10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 14, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36197

DEL TACO RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	46-3340980
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
25521 Commercentre Drive Lake Forest, California	92630
(Address of principal executive offices)	(Zip Code)
(949) 462-9300
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨		Accelerated filer	x
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 20, 2016, there were 37,976,206 shares of the registrant’s common stock issued and outstanding.

Del Taco Restaurants, Inc.

Index

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of June 14, 2016 (Successor) (Unaudited) and December 29, 2015 (Successor)	1
Unaudited Consolidated Statements of Comprehensive Income for the Twelve Weeks Ended June 14, 2016 (Successor) and the Twelve Weeks Ended June 16, 2015 (Predecessor)	2
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Twenty-Four Weeks Ended June 14, 2016 (Successor) and the Twenty-Four Weeks Ended June 16, 2015 (Predecessor)	3
Unaudited Consolidated Statements of Cash Flows for the Twenty-Four Weeks Ended June 14, 2016 (Successor) and Twenty-Four Weeks Ended June 16, 2015 (Predecessor)	4
Notes to Consolidated Financial Statements (Unaudited)	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures about Market Risk	36
Item 4. Control and Procedures	38
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	39
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6. Exhibits	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Del Taco Restaurants, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
	Successor
	June 14, 2016		December 29, 2015
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	7,298	$	10,194
Accounts and other receivables, net	2,361		3,220
Inventories	2,427		2,806
Prepaid expenses and other current assets	3,174		3,545
Total current assets	15,260		19,765
Property and equipment, net	119,459		114,030
Goodwill	319,056		318,275
Trademarks	220,300		220,300
Intangible assets, net	26,692		28,373
Other assets, net	3,050		2,829
Total assets	$	703,817	$	703,572
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	17,266	$	16,831
Other accrued liabilities	29,319		32,897
Current portion of capital lease obligations and deemed landlord financing liabilities	1,667		1,725
Total current liabilities	48,252		51,453
Long-term debt, capital lease obligations and deemed landlord financing liabilities, excluding current portion, net	167,387		167,968
Deferred income taxes	83,355		79,523
Other non-current liabilities	33,835		36,251
Total liabilities	332,829		335,195
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.0001 par value; 400,000,000 shares authorized; 38,173,443 shares issued and outstanding at June 14, 2016; 38,802,425 shares issued and outstanding at December 29, 2015	4		4
Additional paid-in capital	366,946		372,260
Retained earnings (accumulated deficit)	4,038		(3,887		)
Total shareholders’ equity	370,988		368,377
Total liabilities and shareholders’ equity	$	703,817	$	703,572

See accompanying notes to consolidated financial statements.

1

Del Taco Restaurants, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands, except share and per share data)
	Successor			Predecessor
	12 Weeks Ended June 14, 2016			12 Weeks Ended June 16, 2015
Revenue:
Company restaurant sales	$	95,917		$	93,902
Franchise revenue	3,576			3,147
Franchise sublease income	533			554
Total revenue	100,026			97,603
Operating expenses:
Restaurant operating expenses:
Food and paper costs	26,358			26,859
Labor and related expenses	30,249			28,486
Occupancy and other operating expenses	19,526			19,924
General and administrative	8,214			6,550
Depreciation and amortization	5,532			3,796
Occupancy and other - franchise subleases	510			517
Pre-opening costs	35			129
Restaurant closure charges, net	(166		)	72
Loss on disposal of assets	62			14
Total operating expenses	90,320			86,347
Income from operations	9,706			11,256
Other expenses:
Interest expense	1,405			4,018
Transaction-related costs	126			877
Debt modification costs	—			2
Total other expenses	1,531			4,897
Income from operations before provision for income taxes	8,175			6,359
Provision for income taxes	3,311			1,731
Net income	4,864			4,628
Other comprehensive income (loss):
Change in fair value of interest rate cap	—			(2		)
Reclassification of interest rate cap amortization included in net income	—			36
Total other comprehensive income, net	—			34
Comprehensive income	$	4,864		$	4,662
Earnings per share:
Basic	$	0.13		$	0.69
Diluted	$	0.13		$	0.69
Weighted-average shares outstanding
Basic	38,292,215			6,707,776
Diluted	38,442,304			6,707,776

See accompanying notes to consolidated financial statements.

2

Del Taco Restaurants, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(In thousands, except share and per share data)
	Successor		Predecessor
	24 Weeks Ended June 14, 2016		24 Weeks Ended June 16, 2015
Revenue:
Company restaurant sales	$	189,467	$	184,785
Franchise revenue	6,905		6,148
Franchise sublease income	1,057		1,088
Total revenue	197,429		192,021
Operating expenses:
Restaurant operating expenses:
Food and paper costs	52,487		52,841
Labor and related expenses	60,033		56,409
Occupancy and other operating expenses	39,649		39,958
General and administrative	16,506		13,846
Depreciation and amortization	11,018		7,588
Occupancy and other - franchise subleases	1,013		1,022
Pre-opening costs	128		248
Restaurant closure charges, net	12		94
Loss on disposal of assets	137		14
Total operating expenses	180,983		172,020
Income from operations	16,446		20,001
Other expenses:
Interest expense	2,877		10,829
Transaction-related costs	191		7,193
Debt modification costs	—		137
Change in fair value of warrant liability	—		(35		)
Total other expenses	3,068		18,124
Income from operations before provision for income taxes	13,378		1,877
Provision for income taxes	5,453		2,189
Net income (loss)	7,925		(312		)
Other comprehensive income (loss):
Change in fair value of interest rate cap	—		(23		)
Reclassification of interest rate cap amortization included in net income (loss)	—		58
Total other comprehensive income, net	—		35
Comprehensive income (loss)	$	7,925	$	(277	)
Earnings (loss) per share:
Basic	$	0.21	$	(0.06	)
Diluted	$	0.20	$	(0.06	)
Weighted-average shares outstanding
Basic	38,545,115		5,391,137
Diluted	38,672,425		5,391,137

3

Del Taco Restaurants, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
	Successor			Predecessor
	24 Weeks Ended June 14, 2016			24 Weeks Ended June 16, 2015
Operating activities
Net income (loss)	$	7,925		$	(312	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	11,018			7,590
Amortization of favorable and unfavorable lease assets and liabilities, net	(280		)	(2		)
Amortization of deferred financing costs	178			835
Subordinated note interest paid-in-kind	—			37
Debt modification costs	—			137
Stock-based compensation	1,629			532
Change in fair value of warrant liability	—			(35		)
Deferred income taxes	3,052			—
Loss on disposal of assets	137			14
Restaurant closure charges	(137		)	—
Changes in operating assets and liabilities:
Accounts and other receivables, net	859			961
Inventories	379			93
Prepaid expenses and other current assets	371			571
Accounts payable	435			2,358
Other accrued liabilities	(3,609		)	(95		)
Other non-current liabilities	(904		)	(1,822		)
Net cash provided by operating activities	21,053			10,862
Investing activities
Purchases of property and equipment	(15,546		)	(13,357		)
Proceeds from disposal of property and equipment	4			38
Purchases of other assets	(647		)	(472		)
Net cash used in investing activities	(16,189		)	(13,791		)
Financing activities
Proceeds from term loan, net of debt discount	—			23,654
Proceeds from issuance of common stock	—			91,236
Repurchase of common stock and warrants	(6,943		)	—
Payment of tax withholding related to option exercises and distribution of restricted stock units	—			(7,533		)
Payments on capital leases and deemed landlord financing	(817		)	(768		)
Payment on subordinated notes	—			(108,113		)
Proceeds from revolving credit facility	4,000			10,000
Payments on revolving credit facility	(4,000		)	(6,000		)
Payments for debt issue costs	—			(591		)
Net cash (used in) provided by financing activities	(7,760		)	1,885
Decrease in cash and cash equivalents	(2,896		)	(1,044		)
Cash and cash equivalents at beginning of period	10,194			8,553
Cash and cash equivalents at end of period	$	7,298		$	7,509
Supplemental cash flow information:
Cash paid during the period for interest	$	2,872		$	8,953
Cash paid during the period for income taxes	800			8
Supplemental schedule of non-cash activities:
Accrued property and equipment purchases	$	1,939		$	996
Write-offs of accounts receivables	72			—
Amortization of interest rate cap into net loss, net of tax	—			58
Change in other asset for fair value of interest rate cap recorded to other comprehensive loss, net	—			(23		)
Warrant liability reclassified to equity upon exercise of warrants	—			8,274

See accompanying notes to consolidated financial statements

4

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Description of Business

Del Taco Restaurants, Inc. (f/k/a Levy Acquisition Corp. (“LAC”)) is a Delaware corporation headquartered in Lake Forest, California. The consolidated financial statements include the accounts of Del Taco Restaurants, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Del Taco”). The Company develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants. At June 14, 2016 (Successor), there were 298 company-operated and 245 franchised Del Taco restaurants located in 16 states, including one franchised unit in Guam. At June 16, 2015 (Predecessor), there were 306 company-operated and 241 franchised Del Taco restaurants located in 16 states, including one franchised unit in Guam.

The Company was originally incorporated in Delaware on August 2, 2013 as a special purpose acquisition company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On June 30, 2015 (the “Closing Date”), the Company consummated its business combination with Del Taco Holdings, Inc. (“DTH”) pursuant to the agreement and plan of merger dated as of March 12, 2015 by and among LAC, Levy Merger Sub, LLC (“Levy Merger Sub”), LAC’s wholly owned subsidiary, and DTH (the “Merger Agreement”). Under the Merger Agreement, Levy Merger Sub merged with and into DTH, with DTH surviving the merger as a wholly-owned subsidiary of the Company (the “Business Combination” or “Merger”). In connection with the closing of the Business Combination, the Company changed its name from Levy Acquisition Corp. to Del Taco Restaurants, Inc. See Note 3 for further discussion of the Business Combination.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of Securities and Exchange Commission (“SEC”). For additional information, these consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 29, 2015 ("2015 Form 10-K"). The accounting policies used in preparing these consolidated financial statements are the same as those described in our 2015 Form 10-K.

