrictive Covenants, Maximum Annual Payment For Stock Option Plans, Employment Agreements and Incentive Plans		2,500
Debt Instrument, Restrictive Covenants, Maximum Annual Payment For Other Restricted Payments		$ 5,000
Debt Instrument, Covenant Description, Maximum Leverage Ratio		4.25
Revolving Credit Facility \| 2022 Credit Agreement \| Subsequent Event
Debt Instrument [Line Items]
Revolving line of credit							$ 71,000
Repayments of Lines of Credit	$ 9,000
Revolving Credit Facility \| 2022 Credit Agreement \| Minimum
Debt Instrument [Line Items]
Debt instrument, interest rate			6.74%		5.69%
Revolving Credit Facility \| 2022 Credit Agreement \| Maximum
Debt Instrument [Line Items]
Debt instrument, interest rate			6.93%		8.50%
Revolving Credit Facility \| 2022 Credit Agreement \| Federal Funds Rate
Debt Instrument [Line Items]
Debt instrument basis percentage					0.50%
Revolving Credit Facility \| 2022 Credit Agreement \| One Month SOFR
Debt Instrument [Line Items]
Debt instrument basis percentage					1.00%
Revolving Credit Facility \| 2018 Credit Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 150,000
Senior secured revolving facility term		5 years
Revolving Credit Facility \| 2022 and 2018 Credit Agreements \| Minimum
Debt Instrument [Line Items]
Debt instrument, interest rate				2.87%		1.35%
Revolving Credit Facility \| 2022 and 2018 Credit Agreements \| Maximum
Debt Instrument [Line Items]
Debt instrument, interest rate				6.00%		6.00%
Letter of Credit \| 2022 Credit Agreement
Debt Instrument [Line Items]
Sub limit of revolving facility		$ 15,000
Principal payments prior to maturity		0
Swing Line Loans \| 2022 Credit Agreement
Debt Instrument [Line Items]
Sub limit of revolving facility		$ 15,000

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Total
Beginning balance (shares) at Dec. 29, 2021	36,601,648
Beginning balance at Dec. 29, 2021	$ 365	$ 342,941	$ (32,393)	$ (290)	$ 310,623
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		2,806			2,806
Issuance of common stock related to restricted shares	$ 4	(4)
Issuance of common stock related to restricted shares (shares)	352,114
Issuance of common stock upon exercise of stock options, net	$ 1	1,579			1,580
Issuance of common stock upon exercise of stock options, net (shares)	150,475
Shares repurchased for employee tax withholdings		(243)			(243)
Shares repurchased for employee tax withholdings (shares)	(22,901)
Forfeiture of common stock related to restricted shares (shares)	(27,931)
Other comprehensive income (loss), net of tax				480	480
Net income			14,265		14,265
Ending balance (shares) at Sep. 28, 2022	37,053,405
Ending balance at Sep. 28, 2022	$ 370	347,079	(18,128)	190	329,511
Beginning balance (shares) at Jun. 29, 2022	37,002,513
Beginning balance at Jun. 29, 2022	$ 369	346,095	(23,137)	516	323,843
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		1,009			1,009
Issuance of common stock related to restricted shares	$ 1	(1)
Issuance of common stock related to restricted shares (shares)	53,476
Shares repurchased for employee tax withholdings		(24)			(24)
Shares repurchased for employee tax withholdings (shares)	(2,584)
Other comprehensive income (loss), net of tax				(326)	(326)
Net income			5,009		5,009
Ending balance (shares) at Sep. 28, 2022	37,053,405
Ending balance at Sep. 28, 2022	$ 370	347,079	(18,128)	190	329,511
Beginning balance (shares) at Dec. 28, 2022	37,008,061
Beginning balance at Dec. 28, 2022	$ 370	292,244	(11,592)	126	281,148
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		2,539			2,539
Issuance of common stock related to restricted shares	$ 4	(4)
Issuance of common stock related to restricted shares (shares)	391,432
Issuance of common stock upon exercise of stock options, net	$ 2	1,169			$ 1,171
Issuance of common stock upon exercise of stock options, net (shares)	219,960				219,960
Shares repurchased for employee tax withholdings		(217)			$ (217)
Shares repurchased for employee tax withholdings (shares)	(23,129)
Repurchase of common stock	$ (46)	(46,570)			(46,616)
Repurchase of common stock (shares)	(4,530,850)
Repurchase of common stock - excise tax		(430)			$ (430)
Forfeiture of common stock related to restricted shares	$ (1)	1
Forfeiture of common stock related to restricted shares (shares)	(108,004)				(108,004)
Other comprehensive income (loss), net of tax				$ (126)	$ (126)
Net income			21,203		21,203
Ending balance (shares) at Sep. 27, 2023	32,957,470
Ending balance at Sep. 27, 2023	$ 329	248,732	9,611		258,672
Beginning balance (shares) at Jun. 28, 2023	35,643,747
Beginning balance at Jun. 28, 2023	$ 356	276,222	382		276,960
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		926			926
Issuance of common stock related to restricted shares (shares)	28,222
Issuance of common stock upon exercise of stock options, net		347			347
Issuance of common stock upon exercise of stock options, net (shares)	35,666
Shares repurchased for employee tax withholdings		(46)			(46)
Shares repurchased for employee tax withholdings (shares)	(4,639)
Repurchase of common stock	$ (27)	(28,437)			(28,464)
Repurchase of common stock (shares)	(2,706,214)
Repurchase of common stock - excise tax		(280)			(280)
Forfeiture of common stock related to restricted shares (shares)	(39,312)
Net income			9,229		9,229
Ending balance (shares) at Sep. 27, 2023	32,957,470
Ending balance at Sep. 27, 2023	$ 329	$ 248,732	$ 9,611		$ 258,672

LEASES - Cash and Non-cash Lease Activities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022
Lessee, Lease, Description [Line Items]
Operating Lease, Payments	$ 21,094	$ 21,101
Finance Lease, Principal Payments	113	124
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	15,499	10,572
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability		28
Derecognition of ROU assets due to terminations, impairment or modifications	(44)	(63)
Property Lease [Member]
Lessee, Lease, Description [Line Items]
Operating Lease, Payments	20,797	20,364
Finance Lease, Principal Payments	70	82
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	15,445	10,486
Derecognition of ROU assets due to terminations, impairment or modifications	$ (40)	$ (39)
Finance Lease, Weighted-average remaining years in lease term	17 years 1 month 13 days	18 years 1 month 13 days
Operating Lease, Weighted-average remaining years in lease term	10 years 6 months 21 days	10 years 10 months 28 days
Finance Lease, Weighted Average Discount Rate, Percent	2.57%	2.57%
Operating Lease, Weighted Average Discount Rate, Percent	4.85%	4.49%
Equipment Lease
Lessee, Lease, Description [Line Items]
Operating Lease, Payments	$ 297	$ 737
Finance Lease, Principal Payments	43	42
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	54	86
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability		28
Derecognition of ROU assets due to terminations, impairment or modifications	$ (4)	$ (24)
Finance Lease, Weighted-average remaining years in lease term	2 years 5 months 15 days	3 years 5 months 8 days
Operating Lease, Weighted-average remaining years in lease term	3 years 5 months 1 day	1 year 6 months 25 days
Finance Lease, Weighted Average Discount Rate, Percent	1.53%	1.53%
Operating Lease, Weighted Average Discount Rate, Percent	4.45%	3.82%

LONG-TERM DEBT

9 Months Ended

Sep. 27, 2023

Debt Disclosure [Abstract]

Long-Term Debt

4. LONG-TERM DEBT

On July 27, 2022, the Company refinanced and terminated its credit agreement (the “2018 Credit Agreement”) among EPL, as borrower, the Company and Intermediate, as guarantors, Bank of America, N.A., as administrative agent, swingline lender, and letter of credit issuer, the lenders party thereto, and the other parties thereto, which provided for a $150.0 million five-year senior secured revolving credit facility (the “2018 Revolver”). The 2018 Revolver was refinanced pursuant to a credit agreement (the “2022 Credit Agreement”) among EPL, as borrower, the Company and Intermediate, as guarantors, Bank of America, N.A., as administrative agent, swingline lender, and letter of credit issuer, the lenders party thereto, and the other parties thereto, which provides for a $150.0 million five-year senior secured

revolving credit facility (the “2022 Revolver”). In connection with the refinancing, the 2018 Credit Agreement was terminated.

The 2022 Revolver includes a sub limit of $15.0 million for letters of credit and a sub limit of $15.0 million for swingline loans. The 2022 Revolver and 2022 Credit Agreement will mature on July 27, 2027. The obligations under the 2022 Credit Agreement and related loan documents are guaranteed by Holdings and Intermediate. The obligations of Holdings, 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.

The special dividend announced by the Company’s Board of Directors on October 11, 2022 was permitted under the terms of 2022 Revolver pursuant to both subclause (iii)(d) and (iii)(e) of the following sentence. Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates) of the Company upon death, disability, or termination of employment, (ii) pay under its TRA, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $0.5 million in any 12 month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 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. The base rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the published Bank of America prime rate, or (c) Term SOFR (as defined in the 2022 Credit Agreement) with a term of one-month SOFR plus 1.00%. For Term SOFR loans, the margin is in the range of 1.25% to 2.25%, and for base rate loans the margin is in a range of 0.25% to 1.25%. Borrowings under the 2022 Revolver may be repaid and reborrowed. The interest rate range was 6.74% to 6.93% and 5.69% to 8.50% for the thirteen and thirty-nine weeks ended September 27, 2023, under the 2022 Revolver, respectively, and 2.87% to 6.00% and 1.35% to 6.00% for the thirteen and thirty-nine weeks ended September 28, 2022, respectively, under the 2022 Revolver and 2018 Revolver.

The 2022 Credit Agreement contains certain financial covenants. The Company was in compliance with the financial covenants as of September 27, 2023.

At September 27, 2023, the Company had $80.0 million in outstanding borrowings under the 2022 Revolver and $9.8 million of letters of credit that further reduce the amount available under the line of credit to $60.2 million in borrowing availability.

Maturities, Borrowings and Paydowns

On July 27, 2022, the Company refinanced and terminated the 2018 Revolver pursuant to the 2022 Credit Agreement. During the thirteen and thirty-nine weeks ended September 27, 2023 the Company borrowed $23.0 million and $25.0 million, respectively, and paid down $3.0 million and $11.0 million, respectively, on the 2022 Revolver. During both the thirteen and thirty-nine weeks ended September 28, 2022 the Company paid down $20.0 million on the 2022 Revolver. No amounts were borrowed on the 2022 Revolver during the thirty-nine weeks ended September 28, 2022. There are no required principal payments prior to maturity for the 2022 Revolver which matures on July 27, 2027.

