0001606366-24-000013 | 10-K | XBRL Viewer | EL Pollo Loco Holdings INC

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Risk (Details) - item	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Accounts Receivable
Concentration of Risk
Number Of Franchisee	1
Supplier Concentration Risk \| Accounts Payable
Concentration of Risk
Number Of Suppliers	1	1
Supplier Concentration Risk \| Supplier One \| Accounts Payable
Concentration of Risk
Percentage of concentration	15.14%	41.70%
Supplier Concentration Risk \| Largest Supplier One \| Purchased
Concentration of Risk
Percentage of concentration	26.60%	28.50%	27.10%
Geographic Concentration Risk \| Revenue
Concentration of Risk
Percentage of concentration	100.00%	100.00%	100.00%
Franchised \| Accounts Receivable
Concentration of Risk
Number Of Franchisee		1
Franchised \| Geographic Concentration Risk \| Accounts Receivable
Concentration of Risk
Percentage of concentration	11.40%	12.90%
Greater Los Angeles area market \| Geographic Concentration Risk \| Revenue
Concentration of Risk
Percentage of concentration	71.30%	71.20%	70.90%

EARNINGS PER SHARE - Computation of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Numerator:
Net Income (Loss)	$ 25,554	$ 20,801	$ 29,121
Denominator:
Weighted-average shares outstanding-Basic (shares)	34,253,542	36,350,579	35,973,892
Weighted-average shares outstanding-Diluted (shares)	34,374,706	36,575,904	36,446,756
Net income per share-Basic (usd per share)	$ 0.75	$ 0.57	$ 0.81
Net income per share-Diluted (usd per share)	$ 0.74	$ 0.57	$ 0.80
Anti-dilutive securities not considered in diluted EPS calculation (shares)	972,181	535,574	136,397

- Definition

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 amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

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

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+ Details

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 25,554	$ 20,801	$ 29,121
Unrealized net gains arising during the period from interest rate swap		862	257
Reclassifications of (losses) gains into net income	(170)	(296)	486
Income tax benefit (expense)	44	(150)	(200)
Other comprehensive (loss) income, net of taxes	(126)	416	543
Comprehensive income	$ 25,428	$ 21,217	$ 29,664

- Definition

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

+ References

+ Details

LONG-TERM DEBT

12 Months Ended

Dec. 27, 2023

LONG-TERM DEBT.

LONG-TERM DEBT

6. 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 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. For borrowings under the 2022 Revolver during fiscal 2023, the interest rate range was 5.7% to 7.0%. For borrowings under the 2022 Revolver and the 2018 Revolver during fiscal 2022, the interest rate range was 1.4% to 6.0%. The interest rate under the 2022 Revolver was 7.0% at December 27, 2023 and 5.7% at December 28, 2022. For the year ended December 27, 2023, the Company had interest expense of $4.4 million under the 2022 Revolver. For the years ended December 28, 2022 and December 29, 2021, the Company had interest expense of $0.9 million and $1.2 million, respectively, under the 2022 Revolver and the 2018 Revolver.

The 2022 Credit Agreement contains certain financial covenants. The Company was in compliance with all such covenants at December 27, 2023.

At December 27, 2023, $9.8 million of letters of credit and $84.0 million of borrowings were outstanding under the 2022 Revolver. The amount available under the 2022 Revolver was $56.2 million at December 27, 2023. At December 28, 2022, $9.8 million of letters of credit and $66.0 million of borrowings were outstanding under the 2022 Revolver. The amount available under the 2022 Revolver was $74.2 million at December 28, 2022.

Maturities

On July 27, 2022, the Company refinanced and terminated the 2018 Revolver pursuant to the 2022 Credit Agreement. The 2022 Revolver and 2022 Credit Agreement will mature on July 27, 2027. During the year ended December 27, 2023, the Company borrowed $18.0 million net of pay downs of $21.0 million on its 2022 Revolver. During the year ended December 28, 2022, the Company borrowed $26.0 million net of pay downs of $20.0 million on its 2022 Revolver. There are no required principal payments prior to maturity for the 2022 Revolver.

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 that matures 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, on July 28, 2022, the Company terminated the interest rate swap, 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 will be reclassified into earnings when the hedged forecasted transaction is reported in earnings.

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


	December 27, 2023		December 28, 2022		December 29, 2021
Interest expense on hedged portion of debt	$	—	$	439	$	568
Interest (income) expense on interest rate swap		(170)		(296)		486
Interest (income) expense on debt and derivatives, net	$	(170)	$	143	$	1,054

The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the years ended December 27, 2023, December 28, 2022 and December 29, 2021 (in thousands):


							(Gain) Loss Reclassified from
	Net Gain Recognized in OCI						AOCI into Interest Income
	December 27, 2023		December 28, 2022		December 29, 2021		December 27, 2023		December 28, 2022		December 29, 2021
Interest rate swap	$	—	$	862	$	257	$	(170)	$	(296)	$	486

See Note 2 “Summary of Significant Accounting Policies” for the fair value of the Company’s derivative asset.

- Definition

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.

+ References

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

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-URI https://asc.fasb.org//470/tableOfContent

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+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Dec. 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

SHAREHOLDER RIGHTS AGREEMENT (Details) - $ / shares	Aug. 08, 2023	Dec. 27, 2023	Dec. 28, 2022
RIGHTS AGREEMENT
Common stock, par value (usd per share)		$ 0.01	$ 0.01
Preferred stock, par value (usd per share)		$ 0.01	$ 0.01
Preferred shares purchase right
RIGHTS AGREEMENT
Dividends declared	1
Common stock, par value (usd per share)	$ 0.01
Beneficial Ownership percentage	12.50%
Rights exchange ratio	1
Percentage of consolidated assets or Earning Power	50.00%
Rights exercisable multiplier	2
Redemption price (usd per share)	$ 0.001
Preferred shares purchase right \| Series A Preferred Stock
RIGHTS AGREEMENT
Shares called by purchase right	0.001
Preferred stock, par value (usd per share)	$ 0.01
Share price	$ 53.75

OTHER NONCURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 27, 2023

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

Schedule of Other Noncurrent Liabilities

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


	December 27, 2023		December 28, 2022
Deferred franchise and development fees	$	6,411	$	5,767
Other		34		89
Total other noncurrent liabilities	$	6,445	$	5,856

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES - Schedule of Other Accrued Expenses and Current Liabilities (Detail) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES
Accrued sales and property taxes	$ 5,229	$ 5,270
Gift card liability	4,877	4,667
Loyalty rewards program liability	687	526
Accrued advertising	3,010	831
Accrued legal settlements and professional fees	720	1,303
Deferred franchise and development fees	586	610
Other	3,252	1,913
Total other accrued expenses and current liabilities	$ 18,361	$ 15,120

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Gain on Recovery of Insurance Proceeds (Details) $ in Thousands	12 Months Ended
	Dec. 27, 2023 USD ($) restaurant	Dec. 28, 2022 USD ($) restaurant	Dec. 29, 2021 USD ($) restaurant
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gain on recovery of insurance proceeds	$ 327
Insurance proceeds	$ 163
Restaurants sold \| restaurant	18
Proceeds from disposition of restaurants	$ 7,722	$ 1,002	$ 4,556
Gain on sale of restaurants	5,034	848	(1,534)
Gain on recovery of insurance proceeds, property, equipment and expenses	247
Received from the insurance	500
Loss on disposal of assets	$ (192)	$ (165)	(289)
Diep v. Sather
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Insurance proceeds			469,000
Orange County \| Restaurant Sales
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number Of Restaurants, Sold To Third Party \| restaurant		3
Orange County \| Restaurant Sales \| Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Proceeds from disposition of restaurants		$ 1,000
Gain on sale of restaurants		$ 800
Sacramento Area \| Restaurant Sales \| Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Proceeds from disposition of restaurants			4,600
Gain on sale of restaurants			$ (1,500)
Number Of Restaurants, Sold To Third Party \| restaurant			8
Fire
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of Restaurants \| restaurant	2	2
Fire \| Maximum
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Incurred costs	$ 100

TRADEMARKS AND OTHER INTANGIBLE ASSETS - Schedule of Domestic Trademarks (Details) - Trademarks - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Indefinite-lived Intangible Assets [Line Items]
Cost	$ 120,700	$ 120,700
Accumulated impairment charges	(58,812)	(58,812)
Trademarks, net	$ 61,888	$ 61,888

LEASES - Lessor (Details) - USD ($) $ in Millions	12 Months Ended
LEASES - Lessor (Details) - USD ($) $ in Millions	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Lessor, Lease, Description [Line Items]
Operating lease income	$ 0.3	$ 0.4	$ 0.4
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
Maximum
Lessor, Lease, Description [Line Items]
Lessor, operating lease term of contract	20 years

EARNINGS PER SHARE- Schedule of Reconciliation of Basic and Diluted Share Counts (Details) - shares	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
EARNINGS PER SHARE
Weighted-average shares outstanding-Basic (shares)	34,253,542	36,350,579	35,973,892
Dilutive effect of stock options and restricted shares (shares)	121,164	225,325	472,864
Weighted-average shares outstanding-Diluted (shares)	34,374,706	36,575,904	36,446,756

DESCRIPTION OF BUSINESS - Additional Information (Details)	12 Months Ended
	Dec. 27, 2023 segment restaurant
DESCRIPTION OF BUSINESS
Number of operating segments \| segment	1
Philippines
DESCRIPTION OF BUSINESS
Number of restaurants	5
Company-operated
DESCRIPTION OF BUSINESS
Number of restaurants	172
Company-operated \| Greater Los Angeles area market
DESCRIPTION OF BUSINESS
Number of restaurants	138
Franchised
DESCRIPTION OF BUSINESS
Number of restaurants	323
Franchised \| Greater Los Angeles area market
DESCRIPTION OF BUSINESS
Number of restaurants	141

- Definition

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.

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+ Details

INCOME TAXES - Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Current income taxes:
Federal	$ 6,572	$ 2,366	$ 7,163
State	1,846	1,112	2,158
Total current	8,418	3,478	9,321
Deferred income taxes:
Federal	(29)	2,958	93
State	935	1,642	918
Total deferred	906	4,600	1,011
Tax provision for income taxes	$ 9,324	$ 8,078	$ 10,332

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

LONG-TERM DEBT - Interest Rate Swap (Details) - USD ($) $ in Thousands		12 Months Ended
	Jul. 28, 2022	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021	Dec. 25, 2019
DESCRIPTION OF BUSINESS
Interest (income) expense on interest rate swap		$ (170)	$ 143	$ 1,054
Net Gain Recognized in OCI			862	257
(Gain) Loss Reclassified from AOCI into Interest Income		170	296	(486)
Interest Rate Swap
DESCRIPTION OF BUSINESS
Derivative asset, notional amount					$ 40,000
Interest (income) expense on interest rate swap		(170)	(296)	486
Net Gain Recognized in OCI			862	257
(Gain) Loss Reclassified from AOCI into Interest Income		$ (170)	(296)	486
Interest Rate Swap \| 2022 Credit Agreement
DESCRIPTION OF BUSINESS
Proceeds from swap	$ 600
Hedged Debt Instrument
DESCRIPTION OF BUSINESS
Interest (income) expense on interest rate swap			$ 439	$ 568

- Definition

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.

+ References

+ Details

- Definition

Nominal or face amount used to calculate payments on the derivative asset.

+ References + Details

LEASES - Cash and Non-cash Lease Activities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Lessee, Lease, Description [Line Items]
Operating cash flows used for operating leases	$ 28,156	$ 28,174	$ 27,498
Financing cash flows used for finance leases	158	162	148
Operating lease ROU assets	21,502	13,070	17,763
Finance lease ROU assets	135	28	196
Derecognition of ROU assets due to terminations, impairment or modifications	(44)	(74)	(4,612)
Property Lease
Lessee, Lease, Description [Line Items]
Operating cash flows used for operating leases	27,835	27,221	26,414
Financing cash flows used for finance leases	93	106	102
Operating lease ROU assets	21,448	12,978	17,763
Finance lease ROU assets	0	0	0
Derecognition of ROU assets due to terminations, impairment or modifications	$ (40)	$ (39)	$ (4,513)
Weighted-average remaining years in lease term-finance leases	16 years 10 months 13 days	17 years 10 months 13 days	18 years 5 months 1 day
Weighted-average remaining years in lease term-operating leases	10 years 5 months 1 day	10 years 8 months 23 days	11 years 3 months 7 days
Weighted-average discount rate-finance leases	2.57%	2.57%	2.78%
Weighted-average discount rate-operating leases	5.00%	4.54%	4.45%
Equipment Lease
Lessee, Lease, Description [Line Items]
Operating cash flows used for operating leases	$ 321	$ 953	$ 1,084
Financing cash flows used for finance leases	65	56	46
Operating lease ROU assets	54	92
Finance lease ROU assets	135	28	196
Derecognition of ROU assets due to terminations, impairment or modifications	$ (4)	$ (35)	$ (99)
Weighted-average remaining years in lease term-finance leases	3 years 1 month 24 days	3 years 2 months 8 days	4 years 7 days
Weighted-average remaining years in lease term-operating leases	3 years 3 months 29 days	1 year 8 months 23 days	1 year 5 months 8 days
Weighted-average discount rate-finance leases	5.68%	1.53%	1.54%
Weighted-average discount rate-operating leases	4.52%	3.80%	3.89%

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

12 Months Ended

Dec. 27, 2023

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

7. OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

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


	December 27, 2023		December 28, 2022
Accrued sales and property taxes	$	5,229	$	5,270
Gift card liability		4,877		4,667
Loyalty rewards program liability		687		526
Accrued advertising		3,010		831
Accrued legal settlements and professional fees		720		1,303
Deferred franchise and development fees		586		610
Other		3,252		1,913
Total other accrued expenses and current liabilities	$	18,361	$	15,120

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restaurant Revenue and Advertising Costs (Details) $ in Thousands	12 Months Ended
	Dec. 27, 2023 USD ($) restaurant	Dec. 28, 2022 USD ($)	Dec. 29, 2021 USD ($)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Promotional allowances amount	$ 8,700	$ 7,500	$ 7,700
Loyalty Rewards Program, Expiration Period For Inactivity	1 year
Accrued Loyalty Rewards Program Liability, Current	$ 700	500
Loyalty Rewards Program, Expected Loyalty Points Redemption Period	1 year
Number of franchised restaurants committed to open \| restaurant	107
Advertising expense	$ 16,200	16,400	16,100
Accrued advertising	3,010	831
Accrued advertising obligated to spend in future	$ 3,000
Initial lease term	20 years
Minimum
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	10 years
Percentage of monthly franchise fee	4.00%
Maximum
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	20 years
Percentage of monthly franchise fee	5.00%
Hardware Services
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unsatisfied performance obligations	$ 0
Franchise Rights
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Renewal period	20 years
Franchise agreement term	20 years
General and Administrative Expense
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Preopening costs	$ 300	300	300
Franchised
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Advertising fees	$ 29,200	$ 28,500	$ 25,900

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 27, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

14. RELATED PARTY TRANSACTIONS

On March 28, 2023, 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.

Additionally, on November 29, 2023, the Company entered into the Stock Repurchase Agreement with the Sellers. The Company previously repurchased 2,500,000 shares of its common stock from the Sellers pursuant to a Stock Repurchase Agreement, dated August 7, 2023, as previously reported on Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2023. John Roth, a former director of the Company until his resignation effective August 16, 2023, is a general partner and chief executive officer of Freeman Spogli, which manages the Sellers. See Note 12 “Earnings per Share” for additional information.