As a result of the Business Combination, the Company is the acquirer for accounting purposes, and DTH is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for DTH for periods prior to the Closing Date. The Company is the “Successor” for periods after the Closing Date, which includes consolidation of DTH subsequent to the Business Combination on June 30, 2015. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. See Note 3 for further discussion of the Business Combination. As a result of the application of the acquisition method of accounting as of the Closing Date, the financial statements for the Predecessor period and for the Successor period are presented on a different basis and are therefore, not comparable. The historical financial information of Del Taco, formerly LAC, prior to the Business Combination have not been reflected in the financial statements as those amounts have been considered de-minimus.

The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2016 is the fifty-three week period ended January 3, 2017 (Successor). Fiscal year 2015 is the fifty-two week period ended December 29, 2015 (Successor). In a fifty-three week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes seventeen weeks of operations. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2016, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor). For fiscal year 2015, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 16, 2015 (Predecessor).

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The

5

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance will result in key changes to lease accounting and will aim to bring leases onto balance sheets to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations as well as the assets it owns versus leases. The new leasing standard will be effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements as well as the expected adoption method.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires a company to recognize revenue in an amount that reflects the consideration it expects to receive for the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This ASU is effective for annual periods and interim periods beginning after December 15, 2017. The ASU is to be applied retrospectively or using a cumulative effect transition method. The Company is currently evaluating which transition method to use and the effect that this pronouncement will have on its consolidated financial statements and related disclosures.

3. Business Combination

On June 30, 2015, the Company and DTH completed the Business Combination pursuant to the Merger Agreement under which the Company’s wholly-owned subsidiary, Levy Merger Sub, merged with and into DTH, with DTH surviving the merger as a wholly-owned subsidiary of the Company.

Concurrent with the execution of the Merger Agreement, Levy Epic Acquisition Company, LLC (“Levy Newco”), Levy Epic Acquisition Company II, LLC (“Levy Newco II” and with Levy Newco, the “Levy Newco Parties”), DTH and the DTH stockholders entered into a stock purchase agreement (the “Stock Purchase Agreement”). Pursuant to the Stock Purchase Agreement, the Levy Newco Parties agreed to purchase 2,348,968 shares of DTH common stock from DTH for $91.2 million in cash, and to purchase 740,564 shares of DTH common stock directly from existing DTH shareholders for $28.8 million in

6

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

cash (the “Initial Investment”). As a result of this Initial Investment, an aggregate of 3,089,532 shares of DTH common stock was purchased by the Levy Newco Parties for total cash consideration of $120.0 million.

The total purchase price paid to DTH stockholders (except for the Levy NewCo Parties) was $284.3 million. The closing of the Business Combination and the Initial Investment were accounted for as related events transferring control of DTH to the Company through a minority investment in the Initial Investment and a controlling interest at the closing of the Business Combination.

The Company recorded an allocation of the purchase price to DTH’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value as of the Closing Date. The final purchase price allocation is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	5,173
Accounts receivable and other receivables	3,228
Inventories	2,541
Prepaid expenses and other current assets	4,266
Total current assets	15,208
Property and equipment	105,524
Intangible assets	250,490
Other assets	4,194
Total identifiable assets acquired	375,416
Accounts payable	(18,866		)
Other accrued liabilities	(26,607		)
Current portion of capital lease obligations and deemed landlord financing liabilities	(1,670		)
Long-term debt, capital lease obligations and deemed landlord financing liabilities	(246,562		)
Deferred income taxes	(80,254		)
Other long-term liabilities	(36,208		)
Net identifiable liabilities assumed	(34,751		)
Goodwill	319,056
Total gross consideration	$	284,305

During the twenty-four weeks ended June 14, 2016 (Successor), the Company recorded a net $0.8 million adjustment to goodwill due to a change in estimate for the liability for deferred income taxes.

For the twelve and twenty-four weeks ended June 14, 2016 (Successor) and the twelve and twenty-four weeks ended June 16, 2015 (Predecessor), the Company incurred approximately $0.1 million, $0.2 million, $0.9 million and $7.2 million, respectively, of transaction expenses directly related to the Business Combination.

4. Restaurant Closure Charges, Net

At June 14, 2016 (Successor) and December 29, 2015 (Successor), the restaurant closure liability is $3.7 million and $4.8 million, respectively. The details of the restaurant closure activities are discussed below.

Restaurant Closures and Lease Reserves

The following table represents other restaurant closure liability activity related to prior restaurant closures and sublease income shortfalls (in thousands):

7

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

	Total
Balance at December 29, 2015 (Successor)	$	1,023
Charges for accretion in current period	39
Cash payments	(37		)
Balance at June 14, 2016 (Successor)	$	1,025

The current portion of the restaurant closure liability is $0.1 million at both June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $0.9 million at both June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other non-current liabilities in the consolidated balance sheets.

Restaurant Closure and Other Related Charges for 12 Underperforming Restaurants

During the fourth fiscal quarter of 2015, the Company closed 12 company-operated restaurants. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company recorded accretion expense related to the closures as well as $0.1 million related to the write-off of fixed assets associated with the closures. During the twenty-four weeks ended June 14, 2016 (Successor), the Company recorded an adjustment to decrease the lease termination liability for one closed restaurant due to a change in estimate, partially offset by an adjustment to increase the lease termination liability for two closed restaurants due to changes in estimates.

A summary of the restaurant closure liability activity for these 12 closed restaurants consisted of the following (in thousands):

	Contract termination costs			Other associated costs			Total
Balance at December 29, 2015 (Successor)	$	3,637		$	163		$	3,800
Charges for accretion in current period	67			—			67
Cash payments	(800		)	(163		)	(963		)
Adjustments to estimates based on current activity	(273		)	—			(273		)
Balance at June 14, 2016 (Successor)	$	2,631		$	—		$	2,631

The current portion of the restaurant closure liability is $1.0 million and $1.5 million at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $1.6 million and $2.3 million at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other non-current liabilities in the consolidated balance sheets.

5. Goodwill and other Intangible Assets

Goodwill was $319.1 million at June 14, 2016 (Successor) compared to $318.3 million at December 29, 2015 (Successor). The increase was due to an adjustment to the purchase price allocation as described in more detail in Note 3.

There have been no changes in the carrying amount of trademarks since December 29, 2015 (Successor).

The Company’s other intangible assets at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

8

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

	Successor
	June 14, 2016							December 29, 2015
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Favorable lease assets	$	14,207	$	(1,946	)	$	12,261	$	14,207	$	(1,020	)	$	13,187
Franchise rights	15,789		(1,358		)	14,431		15,897		(711		)	15,186
Total amortized other intangible assets	$	29,996	$	(3,304	)	$	26,692	$	30,104	$	(1,731	)	$	28,373

Goodwill and intangible assets at June 14, 2016 (Successor) and December 29, 2015 (Successor) are based on the purchase price allocation of DTH, which is based on valuations performed to determine the fair value of the acquired assets as of the acquisition date. See Note 3 for further discussion of the acquisition of DTH. During the twenty-four weeks ended June 14, 2016 (Successor), we wrote-off $0.1 million of franchise rights associated with the closure of two franchise locations.

6. Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities

The Company’s long-term debt, capital lease obligations and deemed landlord financing liabilities at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

	Successor
	June 14, 2016		December 29, 2015
2015 Senior Credit Facility, net of debt discount of $1,195 and $1,328 and deferred financing costs of $403 and $448 at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively	$	152,402	$	152,224
Total outstanding indebtedness	152,402		152,224
Obligations under capital leases and deemed landlord financing liabilities	16,652		17,469
Total debt	169,054		169,693
Less: amounts due within one year	1,667		1,725
Total amounts due after one year, net	$	167,387	$	167,968

At June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company assessed the amounts recorded under the 2015 Senior Credit Facility and determined that such amounts approximated fair value.

2015 Revolving Credit Facility (Successor)

On August 4, 2015, the Company refinanced its existing senior credit facility (“2013 Senior Credit Facility”) and entered into a new credit agreement (the “Credit Agreement”). The Credit Agreement, which matures on August 4, 2020, provides for a $250 million revolving credit facility (the “2015 Senior Credit Facility”). The Company utilized $164 million of proceeds from the Credit Agreement to refinance in total its 2013 Senior Credit Facility and pay costs associated with the refinancing. The 2013 Senior Credit Facility, as amended March 20, 2015, totaled $267.1 million, consisting of an initial $227.1 million term loan (“2013 Term Loan”) and a $40 million revolver (“2013 Revolver”). At the time of the refinance, a $162.5 million term loan balance was outstanding and $17.6 million of revolver capacity was utilized to support outstanding letters of credit under the 2013 Senior Credit Facility.

At the Company’s option, loans under the 2015 Senior Credit Facility may bear interest at a base rate or LIBOR, plus an applicable margin determined in accordance with a consolidated total lease adjusted leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the prime rate of Bank of America, and (c) LIBOR plus 1.00%. For LIBOR loans, the applicable margin is in the range of 1.50% to 2.50%, and for base rate loans the applicable margin is in the range of 0.50% and 1.50%. The applicable margin was initially set at 2.00% for LIBOR loans and at 1.00% for base rate loans until delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending after the closing date of the Credit Agreement. Following delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending December 29, 2015 (Successor), the applicable margin decreased 0.25% for both LIBOR loans and

9

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

base rate loans during the first fiscal quarter of 2016. The 2015 Senior Credit Facility capacity used to support letters of credit currently incurs fees equal to the applicable margin of 1.75%. The 2015 Senior Credit Facility unused commitment currently incurs a 0.20% fee.

The Credit Agreement contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of June 14, 2016 (Successor). Substantially all of the assets of the Company are pledged as collateral under the 2015 Senior Credit Facility.

The Company capitalized lender costs and deferred financing costs of $1.4 million and $0.5 million, respectively, in connection with the refinancing. Lender debt discount costs and deferred financing costs associated with the 2015 Senior Credit Facility are presented net of the 2015 Senior Credit Facility balance on the consolidated balance sheets and will be amortized to interest expense over the term of the 2015 Senior Credit Facility. Amortization of deferred financing costs and debt discount related to the 2015 Senior Credit Facility totaled $0.1 million and $0.2 million during the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor), respectively.