Interest Rate Swap

During the year ended December 25, 2019, the Company entered into a variable-to-fixed interest rate swap agreement with a notional amount of $40.0 million with a maturity date in June 2023. The objective of the interest rate swap was to reduce the Company’s exposure to interest rate risk for a portion of its variable-rate interest payments on its borrowings under the 2018 Revolver. The interest rate swap was designated as a cash flow hedge, as the changes in the future cash

flows of the swap were expected to offset changes in expected future interest payments on the related variable-rate debt, in accordance with Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging.”

In connection with the Company’s entry into the 2022 Credit Agreement, it terminated the interest rate swap on July 28, 2022 which was previously used to hedge interest rate risk. Prior to the interest rate swap termination, the swap was a highly effective cash flow hedge. In settlement of this swap, the Company received approximately $0.6 million and derecognized the corresponding interest rate swap asset. The remaining amount in AOCI related to the hedging relationship was reclassified into earnings when the hedged forecasted transaction was reported in earnings.

As of September 27, 2023, there were no estimated net gains to be included in AOCI related to the Company’s cash flow hedge that would be reclassified into earnings, based on current Term SOFR interest rates.

The following table summarizes the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Interest expense on hedged portion of debt	$	—	$	92	$	—	$	439
Interest income on interest rate swap		—		(369)		(170)		(197)
Interest (income) expense on debt and derivatives, net	$	—	$	(277)	$	(170)	$	242

The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the thirteen and thirty-nine weeks ended September 27, 2023 and September 28, 2022 (in thousands):


	Thirteen Weeks Ended								Thirty-Nine Weeks Ended
					Gain Reclassified from								Gain Reclassified from
	Net Gain Recognized in OCI				AOCI into Interest Income				Net Gain Recognized in OCI				AOCI into Interest Income
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022		September 27, 2023			September 28, 2022	September 27, 2023			September 28, 2022
Interest rate swap	$	—	$	43	$	—	$	(369)	$	—	$	974	$	(170)	$	(197)

See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” for information about the fair value of the Company’s derivative asset.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1I
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

OTHER NONCURRENT LIABILITIES

9 Months Ended

Sep. 27, 2023

Other Noncurrent Liabilities

6. OTHER NONCURRENT LIABILITIES

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


	September 27, 2023		December 28, 2022
Deferred franchise and development fees	$	6,584	$	5,767
Other		43		89
Total other noncurrent liabilities	$	6,627	$	5,856

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 27, 2023	Dec. 28, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (shares)	100,000,000	100,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Shares designated as Series A Preferred Stock	100,000	100,000
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	200,000,000	200,000,000
Common stock, shares issued (shares)	32,957,470	37,008,061
Common stock, shares outstanding (shares)	32,957,470	37,008,061

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) $ in Thousands, shares in Millions					1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 28, 2023 USD ($)	Dec. 28, 2022 USD ($)	Jul. 27, 2022 USD ($)	Jul. 30, 2014	Sep. 30, 2022 USD ($) restaurant	Sep. 27, 2023 USD ($) restaurant	Sep. 28, 2022 USD ($) restaurant	Sep. 27, 2023 USD ($) segment item restaurant	Sep. 28, 2022 USD ($) restaurant	Dec. 28, 2022 USD ($) item	Nov. 02, 2023 USD ($)	Oct. 31, 2023 shares
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Total amount of outstanding debt						$ 80,000		$ 80,000
Cash available		$ 20,493				13,815		13,815		$ 20,493
Repayments of Lines of Credit								11,000	$ 20,000
Revolving line of credit		66,000				$ 80,000		$ 80,000		66,000
Number of reporting unit \| item								1
Number of operating segments \| segment								1
Restaurants sold \| restaurant						17		18
Goodwill and intangible asset impairment						$ 0		$ 0
Goodwill decrement related to dispositions of restaurants								0		0
Closed-store reserve expense						100		100
Unrecognized tax benefits, accrual of interest or penalties		$ 0				0		0		$ 0
Gain on recovery of insurance proceeds, property, equipment and expenses								242
Gain on recovery of insurance proceeds, lost profits, net								(151)
Received from the insurance								400
Proceeds from disposition of restaurants						7,500		7,722
Gain on sale of restaurants						4,923		5,034
Unrecognized tax benefits, interest or penalties expenses						0	$ 0	0	0
Percentage of cash savings in taxes realized as a result of utilizing net operating losses payable to pre-IPO stockholders				85.00%
Income tax receivable agreement expense (income)						106	(29)	105	(345)
Asset impairment charges						1,000	100	1,000	400
(Gain) loss on disposal of assets						16	21	(34)	129
Provision for income taxes						$ 2,975	$ 1,776	$ 7,661	$ 5,736
Estimated effective tax rate						24.40%	26.20%	26.50%	28.70%
Statutory income tax rate								21.00%
Maximum
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Closed-store reserve expense							$ 100
Income tax receivable agreement expense (income)							$ (100)
Supplier Concentration Risk \| Accounts Payable
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number Of Suppliers \| item								0		1
Supplier Concentration Risk \| Supplier One \| Accounts Payable
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration		41.70%
Supplier Concentration Risk \| Largest Supplier One \| Purchased
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration						26.60%	28.40%	27.00%	28.50%
Geographic Concentration Risk \| Revenue
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration						100.00%	100.00%	100.00%	100.00%
Subsequent Event
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares authorized to be repurchased \| shares												20.0
Revolving Credit Facility \| 2022 Credit Agreement
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Repayments of Lines of Credit						$ 3,000	$ 20,000	$ 11,000	$ 20,000
Revolving line of credit						80,000		80,000
Proceeds from Lines of Credit						$ 23,000		$ 25,000	$ 0
Maximum borrowing capacity			$ 150,000
Senior secured revolving facility term			5 years
Debt Instrument, Maturity Date								Jul. 27, 2027
Revolving Credit Facility \| Subsequent Event \| 2022 Credit Agreement
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Repayments of Lines of Credit	$ 9,000
Revolving line of credit											$ 71,000
California
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of restaurants \| restaurant						1		1
Number of restaurants with ROU asset impairment charges \| restaurant							1		1
NEVADA
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of restaurants \| restaurant						1		1
Greater Los Angeles area market \| Geographic Concentration Risk \| Revenue
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration						71.60%	71.90%	71.10%	71.20%
Closed Store
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Closed-store reserve expense									$ 200
Fire
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of restaurants \| restaurant					1
Fire \| Maximum
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Incurred costs								$ 100
(Gain) loss on disposal of assets					$ 100
Company-operated
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of restaurants \| restaurant						171		171
Franchised
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of restaurants \| restaurant						321		321

PROPERTY AND EQUIPMENT - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023 USD ($) restaurant	Sep. 28, 2022 USD ($) restaurant	Sep. 27, 2023 USD ($) restaurant	Sep. 28, 2022 USD ($) restaurant
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 3,900	$ 3,500	$ 11,300	$ 10,700
Impairment of property and equipment	$ 979	100	$ 979	353
California
Property, Plant and Equipment [Line Items]
Impairment of property and equipment		$ 100		$ 400
Number of restaurants primarily responsible for impairment \| restaurant		1		1
Nevada
Property, Plant and Equipment [Line Items]
Number of restaurants primarily responsible for impairment \| restaurant	1		1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022
Cash flows from operating activities:
Net income	$ 21,203	$ 14,265
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	11,277	10,745
Stock-based compensation expense	2,539	2,806
Income tax receivable agreement expense (income)	105	(345)
Fire insurance proceeds for expenses paid and lost profit	151
(Gain) loss on disposal of assets	(34)	129
Gain on recovery of insurance proceeds, property, equipment and expenses, net	(242)
Impairment of property and equipment	1,032	392
Gain on disposition of restaurants	(5,034)
Amortization of deferred financing costs	153	292
Deferred income taxes, net	1,138	2,351
Changes in operating assets and liabilities:
Accounts and other receivables	462	(1,539)
Inventories	403	108
Prepaid expenses and other current assets	8	755
Income taxes payable (receivable)	6,391	(1,459)
Other assets	(236)	(150)
Accounts payable	(5,798)	1,285
Accrued salaries and vacation	(1,619)	(4,564)
Accrued insurance	437	93
Other accrued expenses and liabilities	173	(3,257)
Net cash flows provided by operating activities	32,509	21,907
Cash flows from investing activities:
Proceeds from disposition of restaurants	7,722
Proceeds from fire insurance for property and equipment	163
Purchase of property and equipment	(15,297)	(13,022)
Net cash flows used in investing activities	(7,412)	(13,022)
Cash flows from financing activities:
Proceeds from borrowings on revolver and swingline loans	25,000
Payments on revolver and swingline loan	(11,000)	(20,000)
Minimum tax withholdings related to net share settlements	(217)	(243)
Repurchases of common stock	(46,616)
Proceeds from issuance of common stock upon exercise of stock options, net of expenses	1,171	1,580
Payment of obligations under finance leases	(113)	(124)
Deferred financing costs for revolver loan		(869)
Net cash flows used in by financing activities	(31,775)	(19,656)
Decrease in cash and cash equivalents	(6,678)	(10,771)
Cash and cash equivalents, beginning of period	20,493	30,046
Cash and cash equivalents, end of period	13,815	19,275
Supplemental cash flow information
Cash paid during the period for interest	3,554	819
Cash paid during the period for income taxes	54	5,100
Unpaid purchases of property and equipment	4,476	$ 3,030
Unpaid repurchases of common stock	$ 430

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 27, 2023

Related Party Transactions

9. RELATED PARTY TRANSACTIONS

On March 28, 2023, Trimaran Pollo Partners, L.L.C. (“LLC”) and certain of LLC’s affiliates (collectively, the “Trimaran Group”) distributed substantially all of the shares of the Company’s common stock held by the Trimaran Group to their respective investors, members and limited partners. The Trimaran Group intends to subsequently liquidate or distribute its remaining assets and wind up.

On August 7, 2023, the Company entered into the “Repurchase Agreement with the Sellers, pursuant to which the Company agreed to purchase an aggregate of 2,500,000 shares of the Company’s common stock from the Sellers at a price of $10.63 per share, representing the closing price of such shares as listed on Nasdaq on August 7, 2023, for a total purchase price of $26.6 million. The repurchase was completed in August 2023.

Prior to the repurchase, Freeman Spogli, collectively with the Sellers and certain other funds managed by Freeman Spogli, was the Company’s largest stockholder. In addition, John Roth, a director of the Company until his resignation on August 16, 2023, is a general partner of Freeman Spogli and its chief executive officer.

