El Pollo Loco 2015 Annual Report Download - page 38

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Table of Contents
None.
ITEM 2. PROPERTIES
As of December 31, 2014, our restaurant system consisted of 415 restaurants, comprised of 172 company-operated restaurants and 243
franchised restaurants, located in California, Arizona, Nevada, Texas, and Utah. In addition, we currently license our brand to two restaurants in
the Philippines, the licenses of which are currently set to expire in 2016. We have not included these two licensed restaurants as part of our unit
count as presented in this annual report. The table below sets forth the locations (by state) for all restaurants in operation.
Our restaurants are either free-standing facilities, typically with drive-thru capability, or in-line. A typical restaurant generally ranges from 2,200
to 3,000 square feet, with seating for approximately 70 people. For a majority of our company-operated restaurants, we lease land on which our
restaurants are built. Our leases generally have terms of 20 years, with two or three renewal terms of five years. Restaurant leases provide for a
specified annual rent, and some leases call for additional or contingent rent based on revenue above specified levels. Generally, our leases are
“net” leases that require us to pay a pro rata share of taxes, insurance, and maintenance costs. We own 15 properties, currently operating 12 and
licensing three to franchisees. In addition, we operate 160 company-operated restaurants on leased real estate, an owned operating unit with
additional parking on leased real estate, and have another 22 leased sites that are subleased or assigned to franchisees who operate El Pollo Loco
restaurants. We also have two closed units and two units subleased for uses other than El Pollo Loco.
We lease our headquarters, consisting of approximately 24,890 square feet in Costa Mesa, California, for a term expiring in 2018, plus one five-
year extension option. Our headquarters is located at 3535 Harbor Boulevard, Suite 100, Costa Mesa, California 92626, and our telephone
number is (714) 599-5000. We believe that our current office space is suitable and adequate for its intended purposes and our near-term
expansion plans.
ITEM 3. LEGAL PROCEEDINGS
On or about February 24, 2014, a former employee filed a class action in the Superior Court of the State of California, County of Orange, against
El Pollo Loco, Inc. (“EPL”), on behalf of all putative class members (all hourly employees from 2010 to the present) alleging certain violations
of California labor laws, including failure to pay overtime compensation, failure to provide meal periods and rest breaks, and failure to provide
itemized wage statements. The putative lead plaintiff’s requested remedies include compensatory and punitive damages, injunctive relief,
disgorgement of profits, and reasonable attorneys’ fees and costs. No specific amount of damages sought was specified in the complaint. We
were served with the complaint on March 3, 2014. While we intend to vigorously defend against this action, including its class certification, the
ultimate outcome of the case is presently not determinable as it is in a preliminary phase. Thus, we cannot at this time determine the likelihood of
an adverse judgment nor a likely range of damages in the event of an adverse judgment. Any settlement of, or judgment with a negative outcome
arising from, this lawsuit could have a material adverse effect.
We are also involved in various other claims and legal actions that arise in the ordinary course of business. We do not believe that the ultimate
resolution of these other actions will have a material adverse effect on our
34
ITEM 1B.
UNRESOLVED STAFF COMMENTS
State
Company
-
Operated
Franchised
Total
California
149
210
359
Nevada
19
5
24
Arizona
18
19
Texas
9
11
Utah
1
2
Total
172
243
415