At June 14, 2016 (Successor), the weighted-average interest rate on the outstanding balance of the Senior Credit Facility was 2.2%. At June 14, 2016 (Successor), the Company had a total of $77.0 million of availability for additional borrowings under the 2015 Senior Credit Facility as the Company had $154.0 million of outstanding borrowings and letters of credit outstanding of $19.0 million which reduce availability under the 2015 Senior Credit Facility.

DTH 2013 Senior Credit Facility

In March 2015, DTH amended its 2013 Senior Credit Facility to increase the 2013 Term Loan by $25.1 million to $227.1 million (the “March 2015 Debt Refinance”). A portion of the proceeds from Step 1 of the Business Combination, described in Note 3, proceeds of $10 million from the 2013 Revolver and the March 2015 Debt Refinance proceeds were used to fully redeem the then outstanding balance of the subordinated notes of $111.2 million.

On March 12, 2015, DTH satisfied the rating condition in its 2013 Senior Credit Facility resulting in a decrease in interest rate to LIBOR (not to be less than 1.00%) plus a margin of 4.25%.

The Company incurred lender costs and third-party costs associated with the March 2015 Debt Refinance of $1.6 million of which $1.5 million was capitalized as lender debt discount and $0.1 million was expensed as debt modification costs in the consolidated statements of comprehensive income (loss) for the twenty-four weeks ended June 16, 2015 (Predecessor).

Lender debt discount costs and deferred financing costs associated with the 2013 Senior Credit Facility were amortized to interest expense over the term of the 2013 Term Loan using the effective interest method. Amortization of deferred financing costs including debt discount totaled $0.4 million and $0.8 million during the twelve weeks and twenty-four weeks ended June 16, 2015 (Predecessor), respectively.

Subordinated Notes (Predecessor)

In connection with Step 1 of the Business Combination and the March 2015 Debt Refinance discussed above, DTH fully redeemed the outstanding balance of the Sagittarius Restaurants LLC (SAG Restaurants) subordinated notes (“SAG Restaurants Sub Notes”) and F&C Restaurant Holding Co. (F&C RHC) subordinated notes (“F&C RHC Sub Notes”) on March 20, 2015 of $111.2 million.

For the twenty-four weeks ended June 16, 2015 (Predecessor), interest expense related to the SAG Restaurants Sub Notes and F&C RHC Sub Notes was $3.1 million.

10

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

7. Derivative Instruments

As of June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company had an interest rate cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. This agreement had a notional amount of $87.5 million as of June 14, 2016 (Successor) and December 29, 2015 (Successor). The individual caplet contracts within the remaining interest rate cap agreement expire at various dates through June 30, 2016.

Interest Rate Cap Agreement

To ensure the effectiveness of the interest rate cap agreement through June 30, 2015 (Predecessor) , the Company elected the three-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement as of each reset date. The reset dates and other critical terms on the term loans perfectly match with the interest rate cap reset dates and other critical terms during the twelve and twenty-four weeks ended June 16, 2015 (Predecessor).

As of the July 1, 2015 interest reset date, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement, and as a result, this hedge became ineffective. Therefore, after July 1, 2015, any changes in fair value will be recorded through interest expense. For the twelve and twenty-four weeks ended June 14, 2016 (Successor), there have been no changes in the fair value of the interest rate cap agreement.

The effective portion of the interest rate cap agreement through June 30, 2015 (Predecessor) was included in accumulated other comprehensive income and included as a fair value adjustment through the purchase price allocation as described in Note 3.

Warrant Liability (Predecessor)

On March 20, 2015, warrants to purchase 597,802 shares of DTH common stock held by a former large shareholder of DTH were exercised at a strike price of $25.00 per share based on a fair value of $8.3 million determined based on the common stock price of the Initial Investment discussed above in Note 3. Upon exercise, 384,777 shares of DTH common stock were redeemed as payment for the strike price resulting in 213,025 shares of DTH common stock being issued. DTH recorded a mark-to-market adjustment of $35,000 to reduce the liability during the twenty-four weeks ended June 16, 2015 (Predecessor) and then reclassified the balance of the warrant liability of $8.3 million to shareholders’ equity.

8. Fair Value Measurements

The fair values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying amounts due to their short maturities. The carrying value of the 2015 Senior Credit Facility approximated fair value. The interest rate cap agreement is recorded at fair value in the Company’s consolidated balance sheets.

As of June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. For both periods, these included derivative instruments related to interest rates. The Company determined the fair values of the interest rate cap contracts based on counterparty quotes, with appropriate adjustments for any significant impact of nonperformance risk of the parties to the interest rate cap contracts. Therefore, the Company has categorized these interest rate cap contracts as Level 2 fair value measurements. The fair value of the interest rate cap agreement was zero at June 14, 2016 (Successor) and December 29, 2015 (Successor).

The following is a summary of the estimated fair values for the long-term debt instruments (in thousands):

	Successor
	June 14, 2016				December 29, 2015
	Estimated Fair Value		Book Value		Estimated Fair Value		Book Value
2015 Senior Credit Facility	$	152,402	$	152,402	$	152,224	$	152,224

11

9. Other Accrued Liabilities and Other Non-current Liabilities

A summary of other accrued liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Employee compensation and related items	$	7,852	$	7,818
Accrued insurance	7,003		7,168
Accrued sales tax	4,448		3,604
Accrued bonus	1,885		5,352
Accrued income taxes	1,632		30
Restaurant closure liability	1,172		1,617
Accrued real property tax	1,113		1,378
Other	4,214		5,930
	$	29,319	$	32,897

A summary of other non-current liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Unfavorable lease liabilities	$	18,479	$	19,685
Insurance reserves	6,168		5,963
Restaurant closure liability	2,484		3,206
Unearned trade discount, non-current	1,843		2,028
Deferred development and initial franchise fees	1,720		1,920
Deferred gift card income	1,484		2,217
Deferred rent liability	1,136		731
Other	521		501
	$	33,835	$	36,251

10. Stock-Based Compensation

In connection with the approval of the Business Combination, the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, other stock-based awards, other cash-based compensation and performance awards. Under the plan, there were 3,300,000 share of common stock reserved and authorized. At June 14, 2016 (Successor), there were 2,010,502 shares of common stock available for grant under the 2015 Plan.

Stock-Based Compensation Expense (Successor)

The total compensation expense related to the 2015 Plan was $0.9 million and $1.6 million for the twelve and twenty-four weeks ended June 14, 2016 (Successor), respectively.

Restricted Stock Awards (Successor)

A summary of outstanding and unvested restricted stock activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

12

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

	Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 29, 2015 (Successor)	946,494	$	11.16
Granted	114,004	9.90
Vested	—	—
Forfeited	—	—
Nonvested at June 14, 2016 (Successor)	1,060,498	$	11.03

As of June 14, 2016 (Successor), $8.5 million of total unrecognized expense related to unvested restricted stock grants is expected to be recognized over a weighted-average period of 2.8 years. The fair value of these awards was determined based on the Company’s stock price on the grant date.

Stock Options (Successor)

A summary of stock option activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)
Options outstanding at December 29, 2015 (Successor)	224,000		$	10.40	6.5	$	—
Granted	7,000		9.88		6.6	—
Exercised	—		—		—	—
Forfeited	(2,000	)	10.40		—	—
Options outstanding at June 14, 2016 (Successor)	229,000		$	10.38	6.4	$	—
Options exercisable at June 14, 2016 (Successor)	—		$	—	—	$	—
Options exercisable and expected to vest at June 14, 2016 (Successor)	207,173		$	10.38	6.4	$	—

The aggregate intrinsic value in the table above is the amount by which the current market price of the Company's stock on December 29, 2015 (Successor) or June 14, 2016 (Successor), respectively, exceeds the exercise price.

As of June 14, 2016 (Successor), $0.6 million of total unrecognized stock compensation expense, net of forfeitures, related to stock option grants is expected to be recognized over a weighted average period of 3.1 years.

Stock-Based Compensation Expense (Predecessor)

In connection with Step 1 of the Business Combination consummated on March 20, 2015, all unvested restricted stock units (“RSUs”) under the Predecessor incentive plan became fully vested and all vested RSUs were then immediately settled for shares of DTH common stock, net of shares withheld for minimum statutory employee tax withholding obligations and all unvested stock options under the Predecessor plan became fully vested and all vested stock options were also exercised and shares were issued, net of shares withheld for the applicable option strike price and employee tax withholding obligations. An aggregate of 237,948 shares of DTH common stock were issued and 247,552 shares of DTH common stock were withheld for applicable option strike price and employee tax withholding obligations. In exchange for the shares withheld, DTH made payments of $7.5 million related to employee tax withholding obligations.

No RSUs or stock options remained outstanding under the Predecessor plan after March 20, 2015 or as of June 14, 2016 (Successor). DTH recorded stock-based compensation expense of $0.5 million, which included all remaining unrecognized compensation expense related to the accelerated vesting on RSUs and stock options on March 20, 2015, for the twenty-four weeks ended June 16, 2015 (Predecessor).

13

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

11. Shareholders’ Equity

On February 26, 2016, the Company's Board of Directors authorized a share repurchase program covering up to $25.0 million of the Company's common stock and warrants which was effective immediately and expires upon completion of the repurchase program, unless terminated earlier by the Board of Directors. Purchases under the program may be made in open market or privately negotiated transactions. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company repurchased respectively 542,303 and 628,982 shares of common stock for an average price per share of $9.92 and $10.04 for an aggregate cost of approximately $5.4 million and $6.4 million including incremental direct costs to acquire the shares. During both the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company repurchased 241,806 warrants for an average price per warrant of $2.36 for an aggregate cost of approximately $0.6 million including incremental direct costs to acquire the warrants. The Company expects to retire the repurchased shares and warrants and therefore has accounted for them as constructively retired as of June 14, 2016 (Successor). As of June 14, 2016 (Successor), there was approximately $18.1 million remaining under the share repurchase program. The Company has no obligations to repurchase shares or warrants under this authorization, and the timing and value of shares and warrants purchased will depend on the Company's stock price, warrant price, market conditions and other factors.