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022	Dec. 28, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Property and equipment, net	$ 82,187		$ 82,187		$ 78,644
Impairment of property and equipment	$ 979	$ 100	979	$ 353
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring Costs and Asset Impairment Charges			Restructuring Costs and Asset Impairment Charges
Impairment Losses of Right-of-Use Assets	$ 0	39	39	$ 39
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Property and equipment, net		0		0
Right-of-Use Assets, Net	254	332	254	332
Fair Value, Measurements, Nonrecurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Property and equipment, net		0		0
Right-of-Use Assets, Net	0	0	0	0
Fair Value, Measurements, Nonrecurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Property and equipment, net		0		0
Right-of-Use Assets, Net	0	0	0	0
Fair Value, Measurements, Nonrecurring \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Property and equipment, net		0		0
Right-of-Use Assets, Net	$ 254	$ 332	$ 254	$ 332

STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022	Dec. 28, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, options outstanding (shares)	1,169,959		1,169,959		1,068,179
Common stock, options vested (in shares)	480,160		480,160
Common stock, options unvested (shares)	689,799		689,799
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			482,701
Granted (shares)			391,432
Unrecognized compensation expense	$ 3,000		$ 3,000
Unrecognized compensation expense, recognition period			3 years 2 months 4 days
Stock-based compensation expense	$ 900	$ 1,000	$ 2,539	$ 2,806
Premium Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, options outstanding (shares)	0		0
Restricted Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 5,400		$ 5,400
Unrecognized compensation expense, recognition period			2 years 7 months 28 days

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 27, 2023	Oct. 27, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 27, 2023
Document Transition Report	false
Entity File Number	001-36556
Entity Registrant Name	EL POLLO LOCO HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-3563182
Entity Address, Address Line One	3535 Harbor Blvd.
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Costa Mesa
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92626
City Area Code	714
Local Phone Number	599-5000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Smaller reporting company	false
Emerging Growth Company	false
Shell Company	false
Entity Common Stock, Shares Outstanding		32,953,268
Entity Central Index Key	0001606366
Current Fiscal Year End Date	--12-27
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock, par value $0.01 per share
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	LOCO
Security Exchange Name	NASDAQ
Rights to Purchase Series A Preferred Stock, par value $0.01 per share
Document Information [Line Items]
Title of 12(b) Security	Rights to Purchase Series A Preferred Stock, par value $0.01 per share
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 27, 2023

Schedule of changes in Stock Options


				Weighted-Average		Aggregate
		Weighted-Average		Contractual Life		Intrinsic Value
	Shares	Exercise Price		Life (Years)		(in thousands)
Outstanding – December 28, 2022	1,068,179	$	9.92
Grants	482,701		9.27
Exercised	(219,960)		5.32
Forfeited, cancelled or expired	(160,961)	$	11.47
Outstanding – September 27, 2023	1,169,959	$	10.30		7.17	$	—
Vested and expected to vest at September 27, 2023	1,156,593	$	10.31		7.14	$	—
Exercisable at September 27, 2023	480,160	$	11.31		4.26	$	—

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions


	September 27, 2023		September 28, 2022
Expected volatility	43.7	%	43.0	%
Risk-free interest rate	3.6	%	2.9	%
Expected term (years)	6.25		6.25
Expected dividends	—		—

Schedule of Changes in Restricted Shares


		Weighted-Average
	Shares	Fair Value
Unvested shares at December 28, 2022	545,480	$	12.02
Granted	391,432	$	9.18
Released	(181,490)	$	12.20
Forfeited, cancelled, or expired	(108,004)	$	11.93
Unvested shares at September 27, 2023	647,418	$	10.27

STOCK-BASED COMPENSATION - Stock Repurchase Plan (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended	9 Months Ended
	Aug. 07, 2023	Sep. 27, 2023	Sep. 27, 2023	Dec. 28, 2022	Oct. 11, 2022
Equity, Class of Treasury Stock [Line Items]
Common stock, par value (usd per share)		$ 0.01	$ 0.01	$ 0.01
2022 Stock Repurchase Plan
Equity, Class of Treasury Stock [Line Items]
Authorized amount under share repurchase agreement					$ 20.0
Shares repurchased		206,214	2,030,850
Total consideration		$ 1.9	$ 20.0
2023 Stock Repurchase Plan
Equity, Class of Treasury Stock [Line Items]
Total consideration	$ 26.6
Number of shares authorized to be repurchased	2,500,000
Shares repurchased price	$ 10.63

Number of shares that have been repurchased during the period and have not been retired and are not held in treasury. Some state laws may govern the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.

Equity impact of the value of stock that has been repurchased during the period and has not been retired and is not held in treasury. Some state laws may mandate the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.

Revenue From Contract With Customers [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 27, 2023

Revenue from Contracts with Customers

10. REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

Nature of products and services

The Company has two revenue streams, company-operated restaurant revenue and franchise related revenue.

Company-operated restaurant revenue

Revenues from the operation of company-operated restaurants are recognized as food and beverage products are delivered to customers and payment is tendered at the time of sale. The Company presents sales, net of sales-related taxes and promotional allowances.

The Company offers a loyalty rewards program, which awards a customer points for dollars spent. 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, if necessary, on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty points terms. As of September 27, 2023 and December 28, 2022, the revenue allocated to loyalty points that have not been redeemed was $0.6 million and $0.5 million, respectively, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities. The Company expects the loyalty points to be redeemed and recognized over a one-year period.

The Company sells gift cards to its customers in the restaurants and through selected third parties. The gift cards sold to customers have no stated expiration dates and are subject to actual and/or potential escheatment rights in several of the jurisdictions in which the Company operates. Furthermore, due to these escheatment rights, the Company does not recognize breakage related to the sale of gift cards due to the immateriality of the amount remaining after escheatment. The Company recognizes income from gift cards when redeemed by the customer. Unredeemed gift card balances are deferred and recorded as other accrued expenses on the accompanying condensed consolidated balance sheets.

Franchise and franchise advertising revenue

Franchise revenue consists of franchise royalties, initial franchise fees, license fees due from franchisees, IT support services, and rental income for subleases to franchisees. Franchise advertising revenue consists of advertising contributions received from franchisees. These revenue streams are made up of the following performance obligations:

●

Franchise license - inclusive of advertising services, development agreements, training, access to plans and help desk services.

●

Discounted renewal option.

●

Hardware services.

The Company satisfies the performance obligation related to the franchise license over the term of the franchise agreement, which is typically 20 years. Payment for the franchise license consists of three components, a fixed-fee related to the franchise/development agreement, a sales-based royalty fee and a sales-based advertising fee. The fixed fee, as determined by the signed development and/or franchise agreement, is due at the time the development agreement is entered into, and/or when the franchise agreement is signed, and does not include a finance component.

The sales-based royalty fee and sales-based advertising fee are considered variable consideration and will continue to be recognized as revenue as such sales are earned by the franchisees. Both sales-based fees qualify under the royalty constraint exception, and do not require an estimate of future transaction price. Additionally, the Company is utilizing the practical expedient available under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) regarding disclosure of the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for sales-based royalties.

In certain franchise agreements, the Company offers a discounted renewal to incentivize future renewals after the end of the initial franchise term. As this is considered a separate performance obligation, the Company allocates a portion of the initial franchise fee to this discounted renewal, on a pro-rata basis, assuming a 20-year renewal. This performance obligation is satisfied over the renewal term, typically 10 or 20 years, while payment is fixed and due at the time the renewal is signed.

The Company purchases hardware, such as scanners, printers, cash registers and tablets, from third party vendors, which it then sells to franchisees. As the Company is considered the principal in this relationship, payment for the hardware is considered revenue, and is received upon transfer of the goods from the Company to the franchisee. As of September 27, 2023, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.

Disaggregated revenue

The following table presents the Company’s revenues disaggregated by revenue source and market (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022			September 27, 2023		September 28, 2022
Core Market⁽¹⁾:
Company-operated restaurant revenue	$	97,966	$	98,732	$	289,534	$	289,798
Franchise revenue		5,021		4,501		14,454		13,559
Franchise advertising fee revenue		3,456		3,336		10,098		10,008
Total core market	$	106,443	$	106,569	$	314,086	$	313,365
Non-Core Market⁽²⁾:
Company-operated restaurant revenue	$	4,737	$	4,442	$	14,943	$	13,787
Franchise revenue		5,234		5,042		15,592		15,303
Franchise advertising fee revenue		3,985		3,825		11,796		11,582
Total non-core market	$	13,956	$	13,309	$	42,331	$	40,672
Total revenue	$	120,399	$	119,878	$	356,417	$	354,037

(1)	Core Market includes markets with existing company-operated restaurants at the time of the Company’s IPO on July 28, 2014.

(2)	Non-Core Market includes markets entered into by the Company subsequent to the IPO date.

The following table presents the Company’s revenues disaggregated by geographic market:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Greater Los Angeles area market	71.6	%	71.9	%	71.1	%	71.2	%
Other markets	28.4	%	28.1	%	28.9	%	28.8	%
Total	100	%	100	%	100	%	100	%

Contract balances

The following table provides information about the change in the franchise contract liability balances during the thirty-nine weeks ended September 27, 2023 and September 28, 2022 (in thousands):


December 28, 2022	$	6,377
Revenue recognized - beginning balance		(545)
Additional contract liability		1,351
September 27, 2023	$	7,183

December 29, 2021	$	6,328
Revenue recognized - beginning balance		(558)
Additional contract liability		618
September 28, 2022	$	6,388

The Company’s franchise contract liability includes development fees, initial franchise and license fees, franchise renewal fees, lease subsidies and royalty discounts and is included within other accrued expenses and current liabilities and other noncurrent liabilities within the accompanying condensed consolidated balance sheets. The Company receives area development fees from franchisees when they execute multi-unit area development agreements. Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise

agreement. Revenue is recognized from these agreements as the underlying performance obligation is satisfied, which is over the term of the agreement.

The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of September 27, 2023 (in thousands):


Franchise revenues:
2023	$	157
2024		597
2025		551
2026		529
2027		508
Thereafter		4,841
Total	$	7,183

Changes in the loyalty rewards program liability included in deferred revenue within other accrued expenses and current liabilities on the condensed consolidated balance sheets were as follows (in thousands):


	September 27, 2023		December 28, 2022
Loyalty rewards liability, beginning balance	$	526	$	687
Revenue deferred		1,571		2,754
Revenue recognized		(1,464)		(2,915)
Loyalty rewards liability, ending balance	$	633	$	526

The Company expects all loyalty points revenue related to performance obligations unsatisfied as of September 27, 2023 to be recognized within one year.

Gift Cards

The gift card liability included in other accrued expenses and current liabilities on the condensed consolidated balance sheets was as follows (in thousands):


	September 27, 2023		December 28, 2022
Gift card liability	$	4,047	$	4,667

Revenue recognized from the redemption of gift cards that was included in other accrued expenses and current liabilities at the beginning of the year was as follows (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Revenue recognized from gift card liability balance at the beginning of the year	$	205	$	237	$	817	$	967

Contract Costs

The Company does not currently incur costs to obtain or fulfill a contract that would be considered contract assets under Topic 606.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

SHAREHOLDER RIGHTS AGREEMENT [Abstract]

SHAREHOLDER RIGHTS AGREEMENT

9 Months Ended

Sep. 27, 2023

Shareholder Rights Agreement

12. SHAREHOLDER RIGHTS AGREEMENT

On August 8, 2023, the Company’s Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each share of common stock, par value $0.01 per share, of the Company (the “Common Shares”) outstanding on August 18, 2023 to the stockholders of record on that date. In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of August 8, 2023, between the Company and Equiniti Trust Company, LLC, as rights agent. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Shares”) at a price of $53.75 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment.