- Definition

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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Cash flows from operating activities:
Net income	$ 25,554	$ 20,801	$ 29,121
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	15,235	14,418	15,176
Stock-based compensation expense	2,964	3,491	3,220
Income tax receivable agreement (income) expense	103	(436)	58
Fire insurance proceeds for expenses paid and lost profit	327
(Gain) loss on disposition of restaurants	(5,034)	(848)	1,534
Loss on disposal of assets	192	165	289
Gain on recovery of insurance proceeds, property, equipment and expenses, net	(247)
Impairment of property and equipment	1,536	481	711
Amortization of deferred financing costs	201	340	251
Deferred income taxes, net	906	4,600	957
Changes in operating assets and liabilities:
Accounts and other receivables	(216)	3,323	(3,444)
Inventories	531	(125)	(218)
Prepaid expenses and other current assets	(1,972)	71	133
Income taxes (receivable) payable	838	(1,657)	3,410
Other assets	(309)	(240)	(1,052)
Accounts payable	(3,965)	3,977	2,533
Accrued salaries and vacation	459	(2,667)	1,373
Accrued insurance	711	(73)	777
Payment related to tax receivable agreement	(350)	(430)	(1,658)
Other accrued expenses and liabilities	3,224	(6,642)	(1,072)
Net cash flows provided by operating activities	40,688	38,549	52,099
Cash flows from investing activities:
Proceeds from disposition of restaurants	7,722	1,002	4,556
Proceeds from fire insurance for property and equipment	163
Purchase of property and equipment	(21,332)	(19,917)	(17,041)
Net cash flows used in investing activities	(13,447)	(18,915)	(12,485)
Cash flows from financing activities:
Proceeds from borrowings on revolver and swingline loans	39,000	46,000
Payments on revolver and swingline loan	(21,000)	(20,000)	(22,800)
Minimum tax withholdings related to net share settlements	(243)	(322)	(705)
Common stock dividends paid		(55,574)
Proceeds from issuance of common stock upon exercise of stock options, net of expenses	1,171	1,713	866
Payment of obligations under finance leases	(158)	(162)	(148)
Deferred financing costs for revolver loan		(842)
Repurchases of common stock	(59,216)
Net cash flows used in by financing activities	(40,446)	(29,187)	(22,787)
(Decrease) increase in cash and cash equivalents	(13,205)	(9,553)	16,827
Cash and cash equivalents, beginning of period	20,493	30,046	13,219
Cash and cash equivalents, end of period	7,288	20,493	30,046
Supplemental cash flow information
Cash paid during the period for interest	4,819	1,450	1,066
Cash paid during the period for income taxes	7,721	5,100	5,968
Unpaid purchases of property and equipment	$ 5,098	$ 1,333	$ 2,454

LEASES (Details) $ in Thousands	12 Months Ended
LEASES (Details) $ in Thousands	Dec. 27, 2023 USD ($) item restaurant	Dec. 28, 2022 USD ($) restaurant property	Dec. 29, 2021 USD ($) restaurant	Dec. 27, 2023	Dec. 27, 2023 item	Dec. 27, 2023 lease	Dec. 27, 2023 restaurant
Lessee, Lease, Description [Line Items]
Initial lease term	20 years
Number of renewable options \| item	4
Renewal term	5 years
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Operating lease ROU assets	$ 21,502	$ 13,070	$ 17,763
Original impact of original lease classification	$ 0
Number of restaurants primarily responsible for impairment \| restaurant	1	1	2
Operating lease, impairment charges			$ 400
Restaurants sold \| restaurant	18
Texas
Lessee, Lease, Description [Line Items]
Number of restaurants closed \| restaurant			1
California
Lessee, Lease, Description [Line Items]
Number of restaurants closed		1	1		1		1
California \| Maximum
Lessee, Lease, Description [Line Items]
Operating lease, impairment charges	$ 100	$ 100
Lease Not Yet Commenced
Lessee, Lease, Description [Line Items]
Number of operating leases \| lease						0
Property Lease
Lessee, Lease, Description [Line Items]
Number of finance leases				1
Operating lease ROU assets	21,448	12,978	$ 17,763
Equipment Lease
Lessee, Lease, Description [Line Items]
Number of finance leases \| lease						13
Operating lease ROU assets	$ 54	$ 92
Property lease modification
Lessee, Lease, Description [Line Items]
Number of Restaurants with lease modification \| restaurant	36	22
Operating lease ROU assets	$ 21,500	$ 13,000
Number of properties impacted on original lease classification \| property		1
Original impact of original lease classification		$ 700

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 27, 2023

STOCK-BASED COMPENSATION

Schedule of changes in Stock Options


				Weighted-Average		Aggregate
		Weighted-Average		Contractual Life		Intrinsic Value
	Shares	Exercise Price		Life (Years)		(in thousands)
Outstanding - December 29, 2021	978,078	$	11.45
Grants	372,958		10.54
Exercised	(185,798)		9.22
Forfeited, cancelled or expired	(97,059)		12.06
Outstanding – December 28, 2022	1,068,179	$	9.92
Grants	562,344		9.15
Exercised	(219,960)		5.32
Forfeited, cancelled or expired	(567,243)	$	10.63
Outstanding – December 27, 2023	843,320	$	10.13		6.73	$	33
Vested and expected to vest at December 27, 2023	835,581	$	10.14		6.71	$	32
Exercisable at December 27, 2023	380,896	$	11.09		3.90	$	—

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


	December 27, 2023		December 28, 2022
Expected volatility	43.8	%	43.0	%
Risk-free interest rate	3.7	%	2.9	%
Expected term (years)	6.20		6.25
Expected dividends	—		—

Schedule of Changes in Restricted Shares

Changes in restricted shares for the years ended December 27, 2023 and December 28, 2022, are as follows:


		Weighted-Average
	Shares	Fair Value
Unvested shares at December 29, 2021	495,780	$	13.92
Granted	356,610	$	10.37
Released	(201,043)	$	13.32
Forfeited, cancelled, or expired	(105,867)	$	12.91
Unvested shares at December 28, 2022	545,480	$	12.02
Granted	454,081	$	9.08

Released	(190,415)	$	12.25
Forfeited, cancelled, or expired	(271,685)	$	11.06
Unvested shares at December 27, 2023	537,461	$	9.94

EARNINGS PER SHARE - Narrative (Details) - USD ($)			12 Months Ended
EARNINGS PER SHARE - Narrative (Details) - USD ($)	Nov. 29, 2023	Aug. 07, 2023	Dec. 27, 2023	Nov. 02, 2023	Oct. 11, 2022
EARNINGS PER SHARE
Authorized amount under share repurchase agreement				$ 20,000,000	$ 20,000,000.0
Amount remained available for repurchases			$ 7,400,000
FS Equity Partners V, L.P. and FS Affiliates V, L.P [Member]
EARNINGS PER SHARE
Shares repurchased price	$ 8.40
Number of shares authorized to be repurchased	1,500,000
Total consideration	$ 12,600,000
2022 Stock Repurchase Plan
EARNINGS PER SHARE
Shares repurchased			2,030,850
Total consideration			$ 20,000,000.0
2023 Stock Repurchase Plan
EARNINGS PER SHARE
Shares repurchased price		$ 10.63
Number of shares authorized to be repurchased		2,500,000
Total consideration		$ 26,600,000

DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 27, 2023

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS

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 ®. The restaurants, which are located principally in California but also in Arizona, Nevada, Texas, Colorado, Utah and Louisiana, specialize in fire-grilling citrus-marinated chicken in a wide variety of contemporary Mexican and LA-inspired entrees, including specialty chicken burritos, chicken quesadillas, chicken tostada salads, chicken tortilla soup, variations on the Company’s Pollo Bowl®, Pollo Salads and Pollo Fit entrees. At December 27, 2023, the Company operated 172 (138 in the greater Los Angeles area) and franchised 323 (141 in the greater Los Angeles area) El Pollo Loco restaurants. In addition, the Company currently licenses five restaurants in the Philippines.

Holdings has no material assets or operations. Holdings and Holdings’ direct subsidiary, EPL Intermediate, Inc. (“Intermediate”), guarantee EPL’s 2022 Revolver (see Note 6 “Long-Term Debt”) on a full and unconditional basis 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.

The Company operates in one operating segment. All significant revenues relate to retail sales of food and beverages through either company or franchised restaurants.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 27, 2023

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

3. PROPERTY AND EQUIPMENT

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


	December 27, 2023		December 28, 2022
Land	$	12,323	$	12,323
Buildings and improvements		148,259		153,377
Other property and equipment		86,423		83,035
Construction in progress		7,270		3,196
		254,275		251,931
Less: accumulated depreciation and amortization		(170,248)		(173,287)
	$	84,027	$	78,644

Depreciation and amortization expense was $15.2 million, $14.4 million and $15.2 million for the years ended December 27, 2023, December 28, 2022, and December 29, 2021, respectively.

Based on the Company’s review of its property and equipment assets for impairment, the Company recorded non-cash impairment charges of $1.5 million, $0.4 million and $0.3 million for the years ended December 27, 2023, December 28, 2022, and December 29, 2021, respectively. See “Impairment of Property and Equipment and ROU Assets” in Note 2 “Summary of Significant Accounting Policies” for additional information.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 27, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of estimated useful service lives

The estimated useful service lives are as follows:


Buildings		20 years
Land improvements		3—30 years
Building improvements		3—10 years
Restaurant equipment		3—10 years
Other equipment		2—10 years
Property/equipment held under finance leases		Shorter of useful life or lease term
Leasehold improvements		Shorter of useful life or lease term

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

The following non-financial assets were measured at fair value, on a nonrecurring basis, as of and for the year ended December 27, 2023 reflecting certain property and equipment and ROU assets, for which an impairment loss was recognized during the corresponding periods, as discussed above under Impairment of Property and Equipment and ROU Assets (in thousands):


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	1,497
Certain ROU assets, net	$	244	$	—	$	—	$	244	$	39

The following non-financial assets were measured at fair value, on a nonrecurring basis, as of and for the year ended December 28, 2022 reflecting certain property and equipment and ROU assets for which an impairment loss was recognized during the corresponding periods, as discussed above under "Impairment of Property and Equipment and ROU Assets" (in thousands):


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	442
Certain ROU assets, net	$	327	$	—	$	—	$	327	$	39

The following non-financial assets were measured at fair value, on a nonrecurring basis, as of and for the year ended December 29, 2021 for which an impairment loss was recognized during the corresponding periods, as discussed above under "Impairment of Property and Equipment and ROU Assets" (in thousands):


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	304
Certain ROU assets, net	$	411	$	—	$	—	$	411	$	407

INCOME TAXES (Tables)

12 Months Ended

Dec. 27, 2023

INCOME TAXES

Schedule of Provision for Income Taxes

The provision for income taxes is based on the following components (in thousands):


	December 27,		December 28,		December 29,
For the Years Ended	2023		2022		2021
Current income taxes:
Federal	$	6,572	$	2,366	$	7,163
State		1,846		1,112		2,158
Total current		8,418		3,478		9,321
Deferred income taxes:
Federal		(29)		2,958		93
State		935		1,642		918
Total deferred		906		4,600		1,011
Tax provision for income taxes	$	9,324	$	8,078	$	10,332

Schedule of Effective Income Tax rate

The provision for income taxes differs from the amount computed by applying the federal income tax rate of 21.0% for fiscal 2023, 2022 and 2021 as follows:


	December 27,		December 28,		December 29,
For the Years Ended	2023		2022		2021
Statutory federal income tax rate applied to earnings before income taxes and extraordinary items	21.0	%	21.0	%	21.0	%
State income tax expense (net of federal benefit)	6.4		7.7		5.9
Change in valuation allowance	(19.3)		—		0.1
State credit expiration	19.1		—		—
TRA expense (income)	0.1		(0.3)		—
162(m)	0.6		0.5		0.8
WOTC Credit	(0.7)		(0.9)		(0.5)
Stock option exercises	0.1		0.3		(1.4)
Deferred tax liability true up	(1.1)		—		—
Other	0.5		(0.3)		0.3
Total	26.7	%	28.0	%	26.2	%

Schedule of Deferred Tax Assets and Liabilities

The Company’s deferred tax assets and liabilities as of December 27, 2023 and December 28, 2022 are summarized below.


	December 27,		December 28,
	2023		2022
Deferred assets:
Capital leases	$	62	$	55
Accrued vacation		470		508
Accrued workers’ compensation		2,352		2,201
Enterprise zone and other credits		—		7,258
Net operating losses		5		5
Fixed assets		2,705		2,392
ROU liabilities		50,735		50,112
Other		5,560		4,397
Total deferred tax assets		61,889		66,928
Valuation allowance		—		(6,727)
Net deferred tax assets		61,889		60,201
Deferred liabilities:
Goodwill		(5,938)		(6,420)
Trademark		(16,740)		(16,721)
Prepaid expense		(1,128)		(595)
ROU assets		(45,445)		(44,737)
Fixed assets		(1,470)		—
Other		(46)		267
Deferred tax liabilities		(70,767)		(68,206)
Net deferred tax liability	$	(8,878)	$	(8,005)

Schedule of Deferred Tax Assets Classification

The net deferred tax asset/(liability) amounts above as of December 27, 2023 and December 28, 2022 have been classified in the accompanying consolidated balance sheets as noncurrent assets/(liabilities) and are as follows (in thousands):


	December 27,		December 28,
	2023		2022
Noncurrent:
(Liabilities) assets - state	$	(416)	$	512
Liabilities - federal		(8,462)		(8,517)
Net deferred tax liability	$	(8,878)	$	(8,005)

REVENUE FROM CONTRACTS WITH CUSTOMERS - Revenues Disaggregated by Revenue Source and Market (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 468,664	$ 469,959	$ 454,363
Core Market
Disaggregation of Revenue [Line Items]
Total revenue	414,644	415,680	399,146
Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	54,020	54,279	55,217
Company-operated restaurant revenue
Disaggregation of Revenue [Line Items]
Total revenue	398,437	403,218	394,733
Company-operated restaurant revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	381,319	384,504	371,067
Company-operated restaurant revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	17,118	18,714	23,666
Franchise revenue
Disaggregation of Revenue [Line Items]
Total revenue	41,002	38,225	33,729
Franchise revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	19,805	17,953	16,062
Franchise revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	21,197	20,272	17,667
Franchise advertising fee revenue
Disaggregation of Revenue [Line Items]
Total revenue	29,225	28,516	25,901
Franchise advertising fee revenue \| Core Market
Disaggregation of Revenue [Line Items]
Total revenue	13,520	13,223	12,017
Franchise advertising fee revenue \| Non-Core Market
Disaggregation of Revenue [Line Items]
Total revenue	$ 15,705	$ 15,293	$ 13,884

- Definition

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.