12. Earnings per Share

Basic income (loss) per share is calculated by dividing net income (loss) attributable to Del Taco’s common shareholders for the Successor period and to DTH’s common shareholders for the Predecessor period by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including warrants, restricted stock, common stock options and restricted stock units.

14

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Below are basic and diluted net income (loss) per share for the periods indicated (amounts in thousands except share and per share data):

	Successor		Predecessor
	12 Weeks Ended June 14, 2016		12 Weeks Ended June 16, 2015
Numerator:
Net income	$	4,864	$	4,628
Denominator:
Weighted-average shares outstanding - basic	38,292,215		6,707,776
Dilutive effect of unvested restricted stock and RSUs	150,089		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,442,304		6,707,776
Net income per share - basic	$	0.13	$	0.69
Net income per share - diluted	$	0.13	$	0.69
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,720,918		—
	Successor		Predecessor
	24 Weeks Ended June 14, 2016		24 Weeks Ended June 16, 2015
Numerator:
Net income (loss)	$	7,925	$	(312	)
Denominator:
Weighted-average shares outstanding - basic	38,545,115		5,391,137
Dilutive effect of unvested restricted stock and RSUs	127,310		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,672,425		5,391,137
Net income (loss) per share - basic	$	0.21	$	(0.06	)
Net income (loss) per share - diluted	$	0.20	$	(0.06	)
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,800,021		142,009

Antidilutive stock options, unvested restricted stock and warrants were excluded from the computation of diluted net income (loss) per share due to the assumed proceeds from the award’s exercise or vesting being greater than the average market price of the common shares or due to the Company incurring net losses for the periods presented.

13. Income Taxes

The effective income tax rates were 40.5% for the twelve weeks ended June 14, 2016 (Successor) compared to 27.2% for the twelve weeks ended June 16, 2015 (Predecessor), respectively. The provision for income taxes consisted of income tax expense of $3.3 million for the twelve weeks ended June 14, 2016 (Successor) and $1.7 million for the twelve weeks ended June 16, 2015 (Predecessor), respectively. The effective income tax rates were 40.8% and 116.6% for the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), respectively. The provision for income taxes consisted of income tax expense of $5.5 million and $2.2 million for the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

15

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

The income tax expense related to the twelve weeks ended June 14, 2016 (Successor) is driven by the estimated effective income tax rate of 40.5% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twelve weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

The income tax expense related to the twenty-four weeks ended June 14, 2016 (Successor) is driven by the estimated effective income tax rate of 40.8% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twenty-four weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

14. Commitments and Contingencies

The primary claims in the Company’s business are workers’ compensation and general liabilities. These insurance programs are self-insured or high deductible programs with excess coverage that management believes is sufficient to adequately protect the Company. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured or high deductible limits, including provision for estimated claims incurred but not reported. Because of the uncertainty of the ultimate resolution of outstanding claims, as well as the uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially. However, no estimate can currently be made of the range of additional losses.

Purchasing Commitments

The Company enters into various purchase obligations in the ordinary course of business, generally of short term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, information technology service agreements and marketing initiatives, some of which are related to both Company-operated and franchised locations. The Company also has a long-term beverage supply agreement with a major beverage vendor whereby marketing rebates are provided to the Company and its franchisees based upon the volumes of purchases for system-wide restaurants which vary according to demand for beverage syrup. This contract has terms extending into 2021. The Company’s future estimated cash payments under existing contractual purchase obligations for goods and services as of June 14, 2016 (Successor), are approximately $85.4 million. The Company has excluded agreements that are cancelable without penalty.

Litigation

On April 23, 2015, a purported class action and derivative complaint, Jeffery Tomasulo, on behalf of himself and all others similarly situated v. Levy Acquisition Sponsor, LLC, Lawrence F. Levy, Howard B. Bernick, Marc S. Simon, Craig J. Duchossois, Ari B. Levy, Steven C. Florsheim, Gregory G. Flynn, Del Taco Holdings, Inc., and Levy Acquisition Corp. (“Complaint”), was filed in the Circuit Court of Cook County, Illinois (the “Circuit Court”), relating to the then proposed Business Combination pursuant to the Merger Agreement. The Complaint, which purported to be brought as a class action on behalf of all of the holders of the Company’s common stock, generally alleged that the Company’s pre-merger directors breached their fiduciary duties to stockholders by facilitating the then proposed Business Combination and in negotiating and approving the Merger Agreement. The Complaint also alleged that the Company’s preliminary proxy statement that was filed with the SEC on April 2, 2015 is materially misleading and/or incomplete. The Complaint further alleged that DTH and Levy Acquisition Sponsor LLC aided and abetted the alleged breaches by the Company’s pre-merger directors. The Complaint sought (a) a declaration that the Company’s pre-merger directors breached their fiduciary duties; (b) injunctive relief enjoining the Business Combination until corrective disclosures were made; (c) compensatory and/or rescissory damages; and (d) an award of costs and attorney’s fees. On May 19, 2016, the parties entered into a Stipulation of Settlement, which is subject to final Court approval on July 26, 2016.

16

Del Taco Restaurants, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

The Company has a directors and officers liability insurance policy to cover legal defense costs and settlements stemming from covered claims, subject to an insurance deductible of $0.25 million per claim. The Company's insurance company has acknowledged coverage for claims asserted in the Complaint against covered persons, subject to a reservation of rights. The Company anticipates that any attorney's fees or expenses awarded by the Court in connection with any settlement will be paid in full by the insurance company, together with all or substantially all of any additional legal fees that may be incurred in connection with the action. As of December 29, 2015 (Successor), the Company had an insurance receivable of $0.3 million for legal defense costs it paid in excess of the deductible. The reimbursement from the insurance company was received in January 2016. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company has incurred $0.1 million and $0.3 million, respectively, in legal defense fees for which the Company has recorded a corresponding insurance receivable of $0.2 million as of June 14, 2016 (Successor).

In July 2013, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has failed to pay overtime wages and has not appropriately provided meal breaks to its California general managers. Discovery has been completed and the parties are preparing their motions for and opposition to class certification. Del Taco has several defenses to the action that it believes should prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 14, 2016 (Successor).

In March 2014, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has not appropriately provided meal breaks and failed to pay wages to its California hourly employees. Discovery is in process and Del Taco intends to assert all of its defenses to this threatened class action and the individual claims. Del Taco has several defenses to the action that it believes should prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 14, 2016 (Successor).

The Company and its subsidiaries are parties to other legal proceedings incidental to their businesses, including claims alleging the Company’s restaurants do not comply with the Americans with Disabilities Act of 1990. In the opinion of management, based upon information currently available, the ultimate liability with respect to those other actions will not have a material effect on the operating results, cash flows or the financial position of the Company.

15. Subsequent Events

On July 11, 2016, the Company commenced an offer to exchange 0.2780 shares of the Company's common stock for each outstanding Company warrant exercisable for shares at an exercise price of $11.50 per share (approximately one share for every 3.6 warrants tendered), up to a maximum of 6,750,000 warrants.

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Company's audited consolidated financial statements for the fiscal year ended December 29, 2015 (Successor), and related notes thereto, along with the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2016. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from Del Taco management’s expectations. Factors that could cause such differences are discussed in “Cautionary Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors included in the Annual Report on Form 10-K for the fiscal year ended December 29, 2015 (Successor). We assume no obligation to update any of these forward-looking statements.

As a result of the Business Combination (defined in Note 1 to the consolidated financial statements included in this quarterly report on Form 10-Q), we are the acquirer for accounting purposes, and Del Taco Holdings, Inc. ("DTH") is the acquiree and accounting predecessor. Our financial statement presentation distinguishes a "Predecessor" for DTH for periods prior to the Closing Date. We are the "Successor" for periods after the Closing Date, which includes consolidation of DTH subsequent to the Business Combination on June 30, 2015. The application of acquisition accounting for the Business Combination significantly affected certain assets, liabilities and expenses. As a result, financial information as of June 14, 2016 and for the twelve and twenty-four weeks ended June 14, 2016 may not be comparable to Del Taco’s Predecessor financial information for the twelve and twenty-four weeks ended June 16, 2015. Refer to Notes 2 and 3 to the consolidated financial statements included elsewhere in this quarterly report on Form 10-Q for additional information on the acquisition accounting for the Business Combination.

Fiscal Year

We operate on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal year 2015 is the 52-week period ended December 29, 2015 (Fiscal 2015). Fiscal year 2016 will be a 53-week period ended January 3, 2017 (Fiscal 2016).

Overview

We are a nationwide operator and franchisor of restaurants featuring fresh and fast cuisine, including both Mexican inspired and American classic dishes. As of June 14, 2016 (Successor), there are 543 Del Taco restaurants, a majority of these in the Pacific Southwest. In each of our restaurants, our food is made to order in working kitchens. We serve our customers fresh and high-quality food typical of fast casual restaurants but with the speed, convenience and value associated with traditional quick service restaurants (“QSRs”). With attributes of both a fast casual restaurant and a QSR — a combination we call QSR+ — we occupy a place in the restaurant market distinct from our competitors. With a menu designed to appeal to a wide variety of budgets and tastes and recently updated interior and exterior designs across most of our entire system, we believe that we are poised for growth, operating within the fastest growing segment of the restaurant industry, the limited service restaurant (“LSR”) segment. With an average check of $6.79 during Fiscal 2015, we offer a compelling value proposition relative to both QSR and fast casual peers.