Under the Rights Agreement, the Rights will generally be exercisable only in the event that a person or group of affiliated or associated persons (such person or group being an “Acquiring Person”), other than certain exempt persons, acquires (or commences a tender offer or exchange offer the consummation of which would result in) beneficial ownership of 12.5% or more of the outstanding Common Shares. In such case (with certain limited exceptions), each

holder of a Right (other than the Acquiring Person, whose Rights shall become void) will have the right to receive, upon exercise at the then current exercise price of the Right, Common Shares (or, if the Board so elects, cash, securities, or other property) having a value equal to two times the exercise price of the Right.

At any time after any person or group becomes an Acquiring Person, the Board may exchange the Rights at an exchange ratio of one Common Share per Right (subject to adjustment).

If, at any time after a person or group becomes an Acquiring Person, (i) the Company engages in a consolidation or merger and, in connection there with all or part of the Common Shares are or will be changed into or exchanged for stock or other securities of any other person or cash or any other property; or (ii) 50% or more of the Company’s consolidated assets or earning power are sold, then each holder of a Right will thereafter have the right to receive, upon exercise at the then current exercise price of the Right, that number of shares of common stock of the acquiring company having a market value of two times the exercise price of the Right.

At any time prior to the time any person or group becomes an Acquiring Person, the Board may redeem the Rights at a price of $0.001 per Right (the “Redemption Price”). Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. The Rights will expire at the close of business on August 7, 2024.

PROPERTY AND EQUIPMENT - Schedule of Costs and Related Accumulated Depreciation and Amortization of Major Classes of Property (Details) - USD ($) $ in Thousands	Sep. 27, 2023	Dec. 28, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 249,403	$ 251,931
Less: accumulated depreciation and amortization	(167,216)	(173,287)
Property and equipment, net	82,187	78,644
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	12,323	12,323
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	145,589	153,377
Other property and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	84,085	83,035
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 7,406	$ 3,196

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 27, 2023

Schedule of Other Accrued Expenses and Current Liabilities

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


	September 27, 2023		December 28, 2022
Accrued sales and property taxes	$	5,950	$	5,270
Gift card liability		4,047		4,667
Loyalty rewards program liability		633		526
Accrued advertising		710		831
Accrued legal settlements and professional fees		1,091		1,303
Deferred franchise and development fees		599		610
Other		1,945		1,913
Total other accrued expenses and current liabilities	$	14,975	$	15,120

OTHER NONCURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 27, 2023

Schedule of Other Noncurrent Liabilities

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


	September 27, 2023		December 28, 2022
Deferred franchise and development fees	$	6,584	$	5,767
Other		43		89
Total other noncurrent liabilities	$	6,627	$	5,856

EARNINGS PER SHARE

9 Months Ended

Sep. 27, 2023

Earnings Per Share [Abstract]

Earnings Per Share

8. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen and thirty-nine weeks ended September 27, 2023 and September 28, 2022. Diluted EPS is calculated using the weighted-average number of shares of common stock outstanding and potentially dilutive during the period, using the treasury stock method.

Below are basic and diluted EPS data for the periods indicated (in thousands except for share and per share data):



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Numerator:
Net income	$	9,229	$	5,009	$	21,203	$	14,265
Denominator:
Weighted-average shares outstanding—basic		33,412,674		36,402,899		35,026,731		36,329,938
Weighted-average shares outstanding—diluted		33,490,004		36,507,050		35,179,483		36,491,624
Net income per share—basic	$	0.28	$	0.14	$	0.61	$	0.39
Net income per share—diluted	$	0.28	$	0.14	$	0.60	$	0.39
Anti-dilutive securities not considered in diluted EPS calculation		1,216,015		1,434,825		790,077		944,183

Below is a reconciliation of basic and diluted share counts:



	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 27, 2023	September 28, 2022	September 27, 2023	September 28, 2022
Weighted-average shares outstanding—basic	33,412,674	36,402,899	35,026,731	36,329,938
Dilutive effect of stock options and restricted shares	77,330	104,151	152,752	161,686
Weighted-average shares outstanding—diluted	33,490,004	36,507,050	35,179,483	36,491,624

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 27, 2023

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview

El Pollo Loco Holdings, Inc. (“Holdings”) is a Delaware corporation headquartered in Costa Mesa, California. Holdings and its direct and indirect subsidiaries are collectively referred to herein as the “Company.” The Company’s activities are conducted principally through its indirect wholly-owned subsidiary, El Pollo Loco, Inc. (“EPL”), which develops, franchises, licenses, and operates quick-service restaurants under the name El Pollo Loco® and operates under one operating segment. At September 27, 2023, the Company operated 171 and franchised 321 El Pollo Loco restaurants.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position and results of operations and cash flows for the periods presented. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The condensed consolidated financial statements and related notes do not include all information and footnotes required by GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 28, 2022.

The Company uses a 52- or 53-week fiscal year ending on the last Wednesday of the calendar year. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations, and the fourth quarter includes 14 weeks of operations. Every six or seven years, a 53-week fiscal year occurs. Fiscal 2023 and 2022 are both 52-week years, ending on December 27, 2023 and December 28, 2022, respectively. Revenues, expenses, and other financial and operational figures may be elevated in a 53-week year.

Holdings has no material assets or operations. Holdings and Holdings’ direct subsidiary, EPL Intermediate, Inc. (“Intermediate”), guarantee EPL’s 2022 Revolver (as defined below) on a full and unconditional basis (see Note 4, “Long-Term Debt”), and Intermediate has no subsidiaries other than EPL. EPL is a separate and distinct legal entity and has no obligation to make funds available to Intermediate. EPL and Intermediate may pay dividends to Intermediate and to Holdings, respectively, subject to the terms of the 2022 Revolver.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Holdings and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenue and expenses during the periods reported. Actual results could materially differ from those estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, insurance reserves, lease accounting matters, stock-based compensation, contingent liabilities and income tax valuation allowances.

Cash and Cash Equivalents

The Company considers all liquid instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Liquidity

The Company’s principal liquidity and capital requirements are new restaurants, existing restaurant capital investments (remodels and maintenance), interest payments on its debt, lease obligations and working capital and general corporate needs. At September 27, 2023, the Company’s total debt was $80.0 million. The Company’s ability to make payments on its indebtedness and to fund planned capital expenditures depends on available cash and its ability to generate adequate cash flows in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond the Company’s control. Based on current operations, the Company believes that its cash flow from operations, available cash of $13.8 million at September 27, 2023 and the outstanding borrowing availability under the 2022 Revolver will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.

Subsequent Events

Subsequent to the quarter-end, on November 2, 2023, the Company announced that Laurance Roberts, the Company’s Chief Executive Officer and President, is leaving his position as Chief Executive Officer and President and as a member of the Company’s Board of Directors effective as of the close of business on November 3, 2023. In connection with Mr. Roberts’ departure, the Board has appointed Maria Hollandsworth as interim Chief Executive Officer and President of the Company, effective as of November 4, 2023. Ms. Hollandsworth currently serves as Chief Operating Officer of the Company and will continue in that role during her tenure as interim Chief Executive Officer and President. To help facilitate the transition from Mr. Roberts to Ms. Hollandsworth, the Company has retained Mr. Roberts as a consultant from November 4, 2023 through December 28, 2023 pursuant to a Release and Consulting Agreement dated November 1, 2023 between the Company and Mr. Roberts.

Further, on October 31, 2023, the Company’s Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $20.0 million of shares of the Company’s common stock. The repurchase program will terminate on March 31, 2025, may be modified, suspended or discontinued at any time, and does not obligate the Company to acquire any particular number of shares.

Lastly, the Company paid down $9.0 million on its 2022 Revolver and outstanding borrowings as of November 2, 2023 were $71.0 million.

Concentration of Risk

Cash and cash equivalents are maintained at financial institutions and, at times, these balances may exceed federally-insured limits. The Company has never experienced any losses related to these balances.

The Company had no supplier for which amounts due totaled more than 10.0% of the Company’s accounts payable at September 27, 2023. As of December 28, 2022, the Company had one supplier to whom amounts due totaled 41.7% of the Company’s accounts payable. Purchases from the Company’s largest supplier totaled 26.6% and 27.0% of total expenses for the thirteen and thirty-nine weeks ended September 27, 2023, respectively, and 28.4% and 28.5% of total expenses for the thirteen and thirty-nine weeks ended September 28, 2022, respectively.

Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.6% and 71.1% of total revenue for the thirteen and thirty-nine weeks ended September 27, 2023, respectively, and 71.9% and 71.2% for the thirteen and thirty-nine weeks ended September 28, 2022, respectively.

Goodwill and Indefinite Lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of trademarks. Goodwill represents the excess of cost over fair value of net identified assets acquired in business combinations accounted for under the purchase method. The Company

does not amortize its goodwill and indefinite-lived intangible assets. Goodwill resulted from the acquisition of certain franchise locations.

Upon the sale or refranchising of a restaurant, the Company evaluates whether there is a decrement of goodwill. The amount of goodwill included in the cost basis of the asset sold is determined based on the relative fair value of the portion of the reporting unit disposed of compared to the fair value of the reporting unit retained. The Company reports as one reporting unit. The fair value of the portion of the reporting unit disposed of in a refranchising is determined by reference to the discounted value of the future cash flows expected to be generated by the restaurant and retained by the franchisee, which includes a deduction for the anticipated, future royalties the franchisee will pay the Company associated with the franchise agreement entered into simultaneously with the refranchising transition. The fair value of the reporting unit retained is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise agreements. As such, the fair value of the reporting unit retained can include expected cash flows from future royalties from those restaurants currently being refranchised, future royalties from existing franchise businesses and company restaurant operations. The Company did not record any decrement to goodwill related to the disposition of restaurants in fiscal 2022 or the thirty-nine weeks ended September 27, 2023.

The Company performs an annual impairment test for goodwill during the fourth fiscal quarter of each year, or more frequently if impairment indicators arise.

The Company reviews goodwill for impairment utilizing either a qualitative assessment or a fair value test by comparing the fair value of a reporting unit with its carrying amount. If the Company decides that it is appropriate to perform a qualitative assessment and concludes that the fair value of a reporting unit more likely than not exceeds its carrying value, no further evaluation is necessary. If the Company performs the fair value test, the Company will compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit.