+ References + Details

- Definition

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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Financing Costs and Insurance Reserves (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amortization of Debt Issuance Costs	$ 201	$ 340	$ 251
Accrued insurance	11,831	11,120
Expense for payroll and benefits reserves	9,200	8,700	9,000
Other Assets
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred financing fees net of accumulated amortization	700	900
Interest Expense
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amortization of Debt Issuance Costs	$ 200	$ 300	$ 300

INCOME TAXES

12 Months Ended

Dec. 27, 2023

INCOME TAXES

INCOME TAXES

9. INCOME TAXES

The provision for income taxes is based on the following components (in thousands):


	December 27,		December 28,		December 29,
For the Years Ended	2023		2022		2021
Current income taxes:
Federal	$	6,572	$	2,366	$	7,163
State		1,846		1,112		2,158
Total current		8,418		3,478		9,321
Deferred income taxes:
Federal		(29)		2,958		93
State		935		1,642		918
Total deferred		906		4,600		1,011
Tax provision for income taxes	$	9,324	$	8,078	$	10,332

The provision for income taxes differs from the amount computed by applying the federal income tax rate of 21.0% for fiscal 2023, 2022 and 2021 as follows:


	December 27,		December 28,		December 29,
For the Years Ended	2023		2022		2021
Statutory federal income tax rate applied to earnings before income taxes and extraordinary items	21.0	%	21.0	%	21.0	%
State income tax expense (net of federal benefit)	6.4		7.7		5.9
Change in valuation allowance	(19.3)		—		0.1
State credit expiration	19.1		—		—
TRA expense (income)	0.1		(0.3)		—
162(m)	0.6		0.5		0.8
WOTC Credit	(0.7)		(0.9)		(0.5)
Stock option exercises	0.1		0.3		(1.4)
Deferred tax liability true up	(1.1)		—		—
Other	0.5		(0.3)		0.3
Total	26.7	%	28.0	%	26.2	%

As of December 27, 2023, the Company had no federal and less than $0.1 million state NOL carryforwards. These State NOLs expire beginning 2029. The utilization of NOL carryforwards and state enterprise zone credits may be subject to limitation under section 382 of the Internal Revenue Code of 1986 (the “Code”) and similar state law provisions.

Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets. After evaluating all of the positive and negative evidence, including the Company’s continued income from operations, the Company concluded that it is more likely than not that its deferred tax assets except for certain state credits will be realized. In fiscal 2021 and 2022, the Company recorded a valuation allowance of approximately $0.1 million and $0.5 million, respectively, against its deferred tax asset resulting from certain tax credits that may not be realizable prior to the time the credits expire. As of December 27, 2023, the Company released the corresponding valuation allowance since the ten-year carryover period for California Enterprise Zone credits expired at the end of fiscal 2023. As of December 28, 2022, the deferred tax assets related to the California Enterprise Zone credits, net of valuation allowances are $0.5 million.

On July 30, 2014, the Company entered into the TRA. The TRA calls for the Company to pay its pre-IPO stockholders 85% of the cash savings that the Company realizes in its taxes as a result of utilizing its NOLs and other tax attributes attributable to preceding periods. The TRA charge expense (benefit) is a permanent add-back to the Company’s taxable income. In fiscal 2023, 2022 and 2021, TRA resulted in $0.1 million of expense, $0.4 million of income and less than $0.1 of expense, respectively, in each case as a result of 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. In fiscal 2023, 2022 and 2021, the Company paid $0.3 million, $0.4 million and $1.7 million, respectively, to its pre-IPO stockholders under the TRA.

The Company’s deferred tax assets and liabilities as of December 27, 2023 and December 28, 2022 are summarized below.


	December 27,		December 28,
	2023		2022
Deferred assets:
Capital leases	$	62	$	55
Accrued vacation		470		508
Accrued workers’ compensation		2,352		2,201
Enterprise zone and other credits		—		7,258
Net operating losses		5		5
Fixed assets		2,705		2,392
ROU liabilities		50,735		50,112
Other		5,560		4,397
Total deferred tax assets		61,889		66,928
Valuation allowance		—		(6,727)
Net deferred tax assets		61,889		60,201
Deferred liabilities:
Goodwill		(5,938)		(6,420)
Trademark		(16,740)		(16,721)
Prepaid expense		(1,128)		(595)
ROU assets		(45,445)		(44,737)
Fixed assets		(1,470)		—
Other		(46)		267
Deferred tax liabilities		(70,767)		(68,206)
Net deferred tax liability	$	(8,878)	$	(8,005)


	December 27,		December 28,
	2023		2022
Noncurrent:
(Liabilities) assets - state	$	(416)	$	512
Liabilities - federal		(8,462)		(8,517)
Net deferred tax liability	$	(8,878)	$	(8,005)

As of December 27, 2023 and December 28, 2022, the Company had no accrual for unrecognized tax benefits. Consequently, no interest or penalties have been accrued by the Company. The Company believes that no significant changes to the amount of unrecognized tax benefits will occur within the next twelve months. The Company is subject to taxation in the United States and in various state jurisdictions.

The Company is no longer subject to U.S. examination for years before 2020 by the federal taxing authority, and for years before 2019 by state taxing authorities.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

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(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Indefinite Lived Intangible Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Goodwill decrement related to dispositions of restaurants	$ 0.0	$ 0.0	$ 0.0
Goodwill and intangible asset impairment	$ 0.0

OTHER NONCURRENT LIABILITIES - Schedule of Other Noncurrent Liabilities (Detail) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES
Deferred franchise and development fees	$ 6,411	$ 5,767
Other	34	89
Total other noncurrent liabilities	$ 6,445	$ 5,856

COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Thousands			12 Months Ended
	May 21, 2021 USD ($)	Mar. 17, 2017	Dec. 27, 2023 USD ($) agreement lease	Dec. 29, 2021 USD ($)
COMMITMENTS AND CONTINGENCIES
Insurance proceeds			$ 163
Officers
COMMITMENTS AND CONTINGENCIES
Number of at-will employment agreements \| agreement			2
Property Lease Guarantee
COMMITMENTS AND CONTINGENCIES
Number of leases assigned to franchisees \| lease			3
Latest lease expiration year			2038
Contingent lease obligations, maximum exposure			$ 3,800
Contingent lease obligations, maximum exposure, if discounted at estimated pre-tax cost of debt			2,600
Chicken Acquisition Corp
COMMITMENTS AND CONTINGENCIES
Purchase commitments, estimated obligations			$ 31,300
Diep v. Sather
COMMITMENTS AND CONTINGENCIES
Stay order length		5 months
Litigation amount awarded	$ 625,000
Legal settlements	$ 156,250
Insurance proceeds				$ 469,000

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Current assets:
Cash and cash equivalents	$ 7,288	$ 20,493
Accounts and other receivables, net	10,148	10,084
Inventories	1,911	2,442
Prepaid expenses and other current assets	5,634	3,662
Income tax receivable	153	768
Total current assets	25,134	37,449
Property and equipment, net	84,027	78,644
Property and equipment held under finance lease, net	1,528	1,532
Property and equipment held under operating leases, net ("ROU asset")	168,007	165,584
Goodwill	248,674	248,674
Trademarks	61,888	61,888
Deferred tax assets	0	512
Other assets	3,043	2,935
Total assets	592,301	597,218
Current liabilities:
Current portion of obligations under finance leases	140	110
Current portion of obligations under operating leases	19,490	19,995
Accounts payable	12,541	12,741
Accrued salaries and vacation	9,332	8,873
Accrued insurance	11,831	11,120
Accrued income taxes payable	70	0
Accrued interest	394	291
Current portion of income tax receivable agreement payable	422	263
Other accrued expenses and current liabilities	18,361	15,120
Total current liabilities	72,581	68,513
Revolver loan	84,000	66,000
Obligations under finance leases, net of current portion	1,617	1,626
Obligations under operating leases, net of current portion	168,084	165,149
Deferred taxes	8,878	8,517
Income tax receivable agreement payable, net of current portion	0	409
Other noncurrent liabilities	6,445	5,856
Total liabilities	341,605	316,070
Commitments and contingencies (Note 13)
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	0	0
Common stock, $0.01 par value, 200,000,000 shares authorized; 31,353,223 and 37,008,061 shares issued and outstanding as of December 27, 2023 and December 28, 2022, respectively	313	370
Additional paid-in-capital	236,421	292,244
Retained earnings (accumulated deficit)	13,962	(11,592)
Accumulated other comprehensive income	0	126
Total stockholders' equity	250,696	281,148
Total liabilities and stockholders' equity	$ 592,301	$ 597,218

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 27, 2023

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

10. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution employee benefit plan that permits its employees, subject to certain eligibility requirements, to contribute up to 25% of their qualified compensation to the plan. The Company matches 100% of the employees’ contributions of the first 3% of the employees’ annual qualified compensation, and 50% of the employees’ contributions of the next 2% of the employees’ annual qualified compensation. The Company’s matching contribution immediately fully vests. The Company’s contributions to the plan were $0.8 million for the years ended December 27, 2023, December 28, 2022 and December 29, 2021.

REVENUE FROM CONTRACTS WITH CUSTOMERS - Change in Contract Liabilities (Details) - Franchise revenue - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022
Change in Contract with Customer, Liability [Roll Forward]
Loyalty rewards liability, beginning balance	$ 6,377	$ 6,328
Revenue recognized - beginning balance	(791)	(744)
Additional contract liability	1,411	793
Loyalty rewards liability, ending balance	$ 6,997	$ 6,377

EMPLOYEE BENEFIT PLANS - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Defined Contribution Plan Disclosure [Line Items]
Qualified compensation of employees that may be contributed, maximum	25.00%
Benefit contribution	$ 0.8	$ 0.8	$ 0.8
First 3% of Annual Qualified Compensation
Defined Contribution Plan Disclosure [Line Items]
Employer's matching contribution	100.00%
Percentage of employees' annual qualified compensation matched	3.00%
Next 2 % of Annual Qualified Compensation
Defined Contribution Plan Disclosure [Line Items]
Employer's matching contribution	50.00%
Percentage of employees' annual qualified compensation matched	2.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 27, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liquidity

The Company’s principal liquidity and capital requirements are new restaurants, existing restaurant capital investments (remodel and maintenance), interest payments on its debt, lease obligations and working capital and general corporate needs. At December 27, 2023, the Company’s total debt was $84.0 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 flows from operations, available cash of $7.3 million at December 27, 2023, and available borrowings under the 2022 Revolver (as defined in Note 6 “Long-Term Debt”) will be adequate to meet the Company’s liquidity needs for the next twelve months from the issuance of the consolidated financial statements.

Basis of Presentation

The Company uses a 52- or 53-week fiscal year ending on the last Wednesday of each calendar year. Fiscal 2023, 2022, and 2021 ended on December 27, 2023, December 28, 2022 and December 29, 2021, respectively. 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. Approximately every six or seven years a 53-week fiscal year occurs. Fiscal 2023, 2022 and 2021 were 52-week fiscal years. 53-week years may cause revenues, expenses, and other results of operations to be higher due to the additional week of operations.

Principles of Consolidation

The accompanying 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 consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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 consolidated financial statements and revenue and expenses during the period 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, contingent liabilities and income tax valuation allowances.

Market Trends and Uncertainties

On September 28, 2023, Governor Newsom signed AB 1228 into law, which repealed and replaced the Fast Food Accountability and Standards Recovery Act (“FAST Act”) on January 1, 2024. Pursuant to AB 1228, the minimum wage at fast food restaurants that are part of brands which have more than 60 establishments nationwide will rise to $20 an hour on April 1, 2024, and a Fast Food Council created by AB 1228 will have limited power to approve annual wage increases until 2029. Under the law, the Fast Food Council will also have the power to develop and propose minimum standards for fast food workers, including standards for working hours, working conditions, and health and safety. As a result of AB 1228, the Company expects its labor and regulatory compliance costs will increase beginning in fiscal 2024 and that its results of operations and profitability will be adversely affected if it is not able to implement other measures to counter these increased costs.

The Company has experienced inflationary pressures affecting its operations in certain areas such as food cost, labor costs, construction costs and other restaurant operating costs. The Company has been able to substantially offset these inflationary and other cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements. However, the Company expects these inflationary and other cost pressures to continue throughout fiscal year 2024 and it may not be able to offset cost increases in the future.

Cash and Cash Equivalents

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

Subsequent Events

Subsequent to year-end, on February 13, 2024, the Company announced that its Board of Directors has appointed Elizabeth Williams as the new Chief Executive Officer of the Company and as a member of the Board, effective March 11, 2024. Ms. Williams will succeed Maria Hollandsworth, who has served as the Company’s interim Chief Executive Officer since November 3, 2023.

Further, the Company paid down $3.0 million on its 2022 Revolver resulting in outstanding borrowings as of March 7, 2024 of $81.0 million.

Concentration of Risk

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

The Company had one supplier for which amounts due at December 27, 2023 totaled 15.14% of the Company’s accounts payable. As of December 28, 2022, the Company had one supplier for which the amount due totaled 41.7% of the Company’s accounts payable. Purchases from the Company’s largest supplier totaled 26.6% of the Company’s purchases for fiscal 2023, 28.5% for fiscal 2022 and 27.1% for fiscal 2021 with no amounts payable at December 27, 2023 or December 28, 2022.

In fiscal 2023, 2022 and 2021, Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.3%, 71.2%, and 70.9%, respectively, of total revenue. One franchisee accounted for 11.4% of total accounts receivable as of December 27, 2023, and one franchisee accounted for 12.9% of total accounts receivable as of December 28, 2022.

Management believes the loss of the significant supplier or franchisee could have a material adverse effect on the Company’s consolidated results of operations and financial condition.

Accounts and Other Receivables, Net

Accounts and other receivables consist primarily of royalties, advertising and sublease rent and related amounts receivable from franchisees. Such receivables are due on a monthly basis, which may differ from the Company’s fiscal month-end dates. Accounts and other receivables also include credit/debit card receivables. The need for an allowance for doubtful accounts is reviewed on a specific identification basis and takes into consideration past due balances and the financial strength of the obligor.

Inventories

Inventories consist principally of food, beverages and supplies and are valued at the lower of average cost or net realizable value.

Property and Equipment, Net

Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. Expenditures for reimbursements and improvements that significantly add to the productivity capacity or extend the useful life are capitalized, while expenditures for maintenance and repairs are expensed as incurred. Leasehold improvements and property held under finance leases are amortized over the shorter of their estimated useful lives or the remaining lease terms. For leases with renewal periods at the Company’s option, the Company generally uses the original lease term, excluding the option periods, to determine estimated useful lives; if failure to exercise a renewal option imposes an economic penalty on the Company, such that management determines at the inception of the lease that renewal is reasonably assured, the Company may include the renewal option period in the determination of appropriate estimated useful lives.

The estimated useful service lives are as follows:


Buildings		20 years
Land improvements		3—30 years
Building improvements		3—10 years
Restaurant equipment		3—10 years
Other equipment		2—10 years
Property/equipment held under finance leases		Shorter of useful life or lease term
Leasehold improvements		Shorter of useful life or lease term

The Company capitalizes certain directly attributable internal costs in conjunction with the acquisition, development and construction of future restaurants. The Company also capitalizes certain directly attributable costs, including interest, in conjunction with constructing new restaurants. These costs are included in property and amortized over the shorter of the life of the related buildings and leasehold improvements or the lease term. Costs related to abandoned sites and other site selection costs that cannot be identified with specific restaurants are charged to general and administrative expenses in the accompanying consolidated statements of income, and were $0.2 million for the year ended December 27, 2023 and less than $0.1 million for each of the years ended December 28, 2022 and December 29, 2021. The Company capitalized internal costs related to site selection and construction activities of $1.8 million, $1.5 million and $1.4 million for the years ended December 27, 2023, December 28, 2022 and December 29, 2021, respectively.

Impairment of Property and Equipment and ROU Assets

The Company reviews its property and equipment and right-of-use assets (“ROU assets”) for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain property and equipment and ROU assets may not be recoverable. The Company considers a triggering event, related to property and equipment assets or ROU assets in a net asset position, to have occurred related to a specific restaurant if the restaurant’s Average Unit Volume (“AUV”) for the last twelve months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Additionally, the Company considers a triggering event, related to ROU assets, to have occurred related to a specific lease if the location has been closed or subleased and future estimated sublease income is less than current lease payments. As of December 27, 2023 and December 28, 2022, ROU assets related to closed or subleased restaurant locations totaled $42.8 million and $30.7 million, respectively. If the Company concludes that the carrying value of certain property and equipment and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the property and equipment 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 stores during the year ended December 27, 2023 that required an impairment review of the Company’s property and equipment and ROU assets. Based on the results of this analysis, the Company recorded non-cash impairment charges of $1.5 million for the year ended December 27, 2023, primarily related to the carrying value of the ROU assets of one restaurant in California and the property and equipment assets of one restaurant in Nevada.

