DEAR FELLOW SHAREHOLDERS: R

educing food waste positively impacts significant policy issues while also improving financial performance.

As BlackRock reports: “The need for solutions that...lower food waste and provide alternatives to scarce resources has never been greater.”

Further, SASB Standards includes food waste in its disclosure topics for restaurants, Institutional Shareholder services (ISS) calls it “a growing area of concern globally” that’s “starting to be addressed by regulators,” and Glass Lewis says it has “significant economic and environmental and social ramifications.”

Indeed, a November 2024 feature in Restaurant Business emphasized the significance of food waste concerns: “In the battle to slow climate change, food waste is a huge problem. An estimated one-third of food produced in the U.S. is never eaten…[a]nd wasted food is the single most common material sent to landfills and incinerated in the U.S…There, because it’s typically buried and not exposed to oxygen, it rots and creates methane, called a ‘super pollutant’ because it is one of the most-potent greenhouse gases.”

Financially speaking, Forbes has reported that food waste costs taxpayers billions of dollars. Meanwhile, reducing food waste can save significant amounts of money. For example, “for every $1 restaurants invested to cut down on food waste, they saved on average $7 in operating costs over a three-year period,” found a study by Champions 12.3, whose leadership includes Nestle’s and Rabobank’s CEOs, and the U.N. Food & Agriculture Organization’s Chief Economist. That’s a 600% return on investment.

For context, El Pollo Loco has reported increases/decreases in food waste in several SEC filings—though only in broad terms. (For example, its Form 10-K for fiscal 2017 reported higher costs from “increased food waste” and its 10-K for fiscal 2020 referenced “lower food waste.”) But nowhere does it disclose measurable food waste quantities or reduction targets.

By contrast, for example, Starbucks measured and disclosed the types/quantities of food in its waste streams (including disposal methods) back in 20201 and now has a goal to halve food waste by 2030; Red Robin discloses the percentage of its total waste that’s food waste; and KFC-owner Yum! Brands also has a goal to halve its food waste by 2030. Looking ahead, we believe disclosing food waste totals and timebound reduction targets would significantly advance the company’s management and oversight of this hugely consequential issue. Thank you.

1 www.bit.ly/Starbucks-Report