The Company performs an annual impairment test for indefinite-lived intangible assets during the fourth fiscal quarter of each year, or more frequently if impairment indicators arise. An impairment test consists of either a qualitative assessment or a comparison of the fair value of an intangible asset with its carrying amount. The excess of the carrying amount of an intangible asset over its fair value is recognized as an impairment loss.

The assumptions used in the estimate of fair value are generally consistent with the past performance of the Company’s reporting segment and are also consistent with the projections and assumptions that are used in current operating plans. These assumptions are subject to change as a result of changing economic and competitive conditions.

The Company determined that, in connection with the sale of 18 units, there were indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 27, 2023. After completing the impairment analysis, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 27, 2023.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

●

Level 1: Quoted prices for identical instruments in active markets.

●

Level 2: Observable prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.

●

Level 3: Unobservable inputs used when little or no market data is available.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. In other words, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances (e.g., when there is evidence of impairment).

The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the thirteen and thirty-nine weeks ended September 27, 2023, reflecting certain property and equipment assets and right-of-use (“ROU”) assets for which an impairment loss was recognized during the corresponding periods, as discussed under Note 2, “Property and Equipment” and immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 27, 2023 Using						Ended September 27, 2023		Ended September 27, 2023
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	979	$	979
Certain ROU assets, net	$	254	$	—	$	—	$	254	$	—	$	39

The following non-financial instruments were measured at fair value on a nonrecurring basis as of and for the thirteen and thirty-nine weeks ended September 28, 2022, reflecting certain property and equipment assets and ROU assets for which an impairment loss was recognized during the corresponding periods, as discussed immediately below under “Impairment of Long-Lived Assets and ROU Assets” (in thousands):


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 28, 2022 Using						Ended September 28, 2022		Ended September 28, 2022
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	100	$	353
Certain ROU assets, net	$	332	$	—	$	—	$	332	$	39	$	39

Impairment of Long-Lived Assets and ROU Assets

The Company reviews its long-lived and ROU assets for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain long-lived and ROU assets may not be recoverable. The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s average unit volume for the last twelve months is less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has closed or been subleased and future estimated sublease income is less than lease payments under the head lease. If the Company concludes that the carrying value of certain long-lived and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value. The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs. There is uncertainty in the projected undiscounted future cash flows used in the Company’s impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material. The Company determined that triggering events occurred for certain restaurants during the thirty-nine weeks ended September 27, 2023 that required an impairment review of certain of the Company’s long-lived and ROU assets. Based on the results of the analysis, the Company recorded non-cash impairment charges of $1.0 million for both the thirteen and thirty-nine weeks ended September 27, 2023, primarily related to the carrying value of the ROU assets of one restaurant in California and the carrying value of the long-lived assets of one restaurant in Nevada.

The Company recorded a non-cash impairment charge of $0.1 million and $0.4 million for the thirteen and thirty-nine weeks ended September 28, 2022, respectively, primarily related to the carrying value of the long-lived assets of one restaurant in California. Given the inherent uncertainty in projecting results for newer restaurants in newer

markets, as well as the impact of COVID-19 (and related economic effects) and the current macroeconomic environment, the Company is 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.

Closed-Store Reserves

When a restaurant is closed, the Company 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 common area maintenance (“CAM”) payments relating to closed restaurants are included within closed-store expense. During both the thirteen and thirty-nine weeks ended September 27, 2023, the Company recognized $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations. During the thirteen and thirty-nine weeks ended September 28, 2022, the Company recognized less than $0.1 million and $0.2 million, respectively, of closed-store reserve expense primarily related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.

Derivative Financial Instruments

The Company used an interest rate swap, a derivative instrument, to hedge interest rate risk and not for trading purposes. The derivative contract was entered into with a financial institution. In connection with the Company’s entry into the 2022 Credit Agreement (as defined below), it terminated the interest rate swap on July 28, 2022.

The Company recorded the derivative instrument on its condensed consolidated balance sheets at fair value. The derivative instrument qualified as a hedging instrument in a qualifying cash flow hedge relationship, and the gain or loss on the derivative instrument was reported as a component of accumulated other comprehensive (loss) income (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For any derivative instruments not designated as hedging instruments, the gain or loss will be recognized in earnings immediately. If a derivative previously designated as a hedge is terminated, or no longer meets the qualifications for hedge accounting, any balances in AOCI will be reclassified to earnings immediately.

Gain on Recovery of Insurance Proceeds, Lost Profits

In September 2022, one of the Company’s restaurants incurred damage resulting from a fire. In 2022, the Company disposed of less than $0.1 million of assets related to the fire. The restaurant was reopened for business on October 27, 2022. In fiscal 2023, the Company incurred costs directly related to the fire of less than $0.1 million. The Company recognized gains of $0.2 million, related to the reimbursement of property and equipment and expenses incurred and $0.2 million related to the reimbursement of lost profits. The gain on recovery of insurance proceeds and reimbursement of lost profits, net of the related costs, is included in the accompanying condensed consolidated statements of income, for the thirty-nine weeks ended September 27, 2023, as a reduction of company restaurant expenses. The Company received from the insurance company cash of $0.4 million, net of the insurance deductible, during fiscal 2023.

Gain on Disposition of Restaurants

During the thirteen and thirty-nine weeks ended September 27, 2023, the Company completed the sale of 17 and 18 restaurants, respectively, within California, Utah and Texas to existing franchisees. The Company has determined that these restaurant dispositions represent multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on their relative standalone selling price. Cash proceeds included upfront consideration for the sale of the restaurants and franchise fees. The cash consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements. The Company initially defers and subsequently recognizes the franchise fees over the term of the franchise agreement. During the thirteen and thirty-nine weeks ended September 27, 2023, these sales resulted in cash proceeds of $7.5 million and $7.7 million, respectively, and a net gain on sale of restaurant of $4.9 million and $5.0 million, respectively. Since the date of their sale, these restaurants are now included in the total number of franchised El Pollo Loco restaurants.

Income Taxes

The provision for income taxes, income taxes payable and deferred income taxes is determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If, after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by charging to tax expense a reserve for the portion of deferred tax assets which are not expected to be realized.

The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file.

When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect the Company’s condensed consolidated financial position, results of operations, and cash flows.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 27, 2023 or at December 28, 2022. The Company did not recognize interest or penalties during the thirteen and thirty-nine weeks ended September 27, 2023 and September 28, 2022, respectively, since there were no material unrecognized tax benefits. Management believes no significant changes to the amount of unrecognized tax benefits will occur within the next twelve months.

On July 30, 2014, the Company entered into the income tax receivable agreement (the “TRA”), which calls for the Company to pay to its pre-initial public offering (“IPO”) stockholders 85% of the savings in cash that the Company realizes in its income taxes as a result of utilizing its net operating losses (“NOLs”) and other tax attributes attributable to preceding periods. For both the thirteen and thirty-nine weeks ended September 27, 2023, the Company recorded income tax receivable agreement expense of $0.1 million, and for the thirteen and thirty-nine weeks ended September 28, 2022, the Company recorded income tax receivable agreement income of less than $0.1 million and $0.3 million, respectively, in each case, related to the amortization of interest expense related to the total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income.

For the quarter ended September 27, 2023, the Company recorded an income tax provision of $3.0 million, reflecting an estimated effective tax rate of 24.4%. For the quarter ended September 28, 2022, the Company recorded an income tax provision of $1.8 million, reflecting an estimated effective tax rate of approximately 26.2%. For the year-to-date period ended September 27, 2023, the Company recorded an income tax provision of $7.7 million, reflecting an estimated effective tax rate of approximately 26.5%. For the year-to-date period ended September 28, 2022, the Company recorded an income tax provision of $5.7 million, reflecting an estimated effective tax rate of approximately 28.7%. The difference between the 21.0% statutory rate and the effective tax rate of 26.5% for the year-to-date period ended September 27, 2023 is primarily a result of state taxes, a non-deductible executive compensation, partially offset by a Work Opportunity Tax Credit benefit.

REVENUE FROM CONTRACTS WITH CUSTOMERS - Unsatisfied Performance Obligation (Details) - Franchise revenue $ in Thousands	Sep. 27, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unsatisfied performance obligations	$ 7,183
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-09-28
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	3 months
Unsatisfied performance obligations	$ 157
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unsatisfied performance obligations	$ 597
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unsatisfied performance obligations	$ 551
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-12-31
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unsatisfied performance obligations	$ 529
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-12-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unsatisfied performance obligations	$ 508
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-12-28
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Unsatisfied performance obligations	$ 4,841

COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Millions	9 Months Ended
	Sep. 27, 2023 USD ($) agreement lease
Officers
Other Commitments [Line Items]
Number of at-will employment agreements \| agreement	2
Property Lease Guarantee
Other Commitments [Line Items]
Number of leases assigned to franchisees \| lease	3
Latest lease expiration year	2038
Contingent lease obligations, maximum exposure	$ 3.9
Contingent lease obligations, maximum exposure, if discounted at estimated pre-tax cost of debt	2.6
Chicken Acquisition Corp
Other Commitments [Line Items]
Purchase commitments, estimated obligations	$ 14.9

LONG-TERM DEBT - Interest Rate Swap (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Jul. 28, 2022	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022	Dec. 25, 2019
Debt Instrument [Line Items]
Interest income on interest rate swap		$ (277)	$ (170)	$ 242
Net Gain recognized in OCI		43		974
Gain Reclassified from AOCI into Interest Income		369	170	197
Interest Rate Swap
Debt Instrument [Line Items]
Derivative Asset, Notional Amount					$ 40,000
Interest income on interest rate swap		(369)	(170)	(197)
Net Gain recognized in OCI		43		974
Gain Reclassified from AOCI into Interest Income		(369)	(170)	(197)
Interest Rate Swap \| 2022 Credit Agreement
Debt Instrument [Line Items]
Proceeds from swap	$ 600
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months			$ 0
Hedged Debt Instrument
Debt Instrument [Line Items]
Interest income on interest rate swap		$ 92		$ 439

REVENUE FROM CONTRACTS WITH CUSTOMERS - Revenues Disaggregated by Revenue Source and Market (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 120,399	$ 119,878	$ 356,417	$ 354,037
Core Market
Disaggregation of Revenue [Line Items]
Total revenue	106,443	106,569	314,086	313,365
Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	13,956	13,309	42,331	40,672
Company-operated restaurant revenue
Disaggregation of Revenue [Line Items]
Total revenue	102,703	103,174	304,477	303,585
Company-operated restaurant revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	97,966	98,732	289,534	289,798
Company-operated restaurant revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	4,737	4,442	14,943	13,787
Franchise revenue
Disaggregation of Revenue [Line Items]
Total revenue	10,255	9,543	30,046	28,862
Franchise revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	5,021	4,501	14,454	13,559
Franchise revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	5,234	5,042	15,592	15,303
Franchise advertising fee revenue
Disaggregation of Revenue [Line Items]
Total revenue	7,441	7,161	21,894	21,590
Franchise advertising fee revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	3,456	3,336	10,098	10,008
Franchise advertising fee revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	$ 3,985	$ 3,825	$ 11,796	$ 11,582