In fiscal 2022, the Company recorded non-cash impairment charges of $0.5 million primarily related to the carrying value of the ROU assets of one restaurant in California that closed in 2021 and the property and equipment assets of two restaurants in California. In fiscal 2021, the Company recorded a non-cash impairment charge of $0.7 million primarily related to the carrying value of the ROU assets of one restaurant in Texas that closed in 2019, the carrying value of one restaurant in California that closed in 2021 and the property and equipment assets of three restaurants in California. Given the inherent uncertainty in projecting results for newer restaurants in newer markets, 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 fiscal 2023, 2022 and 2021, the Company recognized $0.2 million, $0.3 million and $0.4 million, respectively, of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.

Goodwill and Indefinite Lived Intangible Assets

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 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 2023, 2022 and 2021.

The Company performs annual impairment tests 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 annual impairment tests 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 its 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 there were no indicators of potential impairment of its goodwill and indefinite-lived intangible assets during fiscal 2023. Accordingly, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the year ended December 27, 2023.

Deferred Financing Costs

Deferred financing costs are capitalized and amortized over the period of the loan on a straight-line basis. Included in other assets are deferred financing costs (net of accumulated amortization), related to the revolver, of $0.7 million and $0.9 million as of December 27, 2023 and December 28, 2022, respectively. Amortization expense for deferred financing costs was approximately $0.2 million for the year ended December 27, 2023 and $0.3 million for both of the years ended December 28, 2022, and December 29, 2021, and is reflected as a component of interest expense in the accompanying consolidated statements of income.

Insurance Reserves

The Company is responsible for workers’ compensation, general and health insurance claims up to a specified aggregate stop loss amount. The Company maintains a reserve for estimated claims both reported and incurred but not reported, based on historical claims experience and other assumptions. At December 27, 2023 and December 28, 2022, the Company had accrued $11.8 million and $11.1 million, respectively, and such amounts are reflected as accrued insurance in the accompanying consolidated balance sheets. The expense for such reserves for the years ended December 27, 2023, December 28, 2022 and December 29, 2021, totaled $9.2 million, $8.7 million, and $9.0 million, respectively. These amounts are included in labor and related expenses and general and administrative expenses on the accompanying consolidated statements of income.

Restaurant and Franchise Revenue

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. Promotional allowances amounted to approximately $8.7 million, $7.5 million and $7.7 million during the years ended December 27, 2023, December 28, 2022, and December 29, 2021, respectively.

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 December 27, 2023 and December 28, 2022, the revenue allocated to loyalty points that have not been redeemed was $0.7 million and $0.5 million, respectively, which is reflected in the Company’s accompanying 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 consolidated balance sheets.

Franchise Revenue

Franchise revenue consists of franchise royalties, initial franchise fees, license fees due from franchisees and IT support services. Rental income for subleases to franchisees are outside of the scope of the revenue standard and are within the scope of lease guidance. Under Topic 842, sublease income is recorded on a net basis within the consolidated statements of income. Franchise royalties are based upon a percentage of net sales of the franchisee and are recorded as income as such sales are earned by the franchisees.

For franchise and development agreement fees, the initial franchise services, or exclusivity of the development agreements, are not distinct from the continuing rights or services offered during the term of the franchise agreement and are, therefore, treated as a single performance obligation. As such, initial franchise and development fees received, and subsequent renewal fees, are recognized over the franchise or renewal term, which is typically twenty years. As of December 27, 2023, the Company had executed development agreements that represent commitments to open 107 franchised restaurants at various dates through 2036.

This revenue stream is 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; and

●

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 are 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 allocated 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, which is 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 received for the hardware is considered revenue, and is received upon transfer of the goods from the Company to the franchisee. As of December 27, 2023, there were no performance obligations, related to hardware services that were unsatisfied or partially satisfied.

Franchise Advertising Fee Revenue

The Company presents advertising contributions received from franchisees as franchise advertising fee revenue and records all expenses of the advertising fund within franchise expenses.

Advertising Costs

Advertising expense is recorded as the obligation to contribute to the advertising fund and is accrued, generally when the associated revenue is recognized. Advertising expense, which is a component of occupancy and other operating expenses, was $16.2 million, $16.4 million and $16.1 million for the years ended December 27, 2023, December 28, 2022 and December 29, 2021, respectively. In addition, there was $29.2 million, $28.5 million and $25.9 million for the years ended December 27, 2023, December 28, 2022 and December 29, 2021, respectively, funded by the franchisees’ advertising fees.

Franchisees pay a monthly fee to the Company that ranges from 4% to 5% of their restaurants’ net sales as reimbursement for advertising, public relations and promotional services the Company provides, which is included within franchise advertising fee revenue. Fees received in advance of provided services are included in other accrued expenses and current liabilities and were $3.0 million and $0.8 million at December 27, 2023 and December 28, 2022, respectively. Company-operated restaurants contribute to the advertising fund on the same basis as franchised restaurants. At December 27, 2023, the Company was obligated to spend $3.0 million more in future periods to comply with this requirement.

Production costs of commercials, programming and other marketing activities are charged to the advertising funds when the advertising is first used for its intended purpose. Total contributions and other marketing expenses are included in general and administrative expenses in the accompanying consolidated statements of income.

Preopening Costs

Preopening costs incurred in connection with the opening of new restaurants are expensed as incurred. For each of the years ended December 27, 2023, December 28, 2022, and December 29, 2021, preopening costs, which are included in general and administrative expenses on the accompanying consolidated statements of income were $0.3 million.

Leases

The Company’s operations utilize property, facilities, equipment and vehicles. Buildings and facilities leased from others are primarily for restaurants and support facilities. 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 more than a defined amount. Initial terms of land and restaurant building leases generally have terms of 20 years, exclusive of options to renew. ROU assets and operating and finance lease liabilities are recognized at the lease commencement date, which is the date the Company takes possession of the property. Operating and finance lease liabilities represent the present value of lease payments not yet paid. ROU assets represent the Company’s right to use an underlying asset and are based upon the operating and finance lease liabilities adjusted for prepayments or accrued lease payments, lease incentives, and impairment of ROU assets. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates corresponding to the lease term including reasonably certain renewal periods.

The Company’s leases generally have escalating rents over the term of the lease, and are recorded on a straight-line basis over the expected lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the operating lease asset as reductions of expense over the lease term.

Operating and finance lease liabilities that are based on an index or rate are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Leases of equipment primarily consist of restaurant equipment, computer systems and vehicles. The Company subleases facilities to certain franchisees and other non-related parties which are recorded on a straight-line basis.

Gain on Recovery of Insurance Proceeds, Lost Profits

Gain on Recovery of Insurance Proceeds, Lost Profits

During fiscal 2023 and fiscal 2022, two of the Company’s restaurants incurred damage resulting from a fire. 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 $0.3 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 consolidated statements of income, for the year ended December 27, 2023, as a reduction of Company restaurant expenses. The Company received from the insurance company cash of $0.5 million, net of the insurance deductible, during fiscal 2023.

Gain (Loss) on Disposition of Restaurants

During fiscal 2023, the Company completed the sale of 18 restaurants within California, Utah and Texas to existing franchisees. During fiscal 2022, the Company completed the sale of three company-operated restaurants within the Orange County area to an existing franchisee. During fiscal 2021, the Company completed the sale of eight restaurants within the Sacramento area to an existing franchisee. 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, as well as future cash consideration for royalties. 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. Future royalty income is also recognized in revenue as earned. During 2023, these sales resulted in cash proceeds of $7.7 million and a net gain on sale of restaurant of $5.0 million. The Orange County sale during 2022 resulted in cash proceeds of $1.0 million and a net gain on sale of restaurants of $0.8 million for the year ended December 28, 2022. The Sacramento sale resulted in cash proceeds of $4.6 million and a net loss on sale of restaurants of $1.5 million for the year ended December 29, 2021. Since the date of their sale, these restaurants are now included in the total number of franchised El Pollo Loco restaurants.

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 in Note 6 “Long-Term Debt”), it terminated the interest rate swap on July 28, 2022. The Company recorded the derivative instrument on its 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.

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 it 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%. 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 as the largest amount of tax benefit that is greater than 50% 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 results of operations, financial position and cash flows.

The Company’s policy is to recognize interest or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at December 27, 2023 or December 28, 2022. During fiscal 2023, fiscal 2022 and fiscal 2021, there were no material unrecognized tax benefits. Management believes no significant change to the amount of unrecognized tax benefits will occur within the next twelve months.

On July 30, 2014, the Company entered into the TRA, which calls for the Company to pay to its pre-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. As of December 27, 2023 and December 28, 2022, the Company had accrued $0.4 million and $0.7 million, respectively, relating to expected TRA payments. In fiscal 2023, 2022 and 2021, the Company paid $0.3 million, $0.4 million and $1.7 million, respectively, to its pre-IPO stockholders under the TRA.

Under the CARES Act, the Company was able to defer its employer Social Security taxes that are otherwise owed for wage payment and the creation of refundable employee retention credits. The total amount deferred as of December 30, 2020 was $4.9 million, of which 50% was due by December 31, 2021 and another 50% was due by December 31, 2022. As of December 28, 2022, the Company made all deferred payroll tax payments and did not have any corresponding balances included in other non-current liabilities on the Company’s consolidated balance sheet.

Additionally, the Company assessed its eligibility for the business relief provision under the CARES Act known as the Employee Retention Credit (“ERC”), a refundable payroll tax credit for 50% of qualified wages paid during 2020. The American Rescue Plan passed into law on March 11, 2021 extended the ERC through September 30, 2021, and the credit was increased to 70% of qualified wages paid from January 1, 2021 through September 30, 2021. During fiscal 2021, the Company recognized the ERC credit in the amount of $3.4 million as income as it is probable that it will comply with the ERC eligibility requirements. The Company has elected an accounting policy to present government assistance as a reduction of the related expense. The ERC credit was initially recorded as a receivable as part of the accounts and other receivable on the consolidated balance sheet for the year ended December 29, 2021 and as an offset to the corresponding payroll expense which is classified as part of the labor and other operating expenses on the consolidated statements of income for the year ended December 29, 2021. During fiscal 2022, the Company received $3.1 million in ERC and the remaining $0.3 million was received and recorded during fiscal 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, they are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	1,497
Certain ROU assets, net	$	244	$	—	$	—	$	244	$	39


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	442
Certain ROU assets, net	$	327	$	—	$	—	$	327	$	39


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	304
Certain ROU assets, net	$	411	$	—	$	—	$	411	$	407

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and certain accrued expenses approximate fair value due to their short-term maturities. The recorded value of the TRA approximates fair value, based on borrowing rates currently available to the Company for debts with similar terms and remaining maturities (Level 3 measurement).

Stock Based Compensation

Stock-Based Compensation

Stock-based compensation expense is recognized using a fair-value based method for costs related to all share-based payments including stock options and restricted stock issued under the Company’s employee stock plans. The fair value of stock option awards is estimated on the date of grant using an option pricing model, which require the input of subjective assumptions. The Company is required to use judgment in estimating the amount of stock-based awards that are expected to be forfeited. If actual forfeitures differ significantly from the original estimate, stock-based compensation expense and the results of operations could be affected. The cost is recognized on a straight-line basis over the period during which an employee is required to provide service, usually the vesting period. For options or restricted shares that are based on a performance requirement, the cost is recognized on an accelerated basis over the period to which the performance criteria relate.

Earnings per Share

Earnings per share (“EPS”) is calculated using the weighted average number of common shares outstanding during each period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents unless the effect is to reduce a loss or increase the income per share. For purposes of this calculation, options and restricted stock awards are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive. The shares used to compute basic and diluted net income per share represent the weighted-average common shares outstanding.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. These disclosures are required quarterly. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with early adoption permitted. It is required to be adopted retrospectively for all prior periods presented in the financial statements The Company is currently evaluating the impact of adopting this ASU on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied prospectively with the option of retrospective application. The Company is currently evaluating the impact of adopting this ASU on its disclosures.

The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the consolidated financial statements.

Franchise Development Option Agreement with Related Party

On July 11, 2014, EPL and Trimaran Pollo Partners, L.L.C (“Trimaran”) entered into a Franchise Development Option Agreement relating to development of restaurants in the New York–Newark, NY–NJ–CT–PA Combined Statistical Area (the “Territory”). EPL granted Trimaran the exclusive option to develop and open 15 restaurants in the Territory over five years (the “Initial Option”), and, provided that the Initial Option is exercised, the exclusive option to develop and open up to an additional 100 restaurants in the Territory over ten years. The Franchise Development Option Agreement terminates (i) ten years after execution, or (ii) if the Initial Option is exercised, five years after that exercise. Trimaran may only exercise the Initial Option if EPL first determines to begin development of company-operated restaurants in the Territory or support the development of the Territory. The Company has no current intention to begin development in the Territory and as of December 27, 2023, no stores have been opened in the Territory.

On March 28, 2023, Trimaran and certain of Trimaran’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.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Beginning balance (shares) at Dec. 30, 2020	36,423,505
Beginning balance at Dec. 30, 2020	$ 364	$ 339,561	$ (61,514)	$ (833)	$ 277,578
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		3,220			3,220
Issuance of common stock related to restricted shares	$ 2	(2)			0
Issuance of common stock related to restricted shares (shares)	246,780
Issuance of common stock upon exercise of stock options, net	$ 1	865			866
Issuance of common stock upon exercise of stock options, net (shares)	132,760
Shares repurchased for employee tax withholdings		(705)			(705)
Shares repurchased for employee tax withholdings (shares)	(40,384)
Forfeiture of common stock related to restricted shares	$ (2)	2			0
Forfeiture of common stock related to restricted shares (shares)	(161,013)
Other comprehensive income (loss), net of tax				543	543
Net income			29,121		29,121
Ending balance (shares) at Dec. 29, 2021	36,601,648
Ending balance at Dec. 29, 2021	$ 365	342,941	(32,393)	(290)	310,623
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		3,491			3,491
Issuance of common stock related to restricted shares	$ 4	(4)			0
Issuance of common stock related to restricted shares (shares)	356,610
Issuance of common stock upon exercise of stock options, net	$ 2	1,711			$ 1,713
Issuance of common stock upon exercise of stock options, net (shares)	185,798				185,798
Shares repurchased for employee tax withholdings		(322)			$ (322)
Shares repurchased for employee tax withholdings (shares)	(30,128)
Forfeiture of common stock related to restricted shares	$ (1)	1			$ 0
Forfeiture of common stock related to restricted shares (shares)	(105,867)				(105,867)
Other comprehensive income (loss), net of tax				416	$ 416
Common stock cash dividends ($1.50 per share)		(55,574)			(55,574)
Net income			20,801		20,801
Ending balance (shares) at Dec. 28, 2022	37,008,061
Ending balance at Dec. 28, 2022	$ 370	292,244	(11,592)	126	281,148
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		2,964			2,964
Issuance of common stock related to restricted shares	$ 5	(5)			0
Issuance of common stock related to restricted shares (shares)	454,081
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		(243)			$ (243)
Shares repurchased for employee tax withholdings (shares)	(26,344)
Repurchase of common stock	$ (61)	(59,155)			(59,216)
Repurchase of common stock (shares)	(6,030,850)
Repurchase of common stock - excise tax		(556)			(556)
Forfeiture of common stock related to restricted shares	$ (3)	3			$ 0
Forfeiture of common stock related to restricted shares (shares)	(271,685)				(271,685)
Other comprehensive income (loss), net of tax				$ (126)	$ (126)
Net income			25,554		25,554
Ending balance (shares) at Dec. 27, 2023	31,353,223
Ending balance at Dec. 27, 2023	$ 313	$ 236,421	$ 13,962		$ 250,696

STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021	Jun. 08, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares	380,896
Authorized number of common stock for issuance (shares)	5,652,240
Number of share available for grant (shares)	610,098
Stock-based compensation expense	$ 3,000	$ 3,500	$ 3,200
Common stock, options outstanding (shares)	843,320	1,068,179	978,078
Common stock, options unvested (shares)	462,424
Option vesting period		4 years
Options expiration period	10 years	10 years
Intrinsic value of options exercised	$ 900	$ 800	$ 1,600
Weighted average grant date fair value (usd per share)	$ 4.41	$ 4.89
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	562,344	372,958
Granted (shares)	454,081	356,610
Unrecognized compensation expense	$ 1,800
Unrecognized compensation expense, recognition period	2 years 10 months 24 days
Stock-based compensation expense	$ 2,964	$ 3,491	$ 3,220
Omnibus Equity Incentive Plan 2018 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized number of common stock for issuance (shares)				2,000,000
Exercise price equal to the fair market value of the common stock on the date of grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option vesting period	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	562,344
Premium Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, options outstanding (shares)	0
Restricted Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (shares)	454,081	356,610
Unrecognized compensation expense	$ 3,500
Unrecognized compensation expense, recognition period	2 years 5 months 23 days
Restricted Shares \| Nonemployee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option vesting period	1 year
Restricted Shares \| Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option vesting period	4 years
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 300
Unrecognized compensation expense, recognition period	10 months 13 days

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Revenue
Total revenue	$ 468,664	$ 469,959	$ 454,363
Cost of operations
Food and paper cost	108,250	117,774	104,394
Labor and related expenses	127,244	130,773	120,308
Occupancy and other operating expenses	101,398	101,543	97,557
Gain on recovery of insurance proceeds, lost profits, net	(327)
Company restaurant expenses	336,565	350,090	322,259
General and administrative expenses	42,025	39,093	39,852
Franchise expenses	38,404	36,169	32,831
Depreciation and amortization	15,235	14,418	15,176
Loss on disposal of assets	192	165	289
Gain on recovery of insurance proceeds, property, equipment and expenses	(247)
(Gain) loss on disposition of restaurants	(5,034)	(848)	1,534
Impairment and closed-store reserves	1,732	752	1,087
Total expenses	428,872	439,839	413,028
Income from operations	39,792	30,120	41,335
Interest expense, net	4,811	1,677	1,824
Income tax receivable agreement expense (income)	103	(436)	58
Income before provision for income taxes	34,878	28,879	39,453
Provision for income taxes	9,324	8,078	10,332
Net income	$ 25,554	$ 20,801	$ 29,121
Net income per share
Basic (usd per share)	$ 0.75	$ 0.57	$ 0.81
Diluted (usd per share)	$ 0.74	$ 0.57	$ 0.80
Weighted-average shares used in computing net income per share
Basic (shares)	34,253,542	36,350,579	35,973,892
Diluted (shares)	34,374,706	36,575,904	36,446,756
Company-operated restaurant revenue
Revenue
Total revenue	$ 398,437	$ 403,218	$ 394,733
Franchise revenue
Revenue
Total revenue	41,002	38,225	33,729
Franchise advertising fee revenue
Revenue
Total revenue	$ 29,225	$ 28,516	$ 25,901

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 27, 2023

EARNINGS PER SHARE

Computation of Basic and Diluted Net Income per Share

Below are basic and diluted EPS data for the periods indicated, which are in thousands except for per share data.


	For the Years Ended
	December 27,		December 28,		December 29,
	2023		2022		2021
Numerator:
Net income	$	25,554	$	20,801	$	29,121
Denominator:
Weighted-average shares outstanding—basic		34,253,542		36,350,579		35,973,892
Weighted-average shares outstanding—diluted		34,374,706		36,575,904		36,446,756
Net income per share—basic	$	0.75	$	0.57	$	0.81
Net income per share—diluted	$	0.74	$	0.57	$	0.80
Anti-dilutive securities not considered in diluted EPS calculation		972,181		535,574		136,397

Schedule of Reconciliation of Basic and Diluted Share Counts

Below is a reconciliation of basic and diluted share counts.


	For the Years Ended
	December 27,	December 28,	December 29,
	2023	2022	2021
Weighted-average shares outstanding—basic	34,253,542	36,350,579	35,973,892
Dilutive effect of stock options and restricted shares	121,164	225,325	472,864
Weighted-average shares outstanding—diluted	34,374,706	36,575,904	36,446,756

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 27, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

Legal Matters

On or about November 5, 2015, a purported Holdings shareholder filed a derivative complaint on behalf of Holdings in the Court of Chancery of the State of Delaware against certain Holdings officers, directors and Trimaran, under the caption Armen Galustyan v. Sather, et al. (Case No. 11676-VCL). The derivative complaint alleges that these defendants breached their fiduciary duties to Holdings and were unjustly enriched when they sold shares of Holdings at artificially inflated prices due to alleged misrepresentations and omissions regarding EPL’s comparable store sales in the second quarter of 2015. The Holdings shareholder’s requested remedies include an award of compensatory damages to Holdings, as well as a court order to improve corporate governance by putting forward for stockholder vote certain resolutions for amendments to Holdings’ Bylaws or Certificate of Incorporation. The Holdings shareholder voluntarily dismissed the action on October 7, 2020. A second purported Holdings shareholder filed a derivative complaint on or about September 23, 2016, under the caption Diep v. Sather, CA 12760-VCL in the Delaware Court of Chancery. The Diep action is also purportedly brought on behalf of Holdings, names the same defendants and asserts substantially the same claims on substantially the same alleged facts as does Galustyan. Defendants moved to stay or dismiss the Diep action.

On March 17, 2017, the Delaware court granted in part, and denied in part, the motion to stay the Diep action. The court denied defendants’ motion to dismiss the complaint for failure to state a claim. On January 17, 2018, the court entered an order granting the parties’ stipulation staying all proceedings in the Diep action for five months or until the completion of an investigation of the allegations in the action by a special litigation committee of the Holdings board of directors (the “SLC”). On September 25, 2020, after concluding its investigation, the SLC filed a motion to dismiss the Diep action and filed its investigative report under seal as an exhibit to the motion to dismiss.

On May 21, 2021, while the SLC’s motion to dismiss the Diep action was pending, the Company filed a notice of proposed partial settlement of the Diep action with respect to defendants Kay Bogeajis, Laurance Roberts, Stephen J. Sather, Edward J. Valle, Douglas K. Ammerman, and Samuel N. Borgese (collectively, the “Settling Defendants”). Defendant Trimaran was not a party to the settlement. The court approved the settlement of $625,000, less Plaintiffs’ fees of $156,250, on September 10, 2021, and dismissed all claims brought, or that could have been brought, against Settling Defendants. In connection with this settlement, the Company received $469,000 in insurance proceeds, which was recorded within general and administrative expenses in the Company’s statement of income for the year ended December 29, 2021.

On July 30, 2021, the court granted the SLC’s motion to dismiss with respect to the claims asserted against remaining defendant Trimaran. On October 4, 2021, Plaintiffs filed a notice of appeal of the court’s granting of the motion to dismiss against defendant Trimaran. Plaintiff filed its opening brief on December 6, 2021. SLC filed its answering brief on December 20, 2021 and the public version of the brief was filed on January 7, 2022. Plaintiffs filed the reply brief on January 4, 2022. The hearing on the appeal took place on March 30, 2022. On June 28, 2022, the court’s granting of the motion to dismiss against Trimaran was affirmed.

The Company is also involved in various other claims such as wage and hour and other legal actions that arise in the ordinary course of business. The outcomes of these actions are not predictable but the Company does not believe that the ultimate resolution of these other actions will have a material adverse effect on its financial position, results of operations, liquidity, or capital resources. A significant increase in the number of claims, or an increase in amounts owing under successful claims, could materially and adversely affect its business, consolidated financial condition, results of operations, and cash flows.

Purchase Commitments

The Company has long-term beverage supply agreements with certain major beverage vendors. Pursuant to the terms of these arrangements, marketing rebates are provided to the Company and its franchisees from the beverage vendors based upon the dollar volume of purchases for system-wide restaurants which will vary according to their demand for beverage syrup and fluctuations in the market rates for beverage syrup. These contracts have terms extending through the end of 2024.

At December 27, 2023, the Company’s total estimated commitment to purchase chicken was $31.3 million.

Contingent Lease Obligations

As a result of assigning the Company’s interest in obligations under real estate leases in connection with the sale of company-operated restaurants to some of the Company’s franchisees, the Company is contingently liable on three lease agreements. These leases have various terms, the latest of which expires in 2038. As of December 27, 2023, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $3.8 million. The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at December 27, 2023 was $2.6 million. The Company’s franchisees are primarily liable on the leases. The Company has cross-default provisions with these franchisees that would put them in default of their franchise agreements in the event of non-payment under the leases. The Company believes that these cross-default provisions reduce the risk that payments will be required to be made under these leases.

Employment Agreements

As of December 27, 2023, the Company had employment agreements with two of the officers of the Company. These agreements provide for minimum salary levels, possible annual adjustments for cost-of-living changes, and incentive bonuses that are payable under certain business conditions.

Indemnification Agreements

The Company has entered into indemnification agreements with each of its current directors and officers. These agreements require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to the Company and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. The Company also intends to enter into indemnification agreements with future directors and officers.

STOCK-BASED COMPENSATION - Changes in Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022
Shares
Outstanding-beginning balance (shares)	1,068,179	978,078
Grants (shares)	562,344	372,958
Exercised (shares)	(219,960)	(185,798)
Forfeited, cancelled or expired (shares)	(567,243)	(97,059)
Outstanding-ending balance (shares)	843,320	1,068,179
Vested and expected to vest at end of period (shares)	835,581
Exercisable at end of period (shares)	380,896
Weighted-Average Exercise Price
Outstanding-beginning balance (usd per share)	$ 9.92	$ 11.45
Grants (usd per share)	9.15	10.54
Exercised (usd per share)	5.32	9.22
Forfeited, cancelled or expired (usd per share)	10.63	12.06
Outstanding-ending balance (usd per share)	10.13	$ 9.92
Vested and expected to vest at end of period (usd per share)	10.14
Exercisable at end of period (usd per share)	$ 11.09
Weighted-Average Contractual Life (Years)
Outstanding contractual life (years)	6 years 8 months 23 days
Vested and expected to vest contractual life (years)	6 years 8 months 15 days
Exercisable contractual life (years)	3 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding	$ 33
Vested and expected to vest	$ 32

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 27, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liquidity

Basis of Presentation

Principles of Consolidation

Use of Estimates

Market Trends and Uncertainties

Cash and Cash Equivalents

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

Subsequent Events

Further, the Company paid down $3.0 million on its 2022 Revolver resulting in outstanding borrowings as of March 7, 2024 of $81.0 million.

Concentration of Risk

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

Management believes the loss of the significant supplier or franchisee could have a material adverse effect on the Company’s consolidated results of operations and financial condition.

Accounts and Other Receivables, Net

Inventories

Inventories consist principally of food, beverages and supplies and are valued at the lower of average cost or net realizable value.

Property and Equipment, Net

The estimated useful service lives are as follows:


Buildings		20 years
Land improvements		3—30 years
Building improvements		3—10 years
Restaurant equipment		3—10 years
Other equipment		2—10 years
Property/equipment held under finance leases		Shorter of useful life or lease term
Leasehold improvements		Shorter of useful life or lease term

Impairment of Property and Equipment and ROU Assets

Closed-Store Reserves

Goodwill and Indefinite-Lived Intangible Assets

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

Deferred Financing Costs

Insurance Reserves

Restaurant Revenue

Franchise Revenue

This revenue stream is 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; and

●

Hardware services.

Franchise Advertising Fee Revenue

The Company presents advertising contributions received from franchisees as franchise advertising fee revenue and records all expenses of the advertising fund within franchise expenses.

Advertising Costs

Preopening Costs

Leases

Gain on Recovery of Insurance Proceeds, Lost Profits

Gain (Loss) on Disposition of Restaurants

Derivative Financial Instruments

Income Taxes

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

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.


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	1,497
Certain ROU assets, net	$	244	$	—	$	—	$	244	$	39


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	442
Certain ROU assets, net	$	327	$	—	$	—	$	327	$	39


	Total		Level 1		Level 2		Level 3		Impairment Losses
Certain property and equipment, net	$	—	$	—	$	—	$	—	$	304
Certain ROU assets, net	$	411	$	—	$	—	$	411	$	407

Fair Value of Financial Instruments

Stock-Based Compensation

Earnings per Share

Recently Issued Accounting Pronouncements

Franchise Development Option Agreement with Related Party

REVENUE FROM CONTRACTS WITH CUSTOMERS - Unsatisfied Performance Obligation (Details) - Franchise revenue $ in Thousands	Dec. 27, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unsatisfied performance obligations	$ 6,997
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	$ 600
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	$ 555
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	$ 533
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	$ 513
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	1 year
Unsatisfied performance obligations	$ 484
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-12-27
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Unsatisfied performance obligations	$ 4,312

INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Deferred assets:
Capital leases	$ 62	$ 55
Accrued vacation	470	508
Accrued workers' compensation	2,352	2,201
Enterprise zone and other credits		7,258
Net operating losses	5	5
Fixed assets	2,705	2,392
ROU liabilities	50,735	50,112
Other	5,560	4,397
Total deferred tax assets	61,889	66,928
Valuation allowance		(6,727)
Net deferred tax assets	61,889	60,201
Deferred liabilities:
Goodwill	(5,938)	(6,420)
Trademark	(16,740)	(16,721)
Prepaid expense	(1,128)	(595)
ROU assets	(45,445)	(44,737)
Fixed assets	(1,470)
Other	(46)	267
Deferred tax liabilities	(70,767)	(68,206)
Net deferred tax liability	$ (8,878)	$ (8,005)

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 27, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

11. STOCK-BASED COMPENSATION

Pursuant to the 2018 Omnibus Equity Incentive Plan the Company grants stock options (“options”), restricted stock units, performance-based stock units and restricted stock. The Company has authorized 5,652,240 shares of common stock for issuance in connection with stock awards. On June 8, 2021, the Company’s stockholders approved amending the Equity Incentive Plan, formerly the 2018 Omnibus Equity Incentive Plan, under which the new aggregate share limit was increased to be 2,000,000 shares. As of December 27, 2023, 610,098 shares were available for grant.

During the years ended December 27, 2023, December 28, 2022 and December 29, 2021, the Company recognized stock-based compensation expense of $3.0 million, $3.5 million and $3.2 million, respectively. These expenses were included in general and administrative expenses consistent with the salary expense for the related optionees in the accompanying consolidated statements of income.