Highlights and Trends

Same Store Sales

Same store sales growth reflects the change in year-over-year sales for the same store base. We include a restaurant in the same store base in the accounting period following its 18th full month of operations and exclude restaurant closures. For the twelve weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), system-wide same store sales increased 3.3% and 6.0%, respectively. For the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), system-wide same store sales increased 3.3% and 6.9%, respectively. Same store sales at company-operated restaurants increased 3.1% for the twelve weeks ended June 14, 2016 and 5.9% for the twelve weeks ended June 16, 2015 (Predecessor). Same store sales at company-operated restaurants increased 3.0% for the twenty-four weeks ended June 14, 2016 (Successor) and 6.9% for the twenty-four weeks ended June 16, 2015 (Predecessor). The increase in company-operated same store sales in the twelve weeks ended June 14, 2016 (Successor) was driven by an increase in average check size of 4.9%, partially offset by a decrease in traffic of 1.8% compared to the twelve weeks ended June 16, 2015 (Predecessor). The increase in company-operated same store sales in the twenty-four weeks ended June 14, 2016 (Successor) was driven by an increase in average check size of 5.2%, partially offset by a decrease in traffic of 2.2% compared to the twenty-four weeks ended June 16, 2015 (Predecessor). Same store sales at franchised restaurants increased 3.6% and 6.2% for the twelve weeks ended June 14, 2016 (Successor) and

18

June 16, 2015 (Predecessor), respectively. Same store sales at franchised restaurants increased 3.7% and 6.9% for the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), respectively.

Restaurant Development

Del Taco restaurant counts at the end of the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), are as follows:

	12 Weeks Ended				24 Weeks Ended
	June 14, 2016		June 16, 2015		June 14, 2016		June 16, 2015
Company-operated restaurant activity:
Beginning of period	297		304		297		304
Openings	1		2		2		2
Closures	—		—		(1	)	—
Restaurants at end of period	298		306		298		306
Franchised restaurant activity:
Beginning of period	246		242		247		243
Openings	—		—		1		—
Closures	(1	)	(1	)	(3	)	(2	)
Restaurants at end of period	245		241		245		241
Total restaurant activity:
Beginning of period	543		546		544		547
Openings	1		2		3		2
Closures	(1	)	(1	)	(4	)	(2	)
Restaurants at end of period	543		547		543		547

Since 2012, we have focused on repositioning our brand, increasing brand awareness, re-imaging our restaurants, strengthening operational capabilities and refinancing indebtedness to build a foundation for future organic and new unit growth. New restaurant development is expected to contribute to our growth strategy. We plan to open an estimated 15 to 18 system-wide restaurants in Fiscal 2016.

Restaurant Re-Imaging

We and our franchisees commenced the Ambience Shake Up (ASU) re-imaging program in 2012 and, as of June 14, 2016 (Successor), a total of 505 restaurants feature our current image through a re-image or new prototype design, including all 298 restaurants that are company-operated. We expect substantially all of our restaurant system to feature the current image by the end of 2016. The ASU remodeling program involved a use of cash and impacted net property and depreciation line items on our consolidated balance sheets and statements of comprehensive income (loss), among others. The cost of the ASU restaurant remodels varied depending on the scope of work required, but on average the company-operated investment was $45,000 per restaurant. We believe the ASU remodeling program is an important element of our strategy that has led to higher system restaurant sales and a strengthened brand.

Key Performance Indicators

In assessing the performance of our business, management utilizes a variety of financial and performance measures.

These key measures include company restaurant sales, same store sales, company-operated average unit volumes, restaurant contribution and restaurant contribution margin, number of new restaurant openings, EBITDA and Adjusted EBITDA.

Company Restaurant Sales

Company restaurant sales consists of sales of food and beverages in company-operated restaurants net of promotional allowances, employee meals and other discounts. Company restaurant sales in any period is directly influenced by the number of operating weeks in such period, the number of open restaurants, same store sales and per restaurant sales.

19

Seasonal factors and the timing of holidays cause revenue to fluctuate from quarter to quarter. Revenue per restaurant is typically lower in the first quarter due to reduced January traffic. As a result of seasonality, quarterly and annual results of operations and key performance indicators such as company restaurant sales and same store sales may fluctuate.

Same Store Sales Growth

We regularly monitor company, franchise and total system same store sales. Same store sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. We include a restaurant in the same store base in the accounting period following its 18th full month of operations and exclude restaurant closures. As of June 14, 2016 (Successor) and June 16, 2015 (Predecessor), there were 287 and 298 restaurants, respectively, in the comparable company-operated restaurant base. As of June 14, 2016 (Successor) and June 16, 2015 (Predecessor), there were 238 and 235 restaurants, respectively, in the comparable franchise-operated restaurant base. This measure highlights the performance of existing restaurants as the impact of new restaurant openings is excluded. Same store sales growth can be generated by an increase in the number of transactions and/or by increases in the average check resulting from a shift in menu mix and/or higher prices resulting from new products, promotions or price increases.

Company-Operated Average Unit Volumes

We measure company-operated average unit volumes (AUVs) on both a weekly and an annual basis. Weekly AUVs are calculated by dividing the sales from comparable company-operated restaurants over a seven day period from Wednesday to Tuesday by the number of comparable restaurants. Annual AUVs are calculated by dividing sales for the trailing 52-week period for all company-operated restaurants that are in the comparable base by the total number of restaurants in the comparable base for such period. This measurement allows management to assess changes in consumer traffic and spending patterns at our company-operated restaurants and the overall performance of the restaurant base.

Restaurant Contribution and Restaurant Contribution Margin

Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with U.S. GAAP. Restaurant contribution is defined as company restaurant sales less restaurant operating expenses, which are food and paper costs, labor and related expenses and occupancy and other operating expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant sales. Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of restaurants and the calculations thereof may not be comparable to those reported by other companies. Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of results as reported under U.S. GAAP. Management believes that restaurant contribution and restaurant contribution margin are important tools for investors because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management uses restaurant contribution and restaurant contribution margin as key performance indicators to evaluate the profitability of incremental sales at Del Taco restaurants, to evaluate restaurant performance across periods and to evaluate restaurant financial performance compared with competitors.

20

A reconciliation of restaurant contribution to company restaurant sales is provided below (in thousands):

	Successor			Predecessor
	12 Weeks Ended June 14, 2016			12 Weeks Ended June 16, 2015
Company restaurant sales	$	95,917		$	93,902
Restaurant operating expenses	76,133			75,269
Restaurant contribution	$	19,784		$	18,633
Restaurant contribution margin	20.6		%	19.8		%
	Successor			Predecessor
	24 Weeks Ended June 14, 2016			24 Weeks Ended June 16, 2015
Company restaurant sales	$	189,467		$	184,785
Restaurant operating expenses	152,169			149,208
Restaurant contribution	$	37,298		$	35,577
Restaurant contribution margin	19.7		%	19.3		%

Number of New Restaurant Openings

The number of restaurant openings reflects the number of new restaurants opened by us and our franchisees during a particular reporting period. Before a new restaurant opens, we and our franchisees incur pre-opening costs, as described below. Some new restaurants open with an initial start-up period of higher than normal sales volumes, which subsequently decrease to stabilized levels. Typically new restaurants experience normal inefficiencies in the form of higher food and paper, labor and other direct operating expenses and, as a result, restaurant contribution margins are generally lower during the start-up period of operation. Typically, the average start-up period after which new company restaurant sales and restaurant operating expenses normalize is approximately 26 to 52 weeks. In new markets, the length of time before average company restaurant sales and restaurant operating expenses for new restaurants stabilize is less predictable and can be longer as a result of limited knowledge of these markets and consumers’ limited awareness of our brand. When we enter new markets, we may be exposed to start-up times that are longer and restaurant contribution margins that are lower than typical historical experience, and these new restaurants may not be profitable and their sales performance may not follow historical patterns.

EBITDA and Adjusted EBITDA

EBITDA represents net income (loss) before interest expense, provision for income taxes, depreciation and amortization. Adjusted EBITDA represents net income (loss) before interest expense, provision for income taxes, depreciation, amortization and items that we do not consider representative of ongoing operating performance, as identified in the reconciliation table below.

EBITDA and Adjusted EBITDA as presented in this quarterly report are supplemental measures of performance that are neither required by, nor presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP and should not be considered as alternatives to net income (loss), income from operations or any other performance measures derived in accordance with U.S. GAAP or as alternatives to cash flow from operating activities as a measure of liquidity. In addition, in evaluating EBITDA and Adjusted EBITDA, note that in the future we may incur expenses or charges such as those added back to calculate EBITDA and Adjusted EBITDA. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as substitutes for analysis of results as reported under U.S. GAAP. Some of these limitations include but are not limited to:

(i) they do not reflect cash expenditures, or future requirements for capital expenditures or contractual commitments;

(ii) they do not reflect changes in, or cash requirements for, working capital needs;

(iii) they do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt;

21

(iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

(v) they do not adjust for all non-cash income or expense items that are reflected in the statements of cash flows;

(vi) they do not reflect the impact of earnings or charges resulting from matters Del Taco considers not to be indicative of ongoing operations; and

(vii) other companies in the industry may calculate these measures differently than Del Taco does, limiting their usefulness as comparative measures.

We compensate for these limitations by providing specific information regarding the U.S. GAAP amounts excluded from such non-GAAP financial measures. We further compensate for the limitations in the use of non-GAAP financial measures by presenting comparable U.S. GAAP measures more prominently.

We believe EBITDA and Adjusted EBITDA facilitate operating performance comparisons from period to period by isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present EBITDA and Adjusted EBITDA because (i) we believe these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use EBITDA and Adjusted EBITDA internally as benchmarks to compare performance to that of competitors.

22

The following table sets forth reconciliations of EBITDA and Adjusted EBITDA to net income (loss) (in thousands):

	Successor			Predecessor
	12 Weeks Ended June 14, 2016			12 Weeks Ended June 16, 2015
Net income	$	4,864		$	4,628
Non-GAAP adjustments:
Provision for income taxes	3,311			1,731
Interest expense	1,405			4,018
Depreciation and amortization	5,532			3,797
EBITDA	15,112			14,174
Stock-based compensation expense (a)	930			—
Loss on disposal of assets (b)	62			14
Restaurant closure charges, net (c)	(166		)	72
Amortization of favorable and unfavorable lease assets and liabilities, net (d)	(140		)	(1		)
Debt modification costs (e)	—			2
Transaction-related costs (f)	126			877
Pre-opening costs (h)	35			129
Adjusted EBITDA	$	15,959		$	15,267
	Successor			Predecessor
	24 Weeks Ended June 14, 2016			24 Weeks Ended June 16, 2015
Net income (loss)	$	7,925		$	(312	)
Non-GAAP adjustments:
Provision for income taxes	5,453			2,189
Interest expense	2,877			10,829
Depreciation and amortization	11,018			7,590
EBITDA	27,273			20,296
Stock-based compensation expense (a)	1,629			532
Loss on disposal of assets (b)	137			14
Restaurant closure charges, net (c)	12			94
Amortization of favorable and unfavorable lease assets and liabilities, net (d)	(280		)	(2		)
Debt modification costs (e)	—			137
Transaction-related costs (f)	191			7,193
Change in fair value of warrant liability (g)	—			(35		)
Pre-opening costs (h)	128			248
Adjusted EBITDA	$	29,090		$	28,477

(a) Includes non-cash, stock-based compensation.

