El Pollo Loco Holdings, Inc. Revenue Disclosure
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 and renewal franchise fees, license fees due from franchisees, IT support services, IT pass through fees related to IT hardware or software 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 disaggregated by geographic market for the years ended December 31, 2025, December 25, 2024 and December 27, 2023:
| December 31, 2025 | | December 25, 2024 | | December 27, 2023 |
|
| |||||
Greater Los Angeles area market |
| 71.9 | % | 72.0 | % | 71.3 | % | |||||
Other markets |
| 28.1 | % | 28.0 | % | 28.7 | % | |||||
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 31, 2025 and December 25, 2024 (in thousands):
December 27, 2023 | | $ | 6,997 |
Revenue recognized |
| (625) | |
Additional contract liability |
| 358 | |
December 25, 2024 | $ | 6,730 | |
Revenue recognized |
| (1,150) | |
Additional contract liability |
| 573 | |
December 31, 2025 | $ | 6,153 |
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.
The following table illustrates the estimated revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2025 (in thousands):
Franchise revenues: | | | |
$ | 552 | ||
| 540 | ||
| 523 | ||
| 495 | ||
470 | |||
Thereafter |
| 3,573 | |
Total | $ | 6,153 |
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 31, 2025 | | December 25, 2024 | | |||
Loyalty rewards liability, beginning balance | $ | 844 | $ | 687 | |||
Revenue deferred |
| 2,667 |
| 2,181 | |||
Revenue recognized |
| (2,405) |
| (2,024) | |||
Loyalty rewards liability, ending balance | $ | 1,106 | $ | 844 | |||
The Company expects all loyalty points revenue related to performance obligations unsatisfied as of December 31, 2025 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 31, 2025 | December 25, 2024 | |||||
Gift card liability | $ | 5,559 | $ | 5,100 | ||
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 31, 2025 | December 25, 2024 | December 27, 2023 | ||||||
Revenue recognized from gift card liability balance at the beginning of the year | $ | 863 | $ | 1,059 | $ | 1,064 | ||
Contract Costs
The Company does not currently incur costs to obtain or fulfill a contract that would be considered contract assets under Topic 606.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 6, 2020 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.