Stock Options

At December 27, 2023, options to purchase 843,320 shares of common stock of the Company were outstanding, including 380,896 vested and 462,424 unvested. Unvested options vest over time, or upon the Company’s achievement of annual financial goals. However, the compensation committee of the board of directors, as administrator of the Company’s Equity Incentive Plan, has the power to accelerate the vesting schedule of stock-based compensation, and, generally, in the event of an employee termination in connection with a change in control of the Company, any unvested portion of an award under the plan shall become fully vested. At December 27, 2023, there were no premium options that were granted above the stock price at date of grant. In fiscal 2023, the Company granted 562,344 options, with an exercise price equal to the fair market value of the common stock on the date of grant. The options granted in fiscal 2023 had a four year vesting period. Stock options generally expire ten years from the date of grant. In fiscal 2022, the Company granted 372,958 options, with an exercise price equal to the fair market value of the common stock on the date of grant. The options granted in fiscal 2022 had a four year vesting period. Stock options generally expire 10 years from the date of grant. Changes in options for the years ended December 27, 2023 and December 28, 2022, are as follows:


				Weighted-Average		Aggregate
		Weighted-Average		Contractual Life		Intrinsic Value
	Shares	Exercise Price		Life (Years)		(in thousands)
Outstanding - December 29, 2021	978,078	$	11.45
Grants	372,958		10.54
Exercised	(185,798)		9.22
Forfeited, cancelled or expired	(97,059)		12.06
Outstanding – December 28, 2022	1,068,179	$	9.92
Grants	562,344		9.15
Exercised	(219,960)		5.32
Forfeited, cancelled or expired	(567,243)	$	10.63
Outstanding – December 27, 2023	843,320	$	10.13		6.73	$	33
Vested and expected to vest at December 27, 2023	835,581	$	10.14		6.71	$	32
Exercisable at December 27, 2023	380,896	$	11.09		3.90	$	—

The intrinsic value of options exercised, calculated as the difference between the market value on the date of exercise and the exercise price, was $0.9 million, $0.8 million and $1.6 million for fiscal years 2023, 2022 and 2021, respectively.

The Company measures and recognizes compensation expense for the estimated fair value of stock options for employees and non-employee directors and similar awards based on the grant-date fair value of the award. For options that are based on a service requirement, the cost is recognized on a straight-line basis over the requisite service period, usually the vesting period. For options that were based on performance requirements, costs were recognized over periods to which the performance criteria related. In order to calculate the Company’s stock options’ fair values and the associated compensation costs for share-based awards, the Company utilizes the Black–Scholes option pricing model and has developed estimates of various inputs including forfeiture rate, expected term, expected volatility, and risk-free

interest rate. The forfeiture rate is based on historical rates and reduces the compensation expense recognized. The expected term for options granted is derived using the “simplified” method, in accordance with SEC guidance. The Company calculates the risk-free interest rate using the implied yield for a U.S. Treasury security with constant maturity and a remaining term equal to the expected term of the Company’s employee stock options. The Company does not anticipate paying any cash dividends for the foreseeable future and therefore uses an expected dividend yield of zero for option valuation purposes. Expected volatility is based on the Company’s historical data. Volatility is calculated by taking the historical daily closing equity prices of the Company, prior to the grant date, over a period equal to the expected term.

The weighted-average estimated fair value of employee stock options granted in fiscal 2023 and 2022 was $4.41 and $4.89 per share, respectively, using the Black–Scholes model with the following weighted-average assumptions used to value the option grants:


	December 27, 2023		December 28, 2022
Expected volatility	43.8	%	43.0	%
Risk-free interest rate	3.7	%	2.9	%
Expected term (years)	6.20		6.25
Expected dividends	—		—

As of December 27, 2023, the Company had total unrecognized compensation expense of $1.8 million related to unvested stock options, which the Company expects to recognize over a weighted average period of 2.9 years.

The above assumptions generally require significant judgment. If in the future the Company determines that another method is more reasonable, or if another method for calculating these input assumptions is prescribed by authoritative guidance, and, therefore, should be used to estimate volatility or expected term, the fair value calculated for the Company’s stock options could change significantly. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant.

The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. Changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously-estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the financial statements. If a revised forfeiture rate is lower than the previously-estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the financial statements. The effect of forfeiture adjustments was insignificant in fiscal 2023, 2022 and 2021. The Company will continue to use significant judgment in evaluating the expected term, volatility, and forfeiture rate related to its stock-based compensation.

Restricted Shares

In fiscal 2023 and 2022, 454,081 and 356,610 restricted share awards were granted, respectively, at the fair market value on the date of grant. These grants vest based on continued service over one year for directors and four years for employees.

Changes in restricted shares for the years ended December 27, 2023 and December 28, 2022, are as follows:


		Weighted-Average
	Shares	Fair Value
Unvested shares at December 29, 2021	495,780	$	13.92
Granted	356,610	$	10.37
Released	(201,043)	$	13.32
Forfeited, cancelled, or expired	(105,867)	$	12.91
Unvested shares at December 28, 2022	545,480	$	12.02
Granted	454,081	$	9.08

Released	(190,415)	$	12.25
Forfeited, cancelled, or expired	(271,685)	$	11.06
Unvested shares at December 27, 2023	537,461	$	9.94

As of December 27, 2023, there was total unrecognized compensation expense of $3.5 million related to unvested restricted share awards, which the Company expects to recognize over a weighted-average period of 2.48 years and unrecognized compensation expense of $0.3 million related to unvested restricted units, which it expects to recognize over a weighted-average period of 0.87 years.

SHAREHOLDER RIGHTS AGREEMENT

12 Months Ended

Dec. 27, 2023

SHAREHOLDER RIGHTS AGREEMENT

SHAREHOLDER RIGHTS AGREEMENT

16. 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($)		12 Months Ended
	Jul. 30, 2014	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021	Dec. 30, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unrecognized tax benefits, accrual of interest or penalties		$ 0	$ 0
Percentage of cash savings in taxes realized as a result of utilizing net operating losses payable to pre-IPO stockholders	85.00%
Employee retention tax credit				$ 3,400,000
Proceeds from employee retention credit			3,100,000
Employee Retention Credit, Percentage of Qualified Wages Paid For Refundable Payroll Tax Credit, CARES Act		70.00%
Employee retention credit receivable			$ 300,000
Social Security Tax, Employer, Deferral, Percentage Due By Next Fiscal Year, CARES Act			50.00%
Social Security Tax, Employer, Deferral, Percentage Due By Current Fiscal Year, CARES Act				50.00%
Social Security Tax, Employer, Deferral, CARES Act					$ 4,900,000
Payments to pre-IPO stockholders under TRA		$ 350,000	$ 430,000	$ 1,658,000
Tax Receivable Agreement Expected Payments		$ 400,000	$ 700,000

INCOME TAXES - Schedule of Effective Income Tax Rate (Details)	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
INCOME TAXES
Statutory federal income tax rate applied to earnings before income taxes and extraordinary items	21.00%	21.00%	21.00%
State income tax expense (net of federal benefit)	6.40%	7.70%	5.90%
Change in valuation allowance	(19.30%)		0.10%
State credit expiration	19.10%
TRA expense (income)	0.10%	(0.30%)
162(m)	0.60%	0.50%	0.80%
WOTC Credit	(0.70%)	(0.90%)	(0.50%)
Stock option exercises	0.10%	0.30%	(1.40%)
Deferred tax liability true up	(1.10%)
Other	0.50%	(0.30%)	0.30%
Total	26.70%	28.00%	26.20%

OTHER NONCURRENT LIABILITIES

12 Months Ended

Dec. 27, 2023

OTHER NONCURRENT LIABILITIES

OTHER NONCURRENT LIABILITIES

8. OTHER NONCURRENT LIABILITIES

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


	December 27, 2023		December 28, 2022
Deferred franchise and development fees	$	6,411	$	5,767
Other		34		89
Total other noncurrent liabilities	$	6,445	$	5,856

REVENUE FROM CONTRACTS WITH CUSTOMERS - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 27, 2023 USD ($) item restaurant	Dec. 28, 2022 USD ($) restaurant	Dec. 29, 2021 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Number of revenue streams \| item	2
Gain on sale of restaurants	$ 5,034	$ 848	$ (1,534)
Restaurant Sale \| California, Utah and Texas \| Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Additional contract liability	$ 300
Number of restaurants \| restaurant	18
Gain on sale of restaurants	$ 5,000
Restaurant Sale \| Orange Country \| Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Additional contract liability		$ 800
Number of restaurants \| restaurant		3

LONG-TERM DEBT (Details) $ in Thousands			12 Months Ended
LONG-TERM DEBT (Details) $ in Thousands	Mar. 07, 2024 USD ($)	Jul. 27, 2022 USD ($)	Dec. 27, 2023 USD ($)	Dec. 28, 2022 USD ($)	Dec. 29, 2021 USD ($)
DESCRIPTION OF BUSINESS
Revolving line of credit			$ 84,000	$ 66,000
Repayments of Lines of Credit			$ 21,000	$ 20,000	$ 22,800
2022 Credit Agreement \| SOFR \| Minimum
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			1.25%
2022 Credit Agreement \| SOFR \| Maximum
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			2.25%
2022 Credit Agreement \| Base Rate \| Minimum
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			0.25%
2022 Credit Agreement \| Base Rate \| Maximum
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			1.25%
Revolving Credit Facility \| 2022 Credit Agreement
DESCRIPTION OF BUSINESS
Interest expense			$ 4,400
Maximum borrowing capacity		$ 150,000
Senior secured revolving facility term		5 years
Debt Instrument, Maturity Date			Jul. 27, 2027
Debt instrument, interest rate			7.00%	5.70%
Revolving line of credit			$ 84,000	$ 66,000
Amount of borrowings available			56,200	74,200
Repayment for long-term line of credit			21,000	20,000
Proceeds from lines of credit			18,000	26,000
Principal payments prior to maturity			$ 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
DESCRIPTION OF BUSINESS
Revolving line of credit	$ 81,000
Repayment for long-term line of credit	$ 3,000
Revolving Credit Facility \| 2022 Credit Agreement \| Minimum
DESCRIPTION OF BUSINESS
Debt instrument, interest rate			5.70%
Revolving Credit Facility \| 2022 Credit Agreement \| Maximum
DESCRIPTION OF BUSINESS
Debt instrument, interest rate			7.00%
Revolving Credit Facility \| 2022 Credit Agreement \| Federal Funds Rate
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			0.50%
Revolving Credit Facility \| 2022 Credit Agreement \| One Month SOFR
DESCRIPTION OF BUSINESS
Debt instrument basis percentage			1.00%
Revolving Credit Facility \| 2018 Credit Agreement
DESCRIPTION OF BUSINESS
Maximum borrowing capacity		$ 150,000
Senior secured revolving facility term		5 years
Revolving Credit Facility \| 2022 and 2018 Credit Agreements
DESCRIPTION OF BUSINESS
Interest expense				$ 900	$ 1,200
Revolving Credit Facility \| 2022 and 2018 Credit Agreements \| Minimum
DESCRIPTION OF BUSINESS
Debt instrument, interest rate				1.40%
Revolving Credit Facility \| 2022 and 2018 Credit Agreements \| Maximum
DESCRIPTION OF BUSINESS
Debt instrument, interest rate				6.00%
Letter of Credit \| 2022 Credit Agreement
DESCRIPTION OF BUSINESS
Maximum borrowing capacity			$ 15,000
Letters of credit outstanding			9,800	$ 9,800
Swing Line Loans \| 2022 Credit Agreement
DESCRIPTION OF BUSINESS
Maximum borrowing capacity			$ 15,000

STOCK-BASED COMPENSATION - Weighted Average Assumptions (Details) - Employee Stock Option [Member]	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	43.80%	43.00%
Risk-free interest rate	3.70%	2.90%
Expected term (years)	6 years 2 months 12 days	6 years 3 months
Expected dividends	0.00%	0.00%

- Definition

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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480483/718-10-35-1D

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 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 27: http://www.xbrl.org/2003/role/disclosureRef
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Reference 28: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

REVENUE FROM CONTRACTS WITH CUSTOMERS - Revenues Disaggregated by Geographic Market (Details) - Revenue - Geographic Concentration Risk	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Disaggregation of Revenue [Line Items]
Percentage of concentration	100.00%	100.00%	100.00%
Greater Los Angeles area market
Disaggregation of Revenue [Line Items]
Percentage of concentration	71.30%	71.20%	70.90%
Other markets
Disaggregation of Revenue [Line Items]
Percentage of concentration	28.70%	28.80%	29.10%

- Definition

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.

+ References + Details

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Dec. 27, 2023

Disaggregation of Revenue [Line Items]

Schedule of disaggregation of Revenue

The following table presents the Company’s revenues for the years ended December 27, 2023, December 28, 2022 and December 29, 2021 disaggregated by revenue source and market (in thousands):


	December 27, 2023		December 28, 2022		December 29, 2021
Core Market⁽¹⁾:
Company-operated restaurant revenue	$	381,319	$	384,504	$	371,067
Franchise revenue		19,805		17,953		16,062
Franchise advertising fee revenue		13,520		13,223		12,017
Total core market	$	414,644	$	415,680	$	399,146
Non-Core Market⁽²⁾:
Company-operated restaurant revenue	$	17,118	$	18,714	$	23,666
Franchise revenue		21,197		20,272		17,667
Franchise advertising fee revenue		15,705		15,293		13,884
Total non-core market	$	54,020	$	54,279	$	55,217
Total revenue	$	468,664	$	469,959	$	454,363

(1)	Core Market includes markets with existing company-operated restaurants at the time of the Company’s Initial Public Offering ("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


	December 27, 2023		December 28, 2022		December 29, 2021
Greater Los Angeles area market	71.3	%	71.2	%	70.9	%
Other markets	28.7	%	28.8	%	29.1	%
Total	100	%	100	%	100	%

Schedule of Estimated Revenue to be Recognized Related to Performance Obligations

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


Franchise revenues:
2024	$	600
2025		555
2026		533
2027		513
2028		484
Thereafter		4,312
Total	$	6,997

Loyalty reward program

Disaggregation of Revenue [Line Items]

Schedule of Change in Franchise Contract Liability Balances

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


	December 27, 2023		December 28, 2022		December 29, 2021
Loyalty rewards liability, beginning balance	$	526	$	687	$	900
Revenue deferred		2,065		2,754		2,677
Revenue recognized		(1,904)		(2,915)		(2,890)
Loyalty rewards liability, ending balance	$	687	$	526	$	687

Gift card liability

Disaggregation of Revenue [Line Items]

Schedule of Change in Franchise Contract Liability Balances

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


	December 27, 2023		December 28, 2022
Gift card liability	$	4,877	$	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):


	December 27, 2023		December 28, 2022		December 29, 2021
Revenue recognized from gift card liability balance at the beginning of the year	$	1,064	$	1,145	$	1,218

Franchise revenue

Disaggregation of Revenue [Line Items]

Schedule of Change in Franchise Contract Liability Balances

The following table provides information about the change in the franchise contract liability balances during the year ended December 27, 2023 and December 28, 2022 (in thousands):


December 29, 2021	$	6,328
Revenue recognized - beginning balance		(744)
Additional contract liability		793
December 28, 2022	$	6,377
Revenue recognized - beginning balance		(791)
Additional contract liability		1,411
December 27, 2023	$	6,997

- Definition

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.

+ References + Details

LEASES - Minimum Future Lease Obligations (Details) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Finance Minimum Lease Payments
For the Years Ending December 25, 2024	$ 191
For the Years Ending December 31, 2025	187
For the Years Ending December 30, 2026	154
For the Years Ending December 29, 2027	144
For the Years Ending December 27, 2028	103
Thereafter	1,376
Total	2,155
Less: imputed interest	(398)
Present value of lease obligations	1,757
Less: current maturities	(140)	$ (110)
Noncurrent portion	1,617	1,626
Operating Leases Minimum Lease Payments
For the Years Ending December 25, 2024	28,328
For the Years Ending December 31, 2025	27,126
For the Years Ending December 30, 2026	25,043
For the Years Ending December 29, 2027	23,581
For the Years Ending December 29, 2028	21,384
Thereafter	118,426
Total	243,888
Less: imputed interest	(56,314)
Present value of lease obligations	187,574
Less: current maturities	(19,490)	(19,995)
Noncurrent portion	168,084	$ 165,149
Operating Leases Minimum Sublease Payments
For the Years Ending December 25,2024	5,886
For the Years Ending December 31, 2025	5,518
For the Years Ending December 30, 2026	5,034
For the Years Ending December 29, 2027	4,858
For the Years Ending December 29, 2028	4,484
Thereafter	27,854
Total	$ 53,634
Minimum
Operating Leases Minimum Sublease Payments
Imputed interest rate	2.57%
Maximum
Operating Leases Minimum Sublease Payments
Imputed interest rate	5.68%

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 27, 2023

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

15. 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. See Note 2 “Summary of Significant Accounting Policies” for a description of the revenue recognition policies.