(b) Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

(c) Includes costs related to future obligations associated with the closure or net sublease shortfall of a restaurant.

(d) Includes amortization of favorable lease assets and unfavorable lease liabilities.

(e) Includes costs associated with debt refinancing transaction in March 2015.

(f) Includes costs related to the strategic sale process which commenced during 2014 and resulted in the Stock Purchase Agreement with the Levy Newco Parties and the Business Combination consummated pursuant to the Merger Agreement.

(g) Relates to fair value adjustments to the warrants to purchase shares of common stock of DTH that had been issued to certain of DTH’s equity shareholders, all of which were exchanged for shares of common stock of DTH on March 20, 2015.

23

(h) Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including restaurant labor, supplies, rent expense and other related pre-opening costs. These are generally incurred over the three to five months prior to opening.

Key Financial Definitions

Company Restaurant Sales

Company restaurant sales represents sale of food and beverages in company-operated restaurants, net of promotional allowances, employee meals and other discounts. Company restaurant sales in any period is directly influenced by the number of operating weeks in such period, the number of open restaurants, same store sales performance and per restaurant sales.

Franchise Revenue

Franchise revenue consists of franchise royalty income from the franchisee and, to a lesser extent, renewal fees and franchise fees from franchise owners for new franchise restaurant openings. Franchise fees are recognized when all material obligations have been performed and conditions have been satisfied, typically when operations of a new franchise restaurant have commenced. The fees we collect upon signing a franchise agreement are deferred until operations have commenced.

Franchise Sublease Income

Franchise sublease income consists of rental income received from franchisees related to properties where we have subleased a leasehold interest to the franchisee but remain primarily liable to the landlord.

Food and Paper Costs

Food and paper costs include the direct costs associated with food, beverage and packaging of menu items. The components of food and paper costs are variable in nature, change with sales volume and are impacted by menu mix and are subject to increases or decreases based on fluctuations in commodity costs. Other important factors causing fluctuations in food and paper costs include seasonality, promotional activity and restaurant level management of food and paper waste. Food and paper are a significant expense and can be expected to grow proportionally as company restaurant sales grows.

Labor and Related Expenses

Labor and related expenses include all restaurant-level management and hourly labor costs, including wages, benefits, bonuses, workers’ compensation expense, group health insurance, paid leave and payroll taxes. Like other expense items, we expect labor and related expenses to grow proportionately as company restaurant sales grows. Factors that influence fluctuations in labor and related expenses include minimum wage, paid sick leave and payroll tax legislation, health care costs and the performance of Del Taco restaurants.

Occupancy and Other Operating Expenses

Occupancy and other operating expenses include all other restaurant-level operating expenses, such as rent, utilities, restaurant supplies, repairs and maintenance, credit and debit card processing fees, advertising, insurance, common area maintenance, real estate taxes and other restaurant operating costs.

General and Administrative Expenses

General and administrative expenses are comprised of expenses associated with corporate and regional supervision functions that support the operations of existing restaurants and development of new restaurants, including compensation and benefits, travel expenses, stock-based compensation expenses, legal and professional fees, information systems, corporate office occupancy costs and other related corporate costs. Also included are expenses above the restaurant level, including salaries for field management, such as area and regional managers, and franchise operational support. General and administrative expenses are expected to grow as we grow, including incremental legal, accounting, insurance, investor relations and other expenses that will be incurred as a public company.

Depreciation and Amortization

Depreciation and amortization expenses are periodic non-cash charges that consist of depreciation of fixed assets, including leasehold improvements and equipment, and amortization of various intangible assets primarily including franchise rights.

24

Occupancy and Other – Franchise Subleases

Occupancy and other – franchise subleases includes rent and property taxes paid on properties subleased to franchisees where we remain primarily liable to the landlord.

Pre-opening Costs

Pre-opening costs are incurred in connection with opening of new restaurants and incurred prior to opening, including restaurant labor related to the hiring and training of restaurant employees, as well as supplies, occupancy and other operating expenses associated with the opening of new restaurants. Pre-opening costs are expensed as incurred.

Restaurant Closure Charges, Net

Restaurant closure charges, net, consists primarily of the future obligations associated with the closure or net sublease shortfall of a restaurant, including the present value of future lease obligations net of estimated sublease income, if any, accretion of the liability during the reporting period and any positive or negative adjustments to the liability as more information becomes available as well as direct costs related to the restaurant closure.

Loss on Disposal of Assets

Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements, furniture, fixtures or equipment in the ordinary course of business, net of the amortization of gains on asset sales associated with sale-leaseback transactions that do not qualify for sale-leaseback accounting treatment and gains from disposal of assets related to eminent domain.

Interest Expense

Interest expense consists primarily of interest expense on outstanding debt. Deferred financing costs and debt discount are amortized at cost over the life of the related debt.

Transaction-Related Costs

Transaction-related costs consists of direct costs incurred in connection with the strategic sale process which commenced during 2014 and resulted in the Stock Purchase Agreement with the Levy Newco Parties in March 2015 and the Business Combination consummated pursuant to the Merger Agreement on June 30, 2015.

Debt Modification Costs

In March 2015, DTH refinanced its existing debt (the "March 2015 Refinance") by amending the senior credit facility (the "2013 Senior Credit Facility") and incurred lender and third party costs which were capitalized on the balance sheet and certain third party costs were expensed.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents the non-cash adjustment to record the warrant liability to its determined fair market value.

Provision for Income Taxes

Provision for income taxes consists of federal and state current and deferred income tax expense.

25

Results of Operations

Comparison of Results of Operations for the Twelve Weeks Ended June 14, 2016 (Successor) and Twelve Weeks Ended June 16, 2015 (Predecessor)

The following table presents operating results for the twelve weeks ended June 14, 2016 (Successor) and twelve weeks ended June 16, 2015 (Predecessor), in absolute terms and expressed as a percentage of total revenue (or company restaurant sales), as compared below:

	Successor						Predecessor
	12 Weeks Ended June 14, 2016						12 Weeks Ended June 16, 2015					Increase / (Decrease)
(Dollar amounts in thousands)	($)			(%)			($)		(%)			($)			(%)
Statement of Operations Data:
Revenue:
Company restaurant sales	$	95,917		95.9	%		$	93,902	96.2	%		$	2,015		2.1	%
Franchise revenue	3,576			3.6			3,147		3.2			429			13.6
Franchise sublease income	533			0.5			554		0.6			(21		)	(3.8	)
Total Revenue	100,026			100.0			97,603		100.0			2,423			2.5
Operating expenses
Restaurant operating expenses:
Food and paper costs	26,358			27.5		(1)	26,859		28.6		(1)	(501		)	(1.9	)
Labor and related expenses	30,249			31.5		(1)	28,486		30.3		(1)	1,763			6.2
Occupancy and other operating expenses	19,526			20.4		(1)	19,924		21.2		(1)	(398		)	(2.0	)
Total restaurant operating expenses	76,133			79.4		(1)	75,269		80.2		(1)	864			1.1
General and administrative	8,214			8.2			6,550		6.7			1,664			25.4
Depreciation and amortization	5,532			5.5			3,796		3.9			1,736			45.7
Occupancy and other-franchise subleases	510			0.5			517		0.5			(7		)	(1.4	)
Pre-opening costs	35			*			129		0.1			(94		)	(72.9	)
Restaurant closure charges, net	(166		)	(0.2	)		72		0.1			(238		)	*
Loss on disposal of assets	62			0.1			14		*			48			*
Total operating expenses	90,320			90.3			86,347		88.5			3,973			4.6
Income from operations	9,706			9.7			11,256		11.5			(1,550		)	(13.8	)
Other expenses:
Interest expense	1,405			1.4			4,018		4.1			(2,613		)	(65.0	)
Transaction-related costs	126			0.1			877		0.9			(751		)	(85.6	)
Debt modification costs	—			—			2		*			(2		)	(100.0	)
Total other expenses	1,531			1.5			4,897		5.0			(3,366		)	(68.7	)
Income from operations before provision for income taxes	8,175			8.2			6,359		6.5			1,816			28.6
Provision for income taxes	3,311			3.3			1,731		1.8			1,580			91.3
Net income	$	4,864		4.9	%		$	4,628	4.7	%		$	236		5.1	%

(1) As a percentage of company restaurant sales.

* Immaterial/not meaningful

26

Company Restaurant Sales

Company restaurant sales increased $2.0 million, or 2.1%, for the twelve weeks ended June 14, 2016 (Successor), primarily due to an increase in company-operated same store sales of $2.4 million, or 3.1% offset by a decrease of $0.4 million from the net impact of restaurant opening and closures since the beginning of the second quarter of 2015. The growth in company-operated same store sales was primarily the result of an increase in average check size of 4.9%, partially offset by a decrease in traffic of 1.8% compared to the prior period.

Franchise Revenue

Franchise revenue increased $0.4 million, or 13.6%, for the twelve weeks ended June 14, 2016 (Successor), primarily due to an increase in franchised same store sales of 3.6% and additional franchised restaurants compared to the second quarter of 2015, as well as an increase in initial fees during the second quarter of 2016.

