EPL Intermediate, Inc. Announces Results for the Fourth Quarter and Year Ended December 26, 2007

Business Wire, March 20, 2008

COSTA MESA, Calif. -- EPL Intermediate, Inc. ("El Pollo Loco" or the "Company"), parent company of El Pollo Loco, Inc., today reported results for its fourth quarter and year ended December 26, 2007. For purposes of simplicity, the Company has described the 13-week fourth quarters and fiscal year ended December 26, 2007 and December 27, 2006 as December 31, 2007 and December 31, 2006, respectively.

El Pollo Loco reported operating revenues for the year ended December 31, 2007 of $279.0 million, which is an increase of $19.1 million, or 7.4%, over operating revenues for the year ended December 31, 2006 of $259.9 million. Operating revenues include both sales at company-owned stores and franchise revenues. Increases in company-operated restaurant revenue is attributed to growth in new company-operated restaurants and increases in same store sales. Same-store sales for the system (includes both company and franchise locations) increased 2.7% in 2007. Restaurants enter the comparable restaurant base for same-store sales the first full week after that restaurant's 15-month anniversary.

Changes in operating expenses in 2007 include:

* an increase in product cost of $5.0 million, or 6.7%, to $81.2 million for 2007 from $76.2 million for 2006. These costs were 31.2% as a percentage of restaurant revenue for 2007 compared to 31.4% for 2006. The 0.2% decrease in 2007 resulted primarily from menu price increases taken in January 2007, offset partially by increases in commodity costs.

* an increase in payroll and benefit expenses of $5.9 million, or 9.6%, to $67.5 million for 2007 from $61.6 million for 2006. As a percentage of restaurant revenue, these costs increased 0.6% to 26.0% for 2007 from 25.4% for 2006. This increase is primarily attributed to the California minimum wage increase effective January 1, 2007 and higher spending during the year on manager training.

* a 0.6% increase in restaurant other operating expense (includes utilities, repair and maintenance, advertising, property taxes, occupancy and other operating expenses) as a percentage of restaurant revenue, resulting primarily from a 0.4% increase in occupancy costs as a percentage of revenue and increased advertising expense of 0.2% as a percentage of revenue.

* an increase in general and administrative expenses of $3.4 million, or 12.6%, to $30.2 million for 2007 from $26.8 million in 2006. This increase is attributed to: a $2.6 million non-cash loss recognized in the 2007 period from the sale of eight company restaurants that did not occur in the 2006 period; increased legal fees of $1.5 million in the 2007 period; a $0.8 million increase in salary and fringe expense, primarily due to increased headcount; and an increase of $0.3 million in stock option expense, partially offset by $1.8 million in IPO-related expenses in fiscal 2006 that did not recur in 2007.

Operating income decreased $2.3 million, or 7.5%, to $28.2 million for 2007 from $30.5 million for 2006 due to the factors described above.

Interest expense, net of interest income, increased $0.4 million, or 1.2%, to $29.2 million in 2007 from $28.8 million in 2006.

Our provision for income taxes consisted of income tax expense of $3.1 million in 2007 compared to $1.1 million in 2006.

There was a net loss for the year ended December 31, 2007 of $4.0 million, or (1.6%) as a percentage of restaurant revenue, compared to net income of $0.6 million, or 0.3%, for the year ended December 31, 2006.

Commenting on the fiscal 2007 results, Stephen E. Carley, president and CEO of El Pollo Loco, Inc. said, "We are pleased to deliver positive system-wide same-store sales growth for the eighth consecutive year. Our growth in 2007 is particularly noteworthy given our comparison against strong early 2006 sales growth numbers and a challenging economic environment that drew intense QSR competition throughout the year."

"We expect 2008 to be even more challenging than last year with a continuation of the general softness in sales we have seen," said Carley. "Consumers continue to feel the pressure of higher gasoline costs, declining home values and the possibility of a recession, while restaurant companies face dramatic, even record, increases in commodity costs. We believe there is a significant risk of rising feedstock costs adversely affecting the cost of chicken and other ingredients. In addition, we have experienced increased labor costs due to increases in the California minimum wage, and the federal minimum wage will increase in July 2008 and further in 2009. In early 2008, we implemented menu price increases to partially offset these cost increases, but if inflationary pressures require more aggressive menu price increases to protect margins, check average and restaurant traffic could be at risk."

Carley added, "Despite the tentative outlook for the U.S. economy in 2008, we are prepared to weather the storm, both with promotions designed to deliver the price-value equation that has become increasingly important to consumers and with new products that feature our signature citrus-marinated, flame-grilled chicken and tap into our guests' demand for fresh, flavorful food on the go."