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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REVENUE FROM CONTRACTS WITH CUSTOMERS - Revenues Disaggregated by Geographic Market (Details) - Revenue - Geographic Concentration Risk	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Disaggregation of Revenue [Line Items]
Percentage of concentration	100.00%	100.00%	100.00%	100.00%
Greater Los Angeles area market
Disaggregation of Revenue [Line Items]
Percentage of concentration	71.60%	71.90%	71.10%	71.20%
Other markets
Disaggregation of Revenue [Line Items]
Percentage of concentration	28.40%	28.10%	28.90%	28.80%

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

Summary of Non-Financial Instruments Measured at Fair Value on Nonrecurring Basis

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 27, 2023	Dec. 28, 2022
Current assets:
Cash and cash equivalents	$ 13,815	$ 20,493
Accounts and other receivables, net	9,622	10,084
Inventories	2,039	2,442
Prepaid expenses and other current assets	3,653	3,662
Income tax receivable		768
Total current assets	29,129	37,449
Property and equipment, net	82,187	78,644
Property and equipment held under finance lease, net	1,434	1,532
Property and equipment held under operating leases, net ("ROU asset")	166,697	165,584
Goodwill	248,674	248,674
Trademarks	61,888	61,888
Deferred tax assets		512
Other assets	3,019	2,935
Total assets	593,028	597,218
Current liabilities:
Current portion of obligations under finance leases	111	110
Current portion of obligations under operating leases	19,425	19,995
Accounts payable	10,087	12,741
Accrued salaries and vacation	7,253	8,873
Accrued insurance	11,557	11,120
Accrued income taxes payable	5,622
Accrued interest	246	291
Current portion of income tax receivable agreement payable	323	263
Other accrued expenses and current liabilities	14,975	15,120
Total current liabilities	69,599	68,513
Revolver loan	80,000	66,000
Obligations under finance leases, net of current portion	1,542	1,626
Obligations under operating leases, net of current portion	166,864	165,149
Deferred taxes	9,270	8,517
Income tax receivable agreement payable, net of current portion	454	409
Other noncurrent liabilities	6,627	5,856
Total liabilities	334,356	316,070
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 100,000 shares designated as Series A Preferred Stock; none issued or outstanding
Common stock, $0.01 par value, 200,000,000 shares authorized; 32,957,470 and 37,008,061 shares issued and outstanding as of September 27, 2023 and December 28, 2022, respectively	329	370
Additional paid-in-capital	248,732	292,244
Retained earnings (accumulated deficit)	9,611	(11,592)
Accumulated other comprehensive income		126
Total stockholders' equity	258,672	281,148
Total liabilities and stockholders' equity	$ 593,028	$ 597,218

OTHER NONCURRENT LIABILITIES - Schedule of Other Noncurrent Liabilities (Detail) - USD ($) $ in Thousands	Sep. 27, 2023	Dec. 28, 2022
Payables And Accruals [Abstract]
Deferred franchise and development fees	$ 6,584	$ 5,767
Other	43	89
Total other noncurrent liabilities	$ 6,627	$ 5,856

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 27, 2023

Accounting Policies [Abstract]


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 27, 2023 Using						Ended September 27, 2023		Ended September 27, 2023
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	979	$	979
Certain ROU assets, net	$	254	$	—	$	—	$	254	$	—	$	39


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 28, 2022 Using						Ended September 28, 2022		Ended September 28, 2022
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	100	$	353
Certain ROU assets, net	$	332	$	—	$	—	$	332	$	39	$	39

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Statements of Other Comprehensive Income [Abstract]
Net income	$ 9,229	$ 5,009	$ 21,203	$ 14,265
Unrealized net gains arising during the period from interest rate swap		43		974
Reclassifications of gains into net income		(369)	(170)	(197)
Income tax benefit (expense)			44	(297)
Other comprehensive (loss) income, net of taxes		(326)	(126)	480
Comprehensive income	$ 9,229	$ 4,683	$ 21,077	$ 14,745

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147480097/470-10-S99-1B

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(B))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480097/470-10-S99-1B

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480097/470-10-S99-1B

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480097/470-10-S99-1B

Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 60B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482689/260-10-45-60B

Reference 32: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Topic 205
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483499/205-20-50-7

Reference 35: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Section 45
-Paragraph 28
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482740/230-10-45-28

Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482790/220-10-45-1A

Reference 37: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
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-Section 45
-Paragraph 1B
-Subparagraph (a)
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Reference 38: http://fasb.org/us-gaap/role/ref/legacyRef
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-Paragraph 2
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Reference 39: http://fasb.org/us-gaap/role/ref/legacyRef
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Principles of Consolidation

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 27, 2023

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Cash and Cash Equivalents

The Company considers all liquid instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Liquidity

Subsequent Events

Lastly, the Company paid down $9.0 million on its 2022 Revolver and outstanding borrowings as of November 2, 2023 were $71.0 million.

Concentration of Risk

Goodwill and Indefinite Lived Intangible Assets

does not amortize its goodwill and indefinite-lived intangible assets. Goodwill resulted from the acquisition of certain franchise locations.

The Company performs an annual impairment test for goodwill during the fourth fiscal quarter of each year, or more frequently if impairment indicators arise.

Fair Value Measurements

●

Level 1: Quoted prices for identical instruments in active markets.

●

Level 3: Unobservable inputs used when little or no market data is available.


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 27, 2023 Using						Ended September 27, 2023		Ended September 27, 2023
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	979	$	979
Certain ROU assets, net	$	254	$	—	$	—	$	254	$	—	$	39


									Thirteen Weeks		Thirty-Nine Weeks
			Fair Value Measurements at September 28, 2022 Using						Ended September 28, 2022		Ended September 28, 2022
	Total		Level 1		Level 2		Level 3		Impairment Losses		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	100	$	353
Certain ROU assets, net	$	332	$	—	$	—	$	332	$	39	$	39

Impairment of Long-Lived Assets and ROU Assets

Closed-Store Reserves

Derivative Financial Instruments

Gain on Recovery of Insurance Proceeds, Lost Profits

Gain on Disposition of Restaurants

Income Taxes

The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file.

REVENUE FROM CONTRACTS WITH CUSTOMERS - Change in Contract Liabilities (Details) - Franchise revenue - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Dec. 28, 2022
Change in Contract with Customer, Liability [Roll Forward]
Loyalty rewards liability, beginning balance	$ 6,377	$ 6,328	$ 6,328
Revenue recognized - beginning balance	(545)	(558)
Additional contract liability	1,351	618
Loyalty rewards liability, ending balance	$ 7,183	$ 6,388	$ 6,377

PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 27, 2023

Property, Plant and Equipment [Abstract]

Schedule of Costs and Related Accumulated Depreciation and Amortization of Major Classes of Property and Equipment

The costs and related accumulated depreciation and amortization of major classes of property and equipment are as follows (in thousands):


	September 27, 2023		December 28, 2022
Land	$	12,323	$	12,323
Buildings and improvements		145,589		153,377
Other property and equipment		84,085		83,035
Construction in progress		7,406		3,196
		249,403		251,931
Less: accumulated depreciation and amortization		(167,216)		(173,287)
	$	82,187	$	78,644

LEASES (Tables)

9 Months Ended

Sep. 27, 2023

LEASES [Abstract]

Schedule of lease cost

The following table presents the Company’s total lease cost, disaggregated by underlying asset (in thousands):


	Thirteen Weeks Ended
	September 27, 2023						September 28, 2022
	Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	18	$	1	$	19	$	18	$	1	$	19
Interest on lease liabilities		9		1		10		10		1		11
Operating lease cost		6,903		43		6,946		6,646		256		6,902
Short-term lease cost		—		2		2		—		4		4
Variable lease cost		150		332		482		151		196		347
Sublease income		(1,280)		—		(1,280)		(1,130)		—		(1,130)
Total lease cost	$	5,800	$	379	$	6,179	$	5,695	$	458	$	6,153


	Thirty-Nine Weeks Ended
	September 27, 2023						September 28, 2022
	Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	55	$	2	$	57	$	55	$	2	$	57
Interest on lease liabilities		29		2		31		32		2		34
Operating lease cost		20,589		342		20,931		19,795		776		20,571
Short-term lease cost		—		6		6		—		11		11
Variable lease cost		422		909		1,331		458		463		921
Sublease income		(3,773)		—		(3,773)		(3,387)		—		(3,387)
Total lease cost	$	17,322	$	1,261	$	18,583	$	16,953	$	1,254	$	18,207

The following table presents the Company’s total lease cost on the condensed consolidated statements of income (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Lease cost – Occupancy and other operating expenses	$	6,043	$	5,969	$	18,101	$	17,709
Lease cost – General & administrative		107		133		375		343
Lease cost – Depreciation and amortization		19		18		57		55
Lease cost – Interest expense		10		11		31		35
Lease cost – Closed-store reserve		—		22		19		65
Total lease cost	$	6,179	$	6,153	$	18,583	$	18,207

During the thirty-nine weeks ended September 27, 2023 and September 28, 2022, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):


	Thirty-Nine Weeks Ended September 27, 2023								Thirty-Nine Weeks Ended September 28, 2022
	Property			Equipment					Property			Equipment
	Leases			Leases			Total		Leases			Leases			Total
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	20,797		$	297		$	21,094	$	20,364		$	737		$	21,101
Financing cash flows used for finance leases	$	70		$	43		$	113	$	82		$	42		$	124

Non-cash investing and financing activities:
Operating lease ROU assets obtained in exchange for lease liabilities:
Operating lease ROU assets	$	15,445		$	54		$	15,499	$	10,486		$	86		$	10,572
Finance lease ROU assets obtained in exchange for lease liabilities:
Finance lease ROU assets	$	—		$	—		$	—	$	—		$	28		$	28
Derecognition of ROU assets due to terminations, impairment or modifications	$	(40)		$	(4)		$	(44)	$	(39)		$	(24)		$	(63)

Other Information
Weighted-average remaining years in lease term—finance leases		17.12			2.46					18.12			3.44
Weighted-average remaining years in lease term—operating leases		10.56			3.42					10.91			1.57
Weighted-average discount rate—finance leases		2.57	%		1.53	%				2.57	%		1.53	%
Weighted-average discount rate—operating leases		4.85	%		4.45	%				4.49	%		3.82	%

Schedule of Financing Leases

Information regarding the Company’s minimum future lease obligations as of September 27, 2023 is as follows (in thousands):