Franchise Sublease Income

Franchise sublease income remained substantially the same for both the twelve week periods ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

Food and Paper Costs

Food and paper costs decreased $0.5 million, or 1.9% for the twelve weeks ended June 14, 2016 (Successor). As a percentage of company restaurant sales, food and paper costs declined to 27.5% for the twelve weeks ended June 14, 2016 (Successor) compared to 28.6% for the twelve weeks ended June 16, 2015 (Predecessor). This reduction was driven by the impact of menu price increases and a reduction in commodity costs.

Labor and Related Expenses

Labor and related expenses increased $1.8 million, or 6.2% for the twelve weeks ended June 14, 2016 (Successor), primarily due to increased labor costs resulting from a California minimum wage increase on January 1, 2016, the impact from new paid sick leave requirements that began July 1, 2015 in California and an increase in workers compensation expense due to higher payments and reserves related to underlying claims activity. As a percentage of company restaurant sales, labor and related expenses were 31.5% for the twelve weeks ended June 14, 2016 (Successor) compared to 30.3% for the twelve weeks ended June 16, 2015 (Predecessor). This percentage increase resulted primarily from the impact of the increased California minimum wage, new sick leave requirements and increased workers compensation expense discussed above, partially offset by the impact of menu price increases.

Occupancy and Other Operating Expenses

Occupancy and other operating expenses decreased $0.4 million, or 2.0%, for the twelve weeks ended June 14, 2016 (Successor). As a percentage of company restaurant sales, occupancy and other operating expenses were 20.4% for the twelve weeks ended June 14, 2016 (Successor) compared to 21.2% for the twelve weeks ended June 16, 2015 (Predecessor). This overall reduction as a percent of company restaurant sales was primarily due to menu price increases which helped to leverage the fixed components of occupancy and other operating expenses, as well as a reduction in utilities, supplies, repairs and maintenance, rent and advertising as a percent of company restaurant sales.

General and Administrative Expenses

General and administrative expenses increased $1.7 million, or 25.4%, for the twelve weeks ended June 14, 2016 (Successor), primarily due to an increase in compensation, legal and professional expense including incremental public company costs and stock-based compensation. As a percentage of total revenue, general and administrative expense was 8.2% for the twelve weeks ended June 14, 2016 (Successor) compared to 6.7% for the twelve weeks ended June 16, 2015 (Predecessor). The percentage increase as a percent of total revenue was due to the above mentioned cost increases partially offset by increased total revenue.

27

Depreciation and Amortization

Depreciation and amortization expenses increased $1.7 million, or 45.7%, for the twelve weeks ended June 14, 2016 (Successor), compared to the twelve weeks ended June 16, 2015 (Predecessor), primarily due to $0.7 million of incremental depreciation and amortization expense resulting from adjusting property and equipment and identifiable intangible assets to fair value in acquisition accounting for the Business Combination and the addition of new assets. As a percentage of total revenue, depreciation and amortization expenses was 5.5% for the twelve weeks ended June 14, 2016 (Successor), compared to 3.9% for the twelve weeks ended June 16, 2015 (Predecessor). The increase as a percent of total revenue for the twelve weeks ended June 14, 2016 (Successor) is primarily the result of the incremental depreciation and amortization expense discussed above.

Occupancy and Other – Franchise Sublease

Occupancy and other – franchise sublease was $0.5 million for both the twelve weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

Pre-opening Costs

Pre-opening costs were $35,000 for the twelve weeks ended June 14, 2016 (Successor) and $129,000 for the twelve weeks ended June 16, 2015 (Predecessor).

Restaurant Closure Charges, net

Restaurant closure charges, net, were $(0.2) million for the twelve weeks ended June 14, 2016 (Successor) compared to $0.1 million for the twelve weeks ended June 16, 2015 (Predecessor). The current year activity includes an adjustment to decrease the lease termination liability for one closed restaurant due to a change in estimate, partially offset by an adjustment to increase the lease termination liability for two closed restaurants due to changes in estimates, accretion expense and other incremental charges related to the 12 underperforming restaurants we closed during the fourth fiscal quarter of 2015. The twelve weeks ended June 16, 2015 (Predecessor) includes accretion expense for the lease termination liability for previously closed restaurants and an adjustment to increase the lease termination liability for one closed restaurant.

Loss on Disposal of Assets

Loss on disposal of assets was $62,000 for the twelve weeks ended June 14, 2016 (Successor) compared to $14,000 for the twelve weeks ended June 16, 2015 (Predecessor). Current year loss was related to the closure of one company restaurant and replacement of certain restaurant equipment. Prior year loss was primarily related to the replacement of restaurant and other equipment.

Interest Expense

Interest expense was $1.4 million for the twelve weeks ended June 14, 2016 (Successor), compared to $4.0 million for the twelve weeks ended June 16, 2015 (Predecessor). The decrease in interest expense for the twelve weeks ended June 14, 2016 (Successor) is primarily due to the debt refinancing that occurred in August 2015 which replaced the existing term loan with a revolving credit facility with a significantly lower interest rate and the $68.6 million reduction to the 2013 Senior Credit Facility in June 2015.

Transaction-Related Costs

Transaction-related costs were $0.1 million for the twelve weeks ended June 14, 2016 (Successor), compared to $0.9 million for the twelve weeks ended June 16, 2015 (Predecessor). Transaction-related costs primarily consist of direct costs incurred in connection with the Business Combination which closed on June 30, 2015 (see Note 3 to the unaudited consolidated financial statements).

Debt Modification Costs

Debt modification costs totaled $2,000 for the twelve weeks ended June 16, 2015 (Predecessor). These costs related to the March 2015 Refinance. There were no such debt modification costs for the twelve weeks ended June 14, 2016 (Successor).

28

Provision for Income Taxes

The effective income tax rates were 40.5% for the twelve weeks ended June 14, 2016 (Successor) compared to 27.2% for the twelve weeks ended June 16, 2015 (Predecessor). The provision for income taxes consisted of income tax expense of $3.3 million for the twelve weeks ended June 14, 2016 (Successor) and $1.7 million for the twelve weeks ended June 16, 2015 (Predecessor). The income tax expense related to the twelve weeks ended June 14, 2016 (Successor) is driven by our estimated effective income tax rate of 40.5% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twelve weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

29

Comparison of Results of Operations for the Twenty-Four Weeks Ended June 14, 2016 (Successor) and Twenty-Four Weeks Ended June 16, 2015 (Predecessor)

The following table presents operating results for the twenty-four weeks ended June 14, 2016 (Successor) and twenty-four weeks ended June 16, 2015 (Predecessor), in absolute terms and expressed as a percentage of total revenue (or company restaurant sales), as compared below:

	Successor					Predecessor
	24 Weeks Ended June 14, 2016					24 Weeks Ended June 16, 2015						Increase / (Decrease)
(Dollar amounts in thousands)	($)		(%)			($)			(%)			($)			(%)
Statement of Operations Data:
Revenue:
Company restaurant sales	$	189,467	96.0	%		$	184,785		96.2	%		$	4,682		2.5	%
Franchise revenue	6,905		3.5			6,148			3.2			757			12.3
Franchise sublease income	1,057		0.5			1,088			0.6			(31		)	(2.8	)
Total Revenue	197,429		100.0			192,021			100.0			5,408			2.8
Operating expenses
Restaurant operating expenses:
Food and paper costs	52,487		27.7		(1)	52,841			28.6		(1)	(354		)	(0.7	)
Labor and related expenses	60,033		31.7		(1)	56,409			30.5		(1)	3,624			6.4
Occupancy and other operating expenses	39,649		20.9		(1)	39,958			21.6		(1)	(309		)	(0.8	)
Total restaurant operating expenses	152,169		80.3		(1)	149,208			80.7		(1)	2,961			2.0
General and administrative	16,506		8.4			13,846			7.2			2,660			19.2
Depreciation and amortization	11,018		5.6			7,588			4.0			3,430			45.2
Occupancy and other-franchise subleases	1,013		0.5			1,022			0.5			(9		)	(0.9	)
Pre-opening costs	128		0.1			248			0.1			(120		)	(48.4	)
Restaurant closure charges, net	12		*			94			*			(82		)	(87.2	)
Loss on disposal of assets	137		0.1			14			*			123			*
Total operating expenses	180,983		91.7			172,020			89.6			8,963			5.2
Income from operations	16,446		8.3			20,001			10.4			(3,555		)	(17.8	)
Other expenses:
Interest expense	2,877		1.5			10,829			5.6			(7,952		)	(73.4	)
Transaction-related costs	191		0.1			7,193			3.7			(7,002		)	(97.3	)
Debt modification costs	—		—			137			0.1			(137		)	(100.0	)
Change in fair value of warrant liability	—		—			(35		)	*			35			(100.0	)
Total other expenses	3,068		1.6			18,124			9.4			(15,056		)	(83.1	)
Income from operations before provision for income taxes	13,378		6.8			1,877			1.0			11,501			*
Provision for income taxes	5,453		2.8			2,189			1.1			3,264			*
Net income (loss)	$	7,925	4.0	%		$	(312	)	(0.2	)%		$	8,237		*

(1) As a percentage of company restaurant sales.

* Immaterial/not meaningful

30

Company Restaurant Sales

Company restaurant sales increased $4.7 million, or 2.5%, for the twenty-four weeks ended June 14, 2016 (Successor), primarily due to an increase in company-operated same store sales of $4.8 million, or 3.0% offset by $0.1 million from the net impact of restaurant openings and closures since the beginning of the first quarter of 2015. The growth in company-operated same store sales was primarily the result of an increase in average check size of 5.2%, partially offset by a decrease in traffic of 2.2% compared to the prior period.

Franchise Revenue

Franchise revenue increased $0.8 million, or 12.3%, for the twenty-four weeks ended June 14, 2016 (Successor), primarily due to an increase in franchised same store sales of 3.7% and additional franchised restaurants compared to the beginning of the first quarter of 2015, as well as an increase in initial fees during the first two quarters of 2016.

Franchise Sublease Income

Franchise sublease income remained substantially the same for both the twenty-four week periods ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

Food and Paper Costs

Food and paper costs decreased $0.4 million, or 0.7% for the twenty-four weeks ended June 14, 2016 (Successor). As a percentage of company restaurant sales, food and paper costs declined to 27.7% for the twenty-four weeks ended June 14, 2016 (Successor) compared to 28.6% for the twenty-four weeks ended June 16, 2015 (Predecessor). This reduction was driven by the impact of menu price increases and a reduction in commodity costs.