Franchise and franchise advertising fee 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 fee revenue consists of advertising contributions received from franchisees.

Disaggregated revenue

The following table presents the Company’s revenues for the years ended December 27, 2023, December 28, 2022 and December 29, 2021 disaggregated by revenue source and market (in thousands):


	December 27, 2023		December 28, 2022		December 29, 2021
Core Market⁽¹⁾:
Company-operated restaurant revenue	$	381,319	$	384,504	$	371,067
Franchise revenue		19,805		17,953		16,062
Franchise advertising fee revenue		13,520		13,223		12,017
Total core market	$	414,644	$	415,680	$	399,146
Non-Core Market⁽²⁾:
Company-operated restaurant revenue	$	17,118	$	18,714	$	23,666
Franchise revenue		21,197		20,272		17,667
Franchise advertising fee revenue		15,705		15,293		13,884
Total non-core market	$	54,020	$	54,279	$	55,217
Total revenue	$	468,664	$	469,959	$	454,363

(1)	Core Market includes markets with existing company-operated restaurants at the time of the Company’s Initial Public Offering ("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 for the years ended December 27, 2023, December 28, 2022 and December 29, 2021:


	December 27, 2023		December 28, 2022		December 29, 2021
Greater Los Angeles area market	71.3	%	71.2	%	70.9	%
Other markets	28.7	%	28.8	%	29.1	%
Total	100	%	100	%	100	%

Contract balances

The following table provides information about the change in the franchise contract liability balances during the year ended December 27, 2023 and December 28, 2022 (in thousands):


December 29, 2021	$	6,328
Revenue recognized - beginning balance		(744)
Additional contract liability		793
December 28, 2022	$	6,377
Revenue recognized - beginning balance		(791)
Additional contract liability		1,411
December 27, 2023	$	6,997

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 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.

For the year ended December 27, 2023, there was an increase to the contract liability balance due to the Company’s completion of the sale of 18 company-operated restaurants within the California, Utah and Texas to an existing franchisee. This resulted in a net gain on sale of restaurant of $5.0 million including an additional contract liability of $0.3 million, relating to allocation of the transaction price to various performance obligations under the applicable contracts of the sale. For the year ended December 28, 2022, there was an increase to the contract liability balance due to the Company’s completion of the sale of three company-operated restaurants within the Orange County area to an existing franchisee. This resulted in additional contract liability of $0.8 million, relating to allocation of the transaction price to various performance obligations under the applicable contracts of the sale.

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


Franchise revenues:
2024	$	600
2025		555
2026		533
2027		513
2028		484
Thereafter		4,312
Total	$	6,997

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


	December 27, 2023		December 28, 2022		December 29, 2021
Loyalty rewards liability, beginning balance	$	526	$	687	$	900
Revenue deferred		2,065		2,754		2,677
Revenue recognized		(1,904)		(2,915)		(2,890)
Loyalty rewards liability, ending balance	$	687	$	526	$	687

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

Gift Cards

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


	December 27, 2023		December 28, 2022
Gift card liability	$	4,877	$	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):


	December 27, 2023		December 28, 2022		December 29, 2021
Revenue recognized from gift card liability balance at the beginning of the year	$	1,064	$	1,145	$	1,218

Contract Costs

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

- Definition

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.

+ References

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

+ Details

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 27, 2023	Dec. 28, 2022
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (shares)	100,000,000	100,000,000
Shares designated as Series A Preferred Stock	100,000	100,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
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)	31,353,223	37,008,061
Common stock, shares outstanding (shares)	31,353,223	37,008,061

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 27, 2023	Mar. 01, 2024	Jun. 28, 2023
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Smaller reporting company	false
Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Document Financial Statement Error Correction [Flag]	false
Shell Company	false
Entity Public Float			$ 168.0
Entity Common Stock, Shares Outstanding		31,282,820
Auditor Name	BDO USA, P.C.
Auditor Firm ID	243
Auditor Location	Costa Mesa, California
Entity Central Index Key	0001606366
Current Fiscal Year End Date	--12-27
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Thousands		12 Months Ended
	Mar. 07, 2024	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021	Nov. 27, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total amount of outstanding debt		$ 84,000
Cash available		7,288	$ 20,493		$ 7,300
Repayments of Lines of Credit		21,000	20,000	$ 22,800
Revolving line of credit		84,000	66,000
Revolving Credit Facility \| 2022 Credit Agreement
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Repayment for long-term line of credit		21,000	20,000
Revolving line of credit		$ 84,000	$ 66,000
Revolving Credit Facility \| Subsequent Event \| 2022 Credit Agreement
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Repayment for long-term line of credit	$ 3,000
Revolving line of credit	$ 81,000

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

- Definition

The carrying value as of the balance sheet date of the noncurrent portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Pay vs Performance Disclosure
Net Income (Loss)	$ 25,554	$ 20,801	$ 29,121

- Definition

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

+ References

+ Details

LEASES

12 Months Ended

Dec. 27, 2023

LEASES

LEASES

5. 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 December 27, 2023, the Company had no leases that it had entered into, but had not yet commenced.

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 13 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, which 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 common area maintenance, 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 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 year ended December 27, 2023, the Company reassessed the lease terms on 36 restaurants due to certain triggering events, such as the addition of significant leasehold improvements, the decision to terminate a lease, or the decision to renew. As a result of the reassessment, an additional $21.5 million of ROU assets and lease liabilities for the year ended December 27, 2023 were recognized, and will be amortized over the new lease term.

During the year ended December 28, 2022, the Company reassessed the lease terms on 22 restaurants due to certain triggering events, such as the addition of significant leasehold improvements, the decision to terminate a lease, or the decision to renew. As a result of the reassessment, an additional $13.0 million of ROU assets and lease liabilities for the year ended December 28, 2022 were recognized, and will be amortized over the new lease term.

There were no reassessments that impacted the original lease classification during the year ended December 27, 2023. The reassessments had an impact on the original lease classification of one property during the year ended December 28, 2022 which represented $0.7 million of the $13.0 million total additional ROU asset and lease liabilities for fiscal 2022. 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 fiscal 2023, the Company determined that the carrying value of an ROU assets at one restaurant was not recoverable. As a result, the Company recorded a less than $0.1 million non-cash impairment charge for the year ended

December 27, 2023 related to one restaurant in California. During fiscal 2022, the Company determined that the carrying value of an ROU assets at one restaurant was not recoverable. As a result, the Company recorded a less than $0.1 million non-cash impairment charge for the year ended December 28, 2022 related to one restaurant closed in California. During fiscal 2021, the Company determined that the carrying value of ROU assets at two restaurants were not recoverable. As a result, the Company recorded a $0.4 million non-cash impairment charge for the year ended December 29, 2021 related to one restaurant closed in Texas in 2019 and one restaurant closed in California.

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. 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):


	December 27, 2023						December 28, 2022						December 29, 2021
	Property		Equipment				Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	73	$	2	$	75	$	73	$	2	$	75	$	78	$	2	$	80
Interest on lease liabilities		40		5		45		42		3		45		58		1		59
Operating lease cost:
Fixed rent cost		27,597		387		27,984		26,537		1,005		27,542		26,501		1,122		27,623
Short-term lease cost		—		8		8		—		18		18		—		21		21
Variable lease cost		546		1,279		1,825		597		677		1,274		539		354		893
Sublease income		(5,570)		—		(5,570)		(4,555)		—		(4,555)		(3,823)		—		(3,823)
Total lease cost	$	22,686	$	1,681	$	24,367	$	22,694	$	1,705	$	24,399	$	23,353	$	1,500	$	24,853

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


	December 27, 2023		December 28, 2022		December 29, 2021
Lease cost – Occupancy and other operating expenses	$	23,736	$	23,730	$	24,020
Lease cost – General & administrative		492		465		413
Lease cost – Depreciation and amortization		75		73		78
Lease cost – Interest expense		45		45		59
Lease cost – Closed-store reserve		19		86		283
Total lease cost	$	24,367	$	24,399	$	24,853

The Company had the following cash and non-cash activities associated with its leases (dollar amounts in thousands):


	December 27, 2023								December 28, 2022								December 29, 2021
	Property			Equipment					Property			Equipment					Property			Equipment
	Leases			Leases			Total		Leases			Leases			Total		Leases			Leases			Total
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	27,835		$	321		$	28,156	$	27,221		$	953		$	28,174	$	26,414		$	1,084		$	27,498
Financing cash flows used for finance leases	$	93		$	65		$	158	$	106		$	56		$	162	$	102		$	46		$	148

Non-cash investing and financing activities:
Operating lease ROU assets obtained in exchange for lease liabilities:
Operating lease ROU assets	$	21,448		$	54		$	21,502	$	12,978		$	92		$	13,070	$	17,763		$	—		$	17,763
Finance lease ROU assets obtained in exchange for lease liabilities:
Finance lease ROU assets	$	—		$	135		$	135	$	—		$	28		$	28	$	—		$	196		$	196
Derecognition of ROU assets due to terminations, impairment or modifications	$	(40)		$	(4)		$	(44)	$	(39)		$	(35)		$	(74)	$	(4,513)		$	(99)		$	(4,612)

Other Information
Weighted-average remaining years in lease term—finance leases		16.87			3.15					17.87			3.19					18.42			4.02
Weighted-average remaining years in lease term—operating leases		10.42			3.33					10.73			1.73					11.27			1.44
Weighted-average discount rate—finance leases		2.57	%		5.68	%				2.57	%		1.53	%				2.78	%		1.54	%
Weighted-average discount rate—operating leases		5.00	%		4.52	%				4.54	%		3.80	%				4.45	%		3.89	%

Information regarding the Company’s minimum future lease obligations at December 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 25, 2024	$	191	$	28,328	$	5,886
December 31, 2025		187		27,126		5,518
December 30, 2026		154		25,043		5,034
December 29, 2027		144		23,581		4,858
December 27, 2028		103		21,384		4,484
Thereafter		1,376		118,426		27,854
Total	$	2,155	$	243,888	$	53,634
Less: imputed interest (2.57% - 5.68%)		(398)		(56,314)
Present value of lease obligations		1,757		187,574
Less: current maturities		(140)		(19,490)
Noncurrent portion	$	1,617	$	168,084

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 consolidated statement

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 is 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 3 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.

For the years ended December 27, 2023, December 28, 2022, and December 29, 2021, the Company received $0.3 million, $0.4 million and $0.4 million, respectively, of lease income from company-owned locations.

LEASES - Lease Cost (Details) - USD ($) $ in Thousands	12 Months Ended
LEASES - Lease Cost (Details) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	$ 75	$ 75	$ 80
Interest on lease liabilities	45	45	59
Fixed rent cost	27,984	27,542	27,623
Short-term lease cost	8	18	21
Variable lease cost	1,825	1,274	893
Sublease income	(5,570)	(4,555)	(3,823)
Total lease cost	24,367	24,399	24,853
Occupancy and other operating expenses
Lessee, Lease, Description [Line Items]
Total lease cost	23,736	23,730	24,020
General & administrative
Lessee, Lease, Description [Line Items]
Total lease cost	492	465	413
Depreciation and amortization
Lessee, Lease, Description [Line Items]
Total lease cost	75	73	78
Interest expense
Lessee, Lease, Description [Line Items]
Total lease cost	45	45	59
Closed-store reserve
Lessee, Lease, Description [Line Items]
Total lease cost	19	86	283
Property Lease
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	73	73	78
Interest on lease liabilities	40	42	58
Fixed rent cost	27,597	26,537	26,501
Variable lease cost	546	597	539
Sublease income	(5,570)	(4,555)	(3,823)
Total lease cost	22,686	22,694	23,353
Equipment Lease
Lessee, Lease, Description [Line Items]
Amortization of right-to-use assets	2	2	2
Interest on lease liabilities	5	3	1
Fixed rent cost	387	1,005	1,122
Short-term lease cost	8	18	21
Variable lease cost	1,279	677	354
Total lease cost	$ 1,681	$ 1,705	$ 1,500

TRADEMARKS AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 27, 2023

TRADEMARKS AND OTHER INTANGIBLE ASSETS

Schedule of Domestic Trademarks

Domestic trademarks consist of the following (in thousands):


	December 27,		December 28,
	2023		2022
Cost	$	120,700	$	120,700
Accumulated impairment charges		(58,812)		(58,812)
Trademarks, net	$	61,888	$	61,888

REVENUE FROM CONTRACTS WITH CUSTOMERS - Loyalty Reward Liability and Gift Card Liability (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Change in Contract with Customer, Liability [Roll Forward]
Gift card liability	$ 4,877	$ 4,667
Gift card liability
Change in Contract with Customer, Liability [Roll Forward]
Gift card liability	4,877	4,667
Revenue recognized from gift card liability balance at the beginning of the year	1,064	1,145	$ 1,218
Loyalty reward program
Change in Contract with Customer, Liability [Roll Forward]
Loyalty rewards liability, beginning balance	526	687	900
Revenue deferred	2,065	2,754	2,677
Revenue recognized	(1,904)	(2,915)	(2,890)
Loyalty rewards liability, ending balance	$ 687	$ 526	$ 687
Loyalty reward program \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-26
Change in Contract with Customer, Liability [Roll Forward]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Dec. 28, 2022 $ / shares
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Dividends per share	$ 1.50

TRADEMARKS AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 27, 2023

TRADEMARKS AND OTHER INTANGIBLE ASSETS

TRADEMARKS AND OTHER INTANGIBLE ASSETS

4. TRADEMARKS AND OTHER INTANGIBLE ASSETS

Domestic trademarks consist of the following (in thousands):


	December 27,		December 28,
	2023		2022
Cost	$	120,700	$	120,700
Accumulated impairment charges		(58,812)		(58,812)
Trademarks, net	$	61,888	$	61,888

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 27, 2023

PROPERTY AND EQUIPMENT

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 are as follows (in thousands):


	December 27, 2023		December 28, 2022
Land	$	12,323	$	12,323
Buildings and improvements		148,259		153,377
Other property and equipment		86,423		83,035
Construction in progress		7,270		3,196
		254,275		251,931
Less: accumulated depreciation and amortization		(170,248)		(173,287)
	$	84,027	$	78,644

STOCK-BASED COMPENSATION - Schedule of Changes in Restricted Shares (Details) - $ / shares	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022
Shares
Unvested shares, beginning balance (shares)	545,480	495,780
Granted (shares)	454,081	356,610
Released (shares)	(190,415)	(201,043)
Forfeited, cancelled, or expired (shares)	(271,685)	(105,867)
Unvested shares, ending balance (shares)	537,461	545,480
Weighted-Average Fair Value
Unvested shares Weighted-Average Fair Value, beginning balance (usd per share)	$ 12.02	$ 13.92
Granted, Weighted-Average Fair Value (usd per share)	9.08	10.37
Released, Weighted-Average Fair Value (usd per share)	12.25	13.32
Forfeited, cancelled, or expired, Weighted-Average Fair Value (usd per share)	11.06	12.91
Unvested shares Weighted-Average Fair Value, ending balance (usd per share)	$ 9.94	$ 12.02

INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands		12 Months Ended
	Jul. 30, 2014	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Investments, Owned, Federal Income Tax Note [Line Items]
Increase in valuation allowance				$ 100
Valuation allowance			$ 6,727
Percentage of cash savings in taxes realized as a result of utilizing net operating losses payable to pre-IPO stockholders	85.00%
TRA tax expense (benefit)		$ 100	(400)
Deferred tax asset credit			7,258
Unrecognized Tax Benefits, Interest on Income Taxes Accrued		0	0
Unrecognized Tax Benefits, Income Tax Penalties Accrued		0	0
Payment to Stockholders Under Tax Receivable Agreement		300	400	1,700
Maximum
Investments, Owned, Federal Income Tax Note [Line Items]
Increase in valuation allowance			500
TRA tax expense (benefit)				$ 100
Federal
Investments, Owned, Federal Income Tax Note [Line Items]
Net operating loss carryforwards		0
State
Investments, Owned, Federal Income Tax Note [Line Items]
Net operating loss carryforwards		$ 100
California \| Enterprise Zone
Investments, Owned, Federal Income Tax Note [Line Items]
Deferred tax asset credit			$ 500

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Property and equipment, net	$ 84,027	$ 78,644
Impairment of property and equipment	$ 1,500	400	$ 300
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring Costs and Asset Impairment Charges
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Property and equipment, net	$ 0	0	0
Right-of-Use Assets, Net	244	327	411
Impairment of property and equipment	1,497	442	304
Impairment Losses of Right-of-Use Assets	39	39	407
Fair Value, Measurements, Nonrecurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Property and equipment, net	0	0	0
Right-of-Use Assets, Net	0	0
Fair Value, Measurements, Nonrecurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Property and equipment, net	0	0	0
Right-of-Use Assets, Net	0	0
Fair Value, Measurements, Nonrecurring \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Property and equipment, net	0	0	0
Right-of-Use Assets, Net	$ 244	$ 327	$ 411

LEASES (Tables)

12 Months Ended

Dec. 27, 2023

LEASES

Schedule of lease cost

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


	December 27, 2023						December 28, 2022						December 29, 2021
	Property		Equipment				Property		Equipment				Property		Equipment
	Leases		Leases		Total		Leases		Leases		Total		Leases		Leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	73	$	2	$	75	$	73	$	2	$	75	$	78	$	2	$	80
Interest on lease liabilities		40		5		45		42		3		45		58		1		59
Operating lease cost:
Fixed rent cost		27,597		387		27,984		26,537		1,005		27,542		26,501		1,122		27,623
Short-term lease cost		—		8		8		—		18		18		—		21		21
Variable lease cost		546		1,279		1,825		597		677		1,274		539		354		893
Sublease income		(5,570)		—		(5,570)		(4,555)		—		(4,555)		(3,823)		—		(3,823)
Total lease cost	$	22,686	$	1,681	$	24,367	$	22,694	$	1,705	$	24,399	$	23,353	$	1,500	$	24,853

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


	December 27, 2023		December 28, 2022		December 29, 2021
Lease cost – Occupancy and other operating expenses	$	23,736	$	23,730	$	24,020
Lease cost – General & administrative		492		465		413
Lease cost – Depreciation and amortization		75		73		78
Lease cost – Interest expense		45		45		59
Lease cost – Closed-store reserve		19		86		283
Total lease cost	$	24,367	$	24,399	$	24,853

The Company had the following cash and non-cash activities associated with its leases (dollar amounts in thousands):


	December 27, 2023								December 28, 2022								December 29, 2021
	Property			Equipment					Property			Equipment					Property			Equipment
	Leases			Leases			Total		Leases			Leases			Total		Leases			Leases			Total
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	27,835		$	321		$	28,156	$	27,221		$	953		$	28,174	$	26,414		$	1,084		$	27,498
Financing cash flows used for finance leases	$	93		$	65		$	158	$	106		$	56		$	162	$	102		$	46		$	148

Non-cash investing and financing activities:
Operating lease ROU assets obtained in exchange for lease liabilities:
Operating lease ROU assets	$	21,448		$	54		$	21,502	$	12,978		$	92		$	13,070	$	17,763		$	—		$	17,763
Finance lease ROU assets obtained in exchange for lease liabilities:
Finance lease ROU assets	$	—		$	135		$	135	$	—		$	28		$	28	$	—		$	196		$	196
Derecognition of ROU assets due to terminations, impairment or modifications	$	(40)		$	(4)		$	(44)	$	(39)		$	(35)		$	(74)	$	(4,513)		$	(99)		$	(4,612)

Other Information
Weighted-average remaining years in lease term—finance leases		16.87			3.15					17.87			3.19					18.42			4.02
Weighted-average remaining years in lease term—operating leases		10.42			3.33					10.73			1.73					11.27			1.44
Weighted-average discount rate—finance leases		2.57	%		5.68	%				2.57	%		1.53	%				2.78	%		1.54	%
Weighted-average discount rate—operating leases		5.00	%		4.52	%				4.54	%		3.80	%				4.45	%		3.89	%

Schedule of Financing Leases

Information regarding the Company’s minimum future lease obligations at December 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 25, 2024	$	191	$	28,328	$	5,886
December 31, 2025		187		27,126		5,518
December 30, 2026		154		25,043		5,034
December 29, 2027		144		23,581		4,858
December 27, 2028		103		21,384		4,484
Thereafter		1,376		118,426		27,854
Total	$	2,155	$	243,888	$	53,634
Less: imputed interest (2.57% - 5.68%)		(398)		(56,314)
Present value of lease obligations		1,757		187,574
Less: current maturities		(140)		(19,490)
Noncurrent portion	$	1,617	$	168,084

Schedule of Operating Leases

Information regarding the Company’s minimum future lease obligations at December 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 25, 2024	$	191	$	28,328	$	5,886
December 31, 2025		187		27,126		5,518
December 30, 2026		154		25,043		5,034
December 29, 2027		144		23,581		4,858
December 27, 2028		103		21,384		4,484
Thereafter		1,376		118,426		27,854
Total	$	2,155	$	243,888	$	53,634
Less: imputed interest (2.57% - 5.68%)		(398)		(56,314)
Present value of lease obligations		1,757		187,574
Less: current maturities		(140)		(19,490)
Noncurrent portion	$	1,617	$	168,084

EARNINGS PER SHARE

12 Months Ended

Dec. 27, 2023

EARNINGS PER SHARE

EARNINGS PER SHARE

12. EARNINGS PER SHARE

Basic EPS is calculated using the weighted-average number of shares of common stock outstanding during the years ended December 27, 2023, December 28, 2022, and December 29, 2021. Diluted EPS is calculated using the weighted-average number of shares of common stock outstanding and potentially dilutive during the period, using the treasury stock method.

On October 11, 2022, the Company’s Board of Directors approved a share repurchase program (the “2022 Stock Repurchase Plan”) under which the Company was authorized to repurchase up to $20.0 million of shares of its common stock through March 28, 2024.

Under the 2022 Stock Repurchase Plan, the Company was permitted to repurchase its common stock from time to time, in amounts and at prices that the Company deemed appropriate, subject to market conditions and other considerations. Pursuant to the 2022 Stock Repurchase Plan, the Company was authorized to effect repurchases using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.

For the year ended December 27, 2023, the Company repurchased 2,030,850 shares of common stock under the 2022 Stock Repurchase Plan, using open market purchases, for total consideration of approximately $20.0 million. The common stock repurchased under 2022 Stock Repurchase Plan were retired upon repurchase. The 2022 Stock Repurchase Plan commenced on January 9, 2023, and was completed on July 12, 2023.

On August 7, 2023, the Company entered into a Stock Repurchase Agreement with FS Equity Partners V, L.P. and FS Affiliates V, L.P. (together, 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 & Co. (“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.

On November 2, 2023, the Company announced that its Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $20,000,000 of shares of the Company’s common stock. Shares may be repurchased from time to time on the open market, in block trades, pursuant to structured or derivative transactions or in privately negotiated transactions. The amount and timing of any shares repurchased under the program will be determined at the discretion of management and will depend on a number of factors, including the market price of the Company’s stock, trading volume, general market and economic conditions, the Company’s capital position, legal requirements, and other factors. The Company may also from time to time establish one or more plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, for the repurchase of shares of its common stock under the program. The repurchase program does not obligate the Company to acquire any particular number of shares. The repurchase program will terminate on March 31, 2025 and may be modified, suspended or discontinued at any time.

On November 29, 2023, in accordance with the board approved share repurchase program, the Company entered into a second Stock Repurchase Agreement with the Sellers (the “Repurchase Agreement”), pursuant to which the Company agreed to purchase an aggregate of 1,500,000 shares of the Company’s common stock from the Sellers at a price of

$8.40 per share, representing the closing price of such shares as listed on Nasdaq on November 29, 2023, for a total purchase price of $12,600,000. The repurchase was completed on December 4, 2023. Following completion of this repurchase, approximately $7.4 million of our common stock remained available for repurchase under the share repurchase program at December 27, 2023. John Roth, a former director of the Company until his resignation effective August 16, 2023, is a general partner and chief executive officer of Freeman Spogli, which manages the Sellers.

Below are basic and diluted EPS data for the periods indicated, which are in thousands except for per share data.


	For the Years Ended
	December 27,		December 28,		December 29,
	2023		2022		2021
Numerator:
Net income	$	25,554	$	20,801	$	29,121
Denominator:
Weighted-average shares outstanding—basic		34,253,542		36,350,579		35,973,892
Weighted-average shares outstanding—diluted		34,374,706		36,575,904		36,446,756
Net income per share—basic	$	0.75	$	0.57	$	0.81
Net income per share—diluted	$	0.74	$	0.57	$	0.80
Anti-dilutive securities not considered in diluted EPS calculation		972,181		535,574		136,397

Below is a reconciliation of basic and diluted share counts.


	For the Years Ended
	December 27,	December 28,	December 29,
	2023	2022	2021
Weighted-average shares outstanding—basic	34,253,542	36,350,579	35,973,892
Dilutive effect of stock options and restricted shares	121,164	225,325	472,864
Weighted-average shares outstanding—diluted	34,374,706	36,575,904	36,446,756

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Franchise Development Option Agreement with Related Party (Details) - Limited Liability Company - restaurant	Jul. 11, 2014	Dec. 27, 2023
Franchise Development Initial Option Agreement \| Affiliated Entity
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of restaurants	15	0
Number of years available under plan	5 years
Franchise Development Additional Option Agreement
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of years available under plan	5 years
Franchise Development Additional Option Agreement \| Affiliated Entity
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of restaurants	100
Number of years available under plan	10 years
Franchise Development Agreement \| Affiliated Entity
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Related party agreement, termination period	10 years

PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
PROPERTY AND EQUIPMENT
Depreciation expense	$ 15.2	$ 14.4	$ 15.2
Impairment of property and equipment	$ 1.5	$ 0.4	$ 0.3

LONG-TERM DEBT (Tables)

12 Months Ended

Dec. 27, 2023

LONG-TERM DEBT.

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

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


	December 27, 2023		December 28, 2022		December 29, 2021
Interest expense on hedged portion of debt	$	—	$	439	$	568
Interest (income) expense on interest rate swap		(170)		(296)		486
Interest (income) expense on debt and derivatives, net	$	(170)	$	143	$	1,054

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 years ended December 27, 2023, December 28, 2022 and December 29, 2021 (in thousands):


							(Gain) Loss Reclassified from
	Net Gain Recognized in OCI						AOCI into Interest Income
	December 27, 2023		December 28, 2022		December 29, 2021		December 27, 2023		December 28, 2022		December 29, 2021
Interest rate swap	$	—	$	862	$	257	$	(170)	$	(296)	$	486

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment of Property and Equipment and ROU Assets (Details) $ in Thousands	12 Months Ended
	Dec. 27, 2023 USD ($)	Dec. 28, 2022 USD ($) restaurant	Dec. 29, 2021 USD ($) restaurant	Dec. 27, 2023 item	Dec. 27, 2023 restaurant
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating Lease ROU assets	$ 168,007	$ 165,584
Asset impairment charges	1,500
Texas
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Asset impairment charges			$ 700
Number Of Restaurant Closed \| restaurant			1
Number of restaurants with ROU asset impairment charges \| restaurant			1
California
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Asset impairment charges		$ 500
Number Of Restaurant Closed		1	1	1	1
Number of restaurants \| restaurant					1
Number of restaurants with ROU asset impairment charges \| restaurant			1
Number of Restaurants With Long Lived Asset Impairment Charges \| restaurant		2	3
Closed Or Subleased Restaurant Locations
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating Lease ROU assets	42,800	$ 30,700
Closed-store reserve expense	$ 200	$ 300	$ 400

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 27, 2023

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

Schedule of Other Accrued Expenses and Current Liabilities

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


	December 27, 2023		December 28, 2022
Accrued sales and property taxes	$	5,229	$	5,270
Gift card liability		4,877		4,667
Loyalty rewards program liability		687		526
Accrued advertising		3,010		831
Accrued legal settlements and professional fees		720		1,303
Deferred franchise and development fees		586		610
Other		3,252		1,913
Total other accrued expenses and current liabilities	$	18,361	$	15,120

PROPERTY AND EQUIPMENT - Schedule of Costs and Related Accumulated Depreciation and Amortization of Major Classes of Property (Details) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Property and Equipment, Net
Property and equipment, gross	$ 254,275	$ 251,931
Less: accumulated depreciation and amortization	(170,248)	(173,287)
Property and equipment, net	84,027	78,644
Land
Property and Equipment, Net
Property and equipment, gross	12,323	12,323
Buildings and improvements
Property and Equipment, Net
Property and equipment, gross	148,259	153,377
Other property and equipment
Property and Equipment, Net
Property and equipment, gross	86,423	83,035
Construction in progress
Property and Equipment, Net
Property and equipment, gross	$ 7,270	$ 3,196

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment Owned, Net (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 27, 2023	Dec. 28, 2022	Dec. 29, 2021
Property and Equipment, Net
Capitalized Internal Wages	$ 1.8	$ 1.5	$ 1.4
General and Administrative Expense
Property and Equipment, Net
Abandoned Site And Other Site Selection Cost	$ 0.2
General and Administrative Expense \| Maximum
Property and Equipment, Net
Abandoned Site And Other Site Selection Cost		$ 0.1	$ 0.1
Buildings
Property and Equipment, Net
Estimated useful service lives	20 years
Land improvements \| Minimum
Property and Equipment, Net
Estimated useful service lives	3 years
Land improvements \| Maximum
Property and Equipment, Net
Estimated useful service lives	30 years
Building improvements \| Minimum
Property and Equipment, Net
Estimated useful service lives	3 years
Building improvements \| Maximum
Property and Equipment, Net
Estimated useful service lives	10 years
Restaurant equipment \| Minimum
Property and Equipment, Net
Estimated useful service lives	3 years
Restaurant equipment \| Maximum
Property and Equipment, Net
Estimated useful service lives	10 years
Other equipment \| Minimum
Property and Equipment, Net
Estimated useful service lives	2 years
Other equipment \| Maximum
Property and Equipment, Net
Estimated useful service lives	10 years

INCOME TAXES - Schedule of Net Deferred Tax Asset Classification (Details) - USD ($) $ in Thousands	Dec. 27, 2023	Dec. 28, 2022
Income Tax [Line Items]
Liabilities	$ (70,767)	$ (68,206)
Net deferred tax liability	(8,878)	(8,005)
State
Income Tax [Line Items]
(Liabilities) assets	(416)	512
Federal
Income Tax [Line Items]
Liabilities	$ (8,462)	$ (8,517)

Related Party Transactions (Details)	Nov. 29, 2023 shares
Related Party \| FS Equity Partners V, L.P. and FS Affiliates V, L.P
Related Party Transaction [Line Items]
Shares repurchased	2,500,000

- Definition

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.

+ References + Details