	Finance Leases		Operating Leases
	Minimum		Minimum		Minimum
	Lease		Lease		Sublease
For the Years Ending	Payments		Payments		Income
December 27, 2023	$	38	$	7,050	$	1,021
December 25, 2024		151		27,867		4,041
December 31, 2025		147		26,149		3,653
December 30, 2026		114		23,778		3,289
December 29, 2027		104		22,314		3,239
Thereafter		1,479		134,298		21,645
Total	$	2,033	$	241,456	$	36,888
Less: imputed interest (1.53% - 4.85%)		(380)		(55,167)
Present value of lease obligations		1,653		186,289
Less: current maturities		(111)		(19,425)
Noncurrent portion	$	1,542	$	166,864

Schedule of Operating Leases

Information regarding the Company’s minimum future lease obligations as of September 27, 2023 is as follows (in thousands):


	Finance Leases		Operating Leases
	Minimum		Minimum		Minimum
	Lease		Lease		Sublease
For the Years Ending	Payments		Payments		Income
December 27, 2023	$	38	$	7,050	$	1,021
December 25, 2024		151		27,867		4,041
December 31, 2025		147		26,149		3,653
December 30, 2026		114		23,778		3,289
December 29, 2027		104		22,314		3,239
Thereafter		1,479		134,298		21,645
Total	$	2,033	$	241,456	$	36,888
Less: imputed interest (1.53% - 4.85%)		(380)		(55,167)
Present value of lease obligations		1,653		186,289
Less: current maturities		(111)		(19,425)
Noncurrent portion	$	1,542	$	166,864

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 9,229	$ 5,009	$ 21,203	$ 14,265

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Computation of Basic and Diluted Net Income per Share

LEASES - Lessor (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
LEASES - Lessor (Details) - USD ($) $ in Millions	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Lessor, Lease, Description [Line Items]
Operating Lease, Lease Income	$ 0.1	$ 0.1	$ 0.2	$ 0.3
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Revenue from Contract with Customer, Excluding Assessed Tax	Revenue from Contract with Customer, Excluding Assessed Tax		Revenue from Contract with Customer, Excluding Assessed Tax
Minimum
Lessor, Lease, Description [Line Items]
Lessor, Operating Lease, Term of Contract	3 years		3 years
Maximum
Lessor, Lease, Description [Line Items]
Lessor, Operating Lease, Term of Contract	20 years		20 years

LEASES

9 Months Ended

Sep. 27, 2023

LEASES [Abstract]

Leases

11. LEASES

Nature of leases

The Company’s operations utilize property, facilities, equipment and vehicles leased from others. Additionally, the Company has various contracts with vendors that have been determined to contain an embedded lease in accordance with Topic 842.

As of September 27, 2023, the Company had one lease that it had entered into, but had not yet commenced. The Company does not have control of the property until lease commencement.

Building and facility leases

The majority of the Company’s building and facilities leases are classified as operating leases; however, the Company currently has one facility and 10 equipment leases that are classified as finance leases.

Restaurants are operated under lease arrangements that generally provide for a fixed base rent and, in some instances, contingent rent based on a percentage of gross operating profit or net revenues in excess of a defined amount. Additionally, a number of the Company’s leases have payments that increase at pre-determined dates based on the change in the consumer price index. For all leases, the Company also reimburses the landlord for non-lease components, or items that are not considered components of a contract, such as CAM, property tax and insurance costs. While the Company determined not to separate lease and non-lease components, these payments are based on actual costs, making them variable consideration and excluding them from the calculations of the ROU asset and lease liability.

The initial terms of land and restaurant building leases are generally 20 years, exclusive of options to renew. These leases typically have four 5-year renewal options, which have generally been excluded in the calculation of the ROU asset and lease liability, as they are not considered reasonably certain to be exercised, unless (1) the renewal had already occurred as of the time of adoption of Topic 842, or (2) there have been significant leasehold improvements that have a useful life that extend past the original lease term. Furthermore, there are no residual value guarantees and no restrictions imposed by the lease.

During the thirteen and thirty-nine weeks ended September 27, 2023, the Company reassessed the lease terms on five and 27 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew. As a result of the reassessment, an additional $1.9 million and $15.4 million of ROU asset and lease liabilities for the thirteen and thirty-nine weeks ended September 27, 2023, respectively, were recognized and will be amortized over the new lease term. During the thirteen and thirty-nine weeks ended September 28, 2022, the Company reassessed the lease terms on five and 18 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew. This reassessment resulted in an additional $2.0 million and $10.5 million of ROU asset and lease liabilities for the thirteen and thirty-nine weeks ended September 28, 2022, respectively, which were recognized and will be amortized over the new lease term. The reassessments had an impact on the original lease classification of one property during the thirty-nine weeks ended September 28, 2022 which represented $0.7 million of the $10.5 million total additional ROU asset and lease liabilities for the period. Additionally, as the Company adopted all practical expedients available under Topic 842, no reallocation between lease and non-lease components was necessary.

The Company also subleases facilities to certain franchisees and other non-related parties which are also considered operating leases. Sublease income also includes contingent rental income based on net revenues. The vast majority of these leases have rights to extend terms via fixed rental increases. However, none of these leases have early termination rights, the right to purchase the premises or any residual value guarantees. The Company does not have any related party leases.

During the thirty-nine weeks ended September 27, 2023, the Company recorded a less than $0.1 million non-cash impairment charge primarily related to the carrying value of ROU assets of one restaurant in California. During the thirty-nine weeks ended September 28, 2022, the Company recorded a less than $0.1 million non-cash impairment charge related to the carrying value of ROU assets of one restaurant in California. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies – Impairment of Long-Lived Assets and ROU Assets” for additional information.

Equipment

Leases of equipment primarily consist of restaurant equipment, copiers and vehicles. These leases are fixed payments with no variable component. Additionally, no optional renewal periods have been included in the calculation of the ROU asset, there are no residual value guarantees and no restrictions imposed.

Significant Assumptions and Judgments

In applying the requirements of Topic 842, the Company made significant assumptions and judgments related to determination of whether a contract contains a lease and the discount rate used for the lease.

In determining if any of the Company’s contracts contain a lease, the Company made assumptions and judgments related to its ability to direct the use of any assets stated in the contract and the likelihood of renewing any short-term contracts for a period extending past twelve months.

The Company also made significant assumptions and judgments in determining an appropriate discount rate for property leases. These included using a consistent discount rate for a portfolio of leases entered into at varying dates, using the full 20-year term of the lease, excluding any options, and using the total minimum lease payments. The Company utilizes a third-party valuation firm in determining the discount rate, based on the above assumptions. For all other leases, the Company uses the discount rate implicit in the lease, or the Company’s incremental borrowing rate.

As the Company has adopted the practical expedient not to separate lease and non-lease components, no significant assumptions or judgments were necessary in allocating consideration between these components, for all classes of underlying assets.

The following table presents the Company’s total lease cost, disaggregated by underlying asset (in thousands):


	Thirteen Weeks Ended
	September 27, 2023						September 28, 2022
	Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	18	$	1	$	19	$	18	$	1	$	19
Interest on lease liabilities		9		1		10		10		1		11
Operating lease cost		6,903		43		6,946		6,646		256		6,902
Short-term lease cost		—		2		2		—		4		4
Variable lease cost		150		332		482		151		196		347
Sublease income		(1,280)		—		(1,280)		(1,130)		—		(1,130)
Total lease cost	$	5,800	$	379	$	6,179	$	5,695	$	458	$	6,153


	Thirty-Nine Weeks Ended
	September 27, 2023						September 28, 2022
	Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	55	$	2	$	57	$	55	$	2	$	57
Interest on lease liabilities		29		2		31		32		2		34
Operating lease cost		20,589		342		20,931		19,795		776		20,571
Short-term lease cost		—		6		6		—		11		11
Variable lease cost		422		909		1,331		458		463		921
Sublease income		(3,773)		—		(3,773)		(3,387)		—		(3,387)
Total lease cost	$	17,322	$	1,261	$	18,583	$	16,953	$	1,254	$	18,207

The following table presents the Company’s total lease cost on the condensed consolidated statements of income (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Lease cost – Occupancy and other operating expenses	$	6,043	$	5,969	$	18,101	$	17,709
Lease cost – General & administrative		107		133		375		343
Lease cost – Depreciation and amortization		19		18		57		55
Lease cost – Interest expense		10		11		31		35
Lease cost – Closed-store reserve		—		22		19		65
Total lease cost	$	6,179	$	6,153	$	18,583	$	18,207

During the thirty-nine weeks ended September 27, 2023 and September 28, 2022, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):


	Thirty-Nine Weeks Ended September 27, 2023								Thirty-Nine Weeks Ended September 28, 2022
	Property			Equipment					Property			Equipment
	Leases			Leases			Total		Leases			Leases			Total
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	20,797		$	297		$	21,094	$	20,364		$	737		$	21,101
Financing cash flows used for finance leases	$	70		$	43		$	113	$	82		$	42		$	124

Non-cash investing and financing activities:
Operating lease ROU assets obtained in exchange for lease liabilities:
Operating lease ROU assets	$	15,445		$	54		$	15,499	$	10,486		$	86		$	10,572
Finance lease ROU assets obtained in exchange for lease liabilities:
Finance lease ROU assets	$	—		$	—		$	—	$	—		$	28		$	28
Derecognition of ROU assets due to terminations, impairment or modifications	$	(40)		$	(4)		$	(44)	$	(39)		$	(24)		$	(63)

Other Information
Weighted-average remaining years in lease term—finance leases		17.12			2.46					18.12			3.44
Weighted-average remaining years in lease term—operating leases		10.56			3.42					10.91			1.57
Weighted-average discount rate—finance leases		2.57	%		1.53	%				2.57	%		1.53	%
Weighted-average discount rate—operating leases		4.85	%		4.45	%				4.49	%		3.82	%

Information regarding the Company’s minimum future lease obligations as of September 27, 2023 is as follows (in thousands):


	Finance Leases		Operating Leases
	Minimum		Minimum		Minimum
	Lease		Lease		Sublease
For the Years Ending	Payments		Payments		Income
December 27, 2023	$	38	$	7,050	$	1,021
December 25, 2024		151		27,867		4,041
December 31, 2025		147		26,149		3,653
December 30, 2026		114		23,778		3,289
December 29, 2027		104		22,314		3,239
Thereafter		1,479		134,298		21,645
Total	$	2,033	$	241,456	$	36,888
Less: imputed interest (1.53% - 4.85%)		(380)		(55,167)
Present value of lease obligations		1,653		186,289
Less: current maturities		(111)		(19,425)
Noncurrent portion	$	1,542	$	166,864

Short-Term Leases

The Company has multiple short-term leases, which have terms of less than 12 months, and thus were excluded from the recognition requirements of Topic 842. The Company has recognized these lease payments in its condensed consolidated statements of income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments was incurred.

Lessor

The Company is a lessor for certain property, facilities and equipment owned by the Company and leased to others, principally franchisees, under non-cancelable leases with initial terms ranging from three to 20 years. These lease agreements generally provide for a fixed base rent and, in some instances, contingent rent based on a percentage of gross operating profit or net revenues. All leases are considered operating leases.

