El Pollo Loco 2015 Annual Report Download - page 30

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Table of Contents
future regulations could impose restrictions or increase the costs associated with food, food packaging, and other supplies, transportation costs,
and utility costs. Complying with environmental regulations may cause our results of operations to suffer. We cannot predict what environmental
regulations or legislation will be enacted in the future, how existing or future environmental laws will be administered or applied, or the level of
costs that we may incur to comply with, or satisfy claims relating to, such laws and regulations.
Legislation and regulations requiring the display and provision of nutritional information for our menu offerings, new information or
attitudes regarding diet and health, or adverse opinions about the health effects of consuming our menu offerings, could affect consumer
preferences and negatively impact our results of operations.
Government regulation and consumer eating habits may impact our business as a result of changes in attitudes regarding diet and health or new
information regarding the health effects of consuming our menu offerings. These changes have resulted in, and may continue to result in, the
enactment of laws and regulations that impact the ingredients and nutritional content of our menu offerings, or laws and regulations requiring us
to disclose the nutritional content of our food offerings.
The PPACA establishes a uniform, federal requirement for certain restaurants to post certain nutritional information on their menus. Specifically,
the PPACA amended the Federal Food, Drug, and Cosmetic Act to require that chain restaurants with 20 or more locations, operating under the
same name and offering substantially the same menus, publish the total number of calories of standard menu items on menus and menu boards,
along with a statement that puts this calorie information in the context of a total daily calorie intake. The PPACA also requires covered
restaurants to provide to consumers, upon request, a written summary of detailed nutritional information for each standard menu item, and to
provide a statement on menus and menu boards about the availability of this information. The PPACA further permits the U.S. Food and Drug
Administration to require covered restaurants to make additional nutrient disclosures, such as disclosure of trans-fat content. An unfavorable
report on, or reaction to, our menu ingredients, the size of our portions, or the nutritional content of our menu items could negatively influence
the demand for our offerings.
Furthermore, a number of states, counties, and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose
certain nutritional information to customers, or have enacted legislation restricting the use of certain types of ingredients in restaurants.
California, our largest market, is one of these, although its menu labeling law has been superseded by the PPACA.
While we believe that our food is generally healthier than that of our peers, customers may disagree or change their dining habits to avoid QSR-
like restaurants altogether.
Compliance with current and future laws and regulations regarding the ingredients and nutritional content of our menu items may be costly and
time-consuming. Additionally, if consumer health regulations or consumer eating habits change significantly, we may be required to modify or
discontinue certain menu items, and we may experience higher costs associated with the implementation of those changes. Additionally, some
government authorities are increasing regulations regarding trans-fats and sodium, which may require us to limit or eliminate trans-fats and
sodium in our menu offerings, or switch to higher-cost ingredients, or which may hinder our ability to operate in certain markets. Some
jurisdictions have banned certain cooking ingredients, such as trans
-fats, which a small number of our ingredients contain in trace amounts, or
have discussed banning certain products, such as large sodas. Removal of these products and ingredients from our menus could affect product
tastes, customer satisfaction levels, and sales volumes, whereas if we were to fail to comply with these laws or regulations, our business could
experience a material adverse effect.
We cannot make any assurances regarding our ability to effectively respond to changes in consumer health perceptions, to successfully
implement nutritional content disclosure requirements, or to adapt our menu offerings to trends in eating habits. The imposition of additional
menu labeling laws could have an adverse effect on our results of operations and financial position, as well as on the restaurant industry in
general.
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