For the leases in which the Company is the lessor, there are options to extend the lease. However, there are no terms and conditions to terminate the lease, no right to purchase premises and no residual value guarantees. Additionally, there are no related party leases.

The Company received $0.1 million of lease income from company-owned locations for each of the thirteen weeks ended September 27, 2023 and September 28, 2022. The Company received $0.2 million and $0.3 million of lease income from company-owned locations for the thirty-nine weeks ended September 27, 2023 and September 28, 2022, respectively.

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 27, 2023

Earnings Per Share [Abstract]

Below are basic and diluted EPS data for the periods indicated (in thousands except for share and per share data):



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Numerator:
Net income	$	9,229	$	5,009	$	21,203	$	14,265
Denominator:
Weighted-average shares outstanding—basic		33,412,674		36,402,899		35,026,731		36,329,938
Weighted-average shares outstanding—diluted		33,490,004		36,507,050		35,179,483		36,491,624
Net income per share—basic	$	0.28	$	0.14	$	0.61	$	0.39
Net income per share—diluted	$	0.28	$	0.14	$	0.60	$	0.39
Anti-dilutive securities not considered in diluted EPS calculation		1,216,015		1,434,825		790,077		944,183

Schedule of Reconciliation of Basic and Diluted Share Counts

Below is a reconciliation of basic and diluted share counts:



	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 27, 2023	September 28, 2022	September 27, 2023	September 28, 2022
Weighted-average shares outstanding—basic	33,412,674	36,402,899	35,026,731	36,329,938
Dilutive effect of stock options and restricted shares	77,330	104,151	152,752	161,686
Weighted-average shares outstanding—diluted	33,490,004	36,507,050	35,179,483	36,491,624

EARNINGS PER SHARE- Schedule of Reconciliation of Basic and Diluted Share Counts (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Earnings Per Share [Abstract]
Weighted-average shares outstanding-Basic (shares)	33,412,674	36,402,899	35,026,731	36,329,938
Dilutive effect of stock options and restricted shares (shares)	77,330	104,151	152,752	161,686
Weighted-average shares outstanding-Diluted (shares)	33,490,004	36,507,050	35,179,483	36,491,624

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 27, 2023

Schedule of disaggregation of Revenue


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022			September 27, 2023		September 28, 2022
Core Market⁽¹⁾:
Company-operated restaurant revenue	$	97,966	$	98,732	$	289,534	$	289,798
Franchise revenue		5,021		4,501		14,454		13,559
Franchise advertising fee revenue		3,456		3,336		10,098		10,008
Total core market	$	106,443	$	106,569	$	314,086	$	313,365
Non-Core Market⁽²⁾:
Company-operated restaurant revenue	$	4,737	$	4,442	$	14,943	$	13,787
Franchise revenue		5,234		5,042		15,592		15,303
Franchise advertising fee revenue		3,985		3,825		11,796		11,582
Total non-core market	$	13,956	$	13,309	$	42,331	$	40,672
Total revenue	$	120,399	$	119,878	$	356,417	$	354,037

(1)	Core Market includes markets with existing company-operated restaurants at the time of the Company’s IPO on July 28, 2014.

(2)	Non-Core Market includes markets entered into by the Company subsequent to the IPO date.

Schedule of revenues disaggregated by geographic market


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Greater Los Angeles area market	71.6	%	71.9	%	71.1	%	71.2	%
Other markets	28.4	%	28.1	%	28.9	%	28.8	%
Total	100	%	100	%	100	%	100	%

Schedule of Estimated Revenue to be Recognized Related to Performance Obligations


Franchise revenues:
2023	$	157
2024		597
2025		551
2026		529
2027		508
Thereafter		4,841
Total	$	7,183

Loyalty reward program

Schedule of Change in Franchise Contract Liability Balances


	September 27, 2023		December 28, 2022
Loyalty rewards liability, beginning balance	$	526	$	687
Revenue deferred		1,571		2,754
Revenue recognized		(1,464)		(2,915)
Loyalty rewards liability, ending balance	$	633	$	526

Gift card liability

Schedule of Change in Franchise Contract Liability Balances

The gift card liability included in other accrued expenses and current liabilities on the condensed consolidated balance sheets was as follows (in thousands):


	September 27, 2023		December 28, 2022
Gift card liability	$	4,047	$	4,667

Revenue recognized from the redemption of gift cards that was included in other accrued expenses and current liabilities at the beginning of the year was as follows (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Revenue recognized from gift card liability balance at the beginning of the year	$	205	$	237	$	817	$	967

Franchise revenue

Schedule of Change in Franchise Contract Liability Balances

The following table provides information about the change in the franchise contract liability balances during the thirty-nine weeks ended September 27, 2023 and September 28, 2022 (in thousands):


December 28, 2022	$	6,377
Revenue recognized - beginning balance		(545)
Additional contract liability		1,351
September 27, 2023	$	7,183

December 29, 2021	$	6,328
Revenue recognized - beginning balance		(558)
Additional contract liability		618
September 28, 2022	$	6,388

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

LEASES (Details) $ in Thousands	3 Months Ended		9 Months Ended
LEASES (Details) $ in Thousands	Sep. 27, 2023 USD ($) lease restaurant	Sep. 28, 2022 USD ($) restaurant	Sep. 27, 2023 USD ($) item lease restaurant	Sep. 28, 2022 USD ($) restaurant property
Lessee, Lease, Description [Line Items]
Initial lease term	20 years		20 years
Number of renewable options \| item			4
Renewal term	5 years		5 years
Lessee, Operating Lease, Existence of Option to Extend [true false]			true
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability			$ 15,499	$ 10,572
Restaurants sold \| restaurant	17		18
California
Lessee, Lease, Description [Line Items]
Number of restaurants primarily responsible for impairment \| restaurant		1		1
California \| Maximum
Lessee, Lease, Description [Line Items]
Operating Lease, Impairment Loss			$ 100	$ 100
Lease Not Yet Commenced
Lessee, Lease, Description [Line Items]
Number Of Leases \| lease	1		1
Property Lease
Lessee, Lease, Description [Line Items]
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability			$ 15,445	$ 10,486
Property Lease \| California
Lessee, Lease, Description [Line Items]
Number of restaurants primarily responsible for impairment \| restaurant			1	1
Equipment Lease
Lessee, Lease, Description [Line Items]
Number Of Finance Leases \| lease	10		10
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability			$ 54	$ 86
Property lease modification
Lessee, Lease, Description [Line Items]
Number of Restaurants with lease modification \| restaurant	5	5	27	18
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 1,900	$ 2,000	$ 15,400	$ 10,500
Number of properties impacted on original lease classification \| property				1
Original impact of original lease classification				$ 700
Facility Leases
Lessee, Lease, Description [Line Items]
Number Of Finance Leases \| lease	1		1

STOCK-BASED COMPENSATION - Weighted Average Assumptions (Details)	9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	43.70%	43.00%
Risk-free interest rate	3.60%	2.90%
Expected term (years)	6 years 3 months	6 years 3 months

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 27, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
LEASES - Lease Cost (Details) - USD ($) $ in Thousands	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	$ 19	$ 19	$ 57	$ 57
Interest on lease liabilities	10	11	31	34
Operating Lease, Cost	6,946	6,902	20,931	20,571
Short-term Lease, Cost	2	4	6	11
Variable Lease, Cost	482	347	1,331	921
Sublease Income	(1,280)	(1,130)	(3,773)	(3,387)
Total lease cost	6,179	6,153	18,583	18,207
Operating Expense [Member]
Lessee, Lease, Description [Line Items]
Total lease cost	6,043	5,969	18,101	17,709
General and Administrative Expense
Lessee, Lease, Description [Line Items]
Total lease cost	107	133	375	343
Depreciation and amortization [Member]
Lessee, Lease, Description [Line Items]
Total lease cost	19	18	57	55
Interest Expense
Lessee, Lease, Description [Line Items]
Total lease cost	10	11	31	35
Restructuring Charges [Member]
Lessee, Lease, Description [Line Items]
Total lease cost		22	19	65
Property Lease [Member]
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	18	18	55	55
Interest on lease liabilities	9	10	29	32
Operating Lease, Cost	6,903	6,646	20,589	19,795
Variable Lease, Cost	150	151	422	458
Sublease Income	(1,280)	(1,130)	(3,773)	(3,387)
Total lease cost	5,800	5,695	17,322	16,953
Equipment Lease
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	1	1	2	2
Interest on lease liabilities	1	1	2	2
Operating Lease, Cost	43	256	342	776
Short-term Lease, Cost	2	4	6	11
Variable Lease, Cost	332	196	909	463
Total lease cost	$ 379	$ 458	$ 1,261	$ 1,254

EARNINGS PER SHARE - Computation of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 27, 2023	Sep. 28, 2022	Sep. 27, 2023	Sep. 28, 2022
Numerator:
Net Income (Loss)	$ 9,229	$ 5,009	$ 21,203	$ 14,265
Denominator:
Weighted-average shares outstanding-Basic (shares)	33,412,674	36,402,899	35,026,731	36,329,938
Weighted-average shares outstanding-Diluted (shares)	33,490,004	36,507,050	35,179,483	36,491,624
Net income per share-Basic (usd per share)	$ 0.28	$ 0.14	$ 0.61	$ 0.39
Net income per share-Diluted (usd per share)	$ 0.28	$ 0.14	$ 0.60	$ 0.39
Anti-dilutive securities not considered in diluted EPS calculation (shares)	1,216,015	1,434,825	790,077	944,183

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 27, 2023

Debt Disclosure [Abstract]

The following table summarizes the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022
Interest expense on hedged portion of debt	$	—	$	92	$	—	$	439
Interest income on interest rate swap		—		(369)		(170)		(197)
Interest (income) expense on debt and derivatives, net	$	—	$	(277)	$	(170)	$	242

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the thirteen and thirty-nine weeks ended September 27, 2023 and September 28, 2022 (in thousands):


	Thirteen Weeks Ended								Thirty-Nine Weeks Ended
					Gain Reclassified from								Gain Reclassified from
	Net Gain Recognized in OCI				AOCI into Interest Income				Net Gain Recognized in OCI				AOCI into Interest Income
	September 27, 2023		September 28, 2022		September 27, 2023		September 28, 2022		September 27, 2023			September 28, 2022	September 27, 2023			September 28, 2022
Interest rate swap	$	—	$	43	$	—	$	(369)	$	—	$	974	$	(170)	$	(197)

Related Party Transactions (Details) - Related Party [Member] - FS Equity Partners V, L.P. and FS Affiliates V, L.P $ / shares in Units, $ in Millions	Aug. 07, 2023 USD ($) $ / shares shares
Related Party Transaction [Line Items]
Shares repurchased \| shares	2,500,000
Share price \| $ / shares	$ 10.63
Total consideration \| $	$ 26.6