Labor and Related Expenses

Labor and related expenses increased $3.6 million, or 6.4% for the twenty-four weeks ended June 14, 2016 (Successor), primarily due to increased labor costs resulting from a California minimum wage increase on January 1, 2016, the impact from new paid sick leave requirements that began July 1, 2015 in California and an increase in workers compensation expense due to higher payments and reserves related to underlying claim activity. As a percentage of company restaurant sales, labor and related expenses were 31.7% for the twenty-four weeks ended June 14, 2016 (Successor) compared to 30.5% for the twenty-four weeks ended June 16, 2015 (Predecessor). This percentage increase resulted primarily from the impact of the increased California minimum wage, new sick leave requirements and increased workers compensation expense discussed above, partially offset by the impact of menu price increases.

Occupancy and Other Operating Expenses

Occupancy and other operating expenses decreased $0.3 million, or 0.8%, for the twenty-four weeks ended June 14, 2016 (Successor). As a percentage of company restaurant sales, occupancy and other operating expenses were 20.9% for the twenty-four weeks ended June 14, 2016 (Successor) compared to 21.6% for the twenty-four weeks ended June 16, 2015 (Predecessor). This overall reduction as a percent of company restaurant sales was primarily due to menu price increases which helped to leverage the fixed components of occupancy and other operating expenses, as well as a reduction in utilities, supplies, repairs and maintenance, rent and advertising as a percent of company restaurant sales.

General and Administrative Expenses

General and administrative expenses increased $2.7 million or 19.2%, for the twenty-four weeks ended June 14, 2016 (Successor), primarily due to an increase in compensation, legal and professional expense including incremental public company costs and stock-based compensation, partially offset by a decrease in performance-based incentive compensation. As a percentage of total revenue, general and administrative expense was 8.4% for the twenty-four weeks ended June 14, 2016 (Successor) compared to 7.2% for the twenty-four weeks ended June 16, 2015 (Predecessor) and the increase as a percent of total revenue was due to the above mentioned cost increases partially offset by increased total revenue.

31

Depreciation and Amortization

Depreciation and amortization expenses increased $3.4 million, or 45.2%, for the twenty-four weeks ended June 14, 2016 (Successor), compared to the twenty-four weeks ended June 16, 2015 (Predecessor), primarily due to $1.6 million of incremental depreciation and amortization expense resulting from adjusting property and equipment and identifiable intangible assets to fair value in acquisition accounting for the Business Combination and the addition of new assets. As a percentage of total revenue, depreciation and amortization expenses was 5.6% for the twenty-four weeks ended June 14, 2016 (Successor), compared to 4.0% for the twenty-four weeks ended June 16, 2015 (Predecessor). The increase as a percent of total revenue for the twenty-four weeks ended June 14, 2016 (Successor) is primarily the result of the incremental depreciation and amortization expense discussed above.

Occupancy and Other – Franchise Sublease

Occupancy and other – franchise sublease was $1.0 million for both the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

Pre-opening Costs

Pre-opening costs were $0.1 million for the twenty-four weeks ended June 14, 2016 (Successor) compared to $0.2 million for the twenty-four weeks ended June 16, 2015 (Predecessor).

Restaurant Closure Charges, net

Restaurant closure charges, net, were $12,000 for the twenty-four weeks ended June 14, 2016 (Successor) compared to $94,000 for the twenty-four weeks ended June 16, 2015 (Predecessor). The current year activity includes an adjustment to decrease the lease termination liability for one closed restaurant due to a change in estimate, partially offset by an adjustment to increase the lease termination liability for two closed restaurants due to changes in estimates, accretion expense and other incremental charges related to the 12 underperforming restaurants we closed during the fourth fiscal quarter of 2015. The twenty-four weeks ended June 16, 2015 (Predecessor) includes accretion expense for the lease termination liability for previously closed restaurants and an adjustment to increase the lease termination liability for one closed restaurant.

Loss on Disposal of Assets

Loss on disposal of assets was $137,000 for the twenty-four weeks ended June 14, 2016 (Successor) compared to $14,000 for the twenty-four weeks ended June 16, 2015 (Predecessor). Current year loss was related to the closure of one company restaurant and replacement of certain restaurant equipment. Prior year loss was primarily related to the replacement of restaurant and other equipment.

Interest Expense

Interest expense was $2.9 million for the twenty-four weeks ended June 14, 2016 (Successor), compared to $10.8 million for the twenty-four weeks ended June 16, 2015 (Predecessor). The decrease in interest expense for the twenty-four weeks ended June 14, 2016 (Successor) is primarily due to the debt refinancing that occurred in August 2015 which replaced the existing term loan with a revolving credit facility with a significantly lower interest rate, the $68.6 million reduction to the 2013 Senior Credit Facility in June 2015, and the full repayment of DTH's subordinated notes in March 2015.

Transaction-Related Costs

Transaction-related costs were $0.2 million for the twenty-four weeks ended June 14, 2016 (Successor), compared to $7.2 million for the twenty-four weeks ended June 16, 2015 (Predecessor). Transaction-related costs primarily consist of direct costs incurred in connection with the Business Combination which closed on June 30, 2015 (see Note 3 to the unaudited consolidated financial statements).

Debt Modification Costs

Debt modification costs totaled $0.1 million for the twenty-four weeks ended June 16, 2015 (Predecessor). These costs related to the March 2015 Refinance. There were no such debt modification costs for the twenty-four weeks ended June 14, 2016 (Successor).

32

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability was $35,000 for the twenty-four weeks ended June 16, 2015 (Predecessor). The warrant liability was reclassified to equity on March 20, 2015 in connection with the Initial Investment discussed in Note 3 to the unaudited consolidated financial statements. There was no such change in fair value of warrant liability for the twenty-four weeks ended June 14, 2016 (Successor).

Provision for Income Taxes

The effective income tax rates were 40.8% for the twenty-four weeks ended June 14, 2016 (Successor) compared to 116.6% for the twenty-four weeks ended June 16, 2015 (Predecessor). The provision for income taxes consisted of income tax expense of $5.5 million for the twenty-four weeks ended June 14, 2016 (Successor) and $2.2 million for the twenty-four weeks ended June 16, 2015 (Predecessor). The income tax expense related to the twenty-four weeks ended June 14, 2016 (Successor) is driven by our estimated effective income tax rate of 40.8% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twenty-four weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

Liquidity and Capital Resources

Potential Impacts of Market Conditions on Capital Resources

We have experienced increases in same store sales and restaurant contribution margin. However, the restaurant industry continues to be challenged and uncertainty exists as to the sustainability of these favorable trends.

We believe that expected cash flow from operations, available cash of $7.3 million at June 14, 2016 (Successor) and available borrowing capacity of $77.0 million at June 14, 2016 (Successor) will be adequate to fund debt service requirements, operating lease obligations, capital expenditures and working capital obligations for at least the next 12 months. However, the ability to continue to meet these requirements and obligations will depend on, among other things, the ability to achieve anticipated levels of revenue and cash flow and the ability to manage costs and working capital successfully.

Summary of Cash Flows

Our primary sources of liquidity and capital resources have been cash provided from operations, cash and cash equivalents, and our senior secured credit facilities. Our primary requirements for liquidity and capital are new restaurants, existing restaurant capital investments (primarily maintenance and roll-out of equipment related to our strategy to emphasize freshness and speed), investments in infrastructure and information technology, interest payments on debt, lease obligations, income tax payments, purchases under our share repurchase program and working capital and general corporate needs. The working capital requirements are not significant since customers pay for their purchases in cash or by payment card (credit or debit) at the time of sale. Thus, we are able to sell many inventory items before we have to pay suppliers for such items since we typically have payment terms for our food and paper suppliers. The Company restaurants do not require significant inventories.

The following table presents summary cash flow information for the periods indicated (in thousands).

	Successor			Predecessor
	24 Weeks Ended June 14, 2016			24 Weeks Ended June 16, 2015
(Amounts in thousands)
Net cash provided by (used in)
Operating activities	$	21,053		$	10,862
Investing activities	(16,189		)	(13,791		)
Financing activities	(7,760		)	1,885
Net decrease in cash	$	(2,896	)	$	(1,044	)

33

Cash Flows Provided by Operating Activities

In the twenty-four weeks ended June 14, 2016 (Successor), cash flows provided by operating activities were $21.1 million. The cash flows provided by operating activities resulted from net income of $7.9 million, non-cash adjustment for asset depreciation and amortization of $10.9 million, stock-based compensation of $1.6 million, deferred income taxes of $3.1 million, loss on disposal of assets of $0.1 million, partially offset by net working capital requirements of $2.4 million and restaurant closures charges of $0.1 million.

In the twenty-four weeks ended June 16, 2015 (Predecessor), cash flows used in operating activities were $10.9 million. The cash flows used in operating activities resulted from non-cash adjustments for asset depreciation and amortization of $8.4 million, stock-based compensation of $0.5 million, other non-cash adjustments totaling $0.2 million, and changes in net working capital requirements totaling $2.1 million, partially offset by a net loss of $0.3 million.

Cash Flows Used in Investing Activities

In the twenty-four weeks ended June 14, 2016 (Successor), cash flows used in investing activities were $16.2 million, which were primarily the result of purchase of property and equipment and other assets.

In the twenty-four weeks ended June 16, 2015 (Predecessor), cash flows used in investing activities were $13.8 million, which were primarily the result of purchase of property and equipment and other assets.

Cash Flows (Used in) Provided by Financing Activities

In the twenty-four weeks ended June 14, 2016 (Successor), cash flows used in financing activities were $7.7 million. The cash flows used in financing activities were primarily the result of the repurchase of approximately 628,982 shares of our common stock and 241,806 warrants for an aggregate purchase price of $6.9 million, including incremental direct costs to acquire the shares, and payments on capital lease and deemed landlord financing totaling $0.8 million. During the twenty-four weeks ended June 14, 2016 (Successor),we borrowed $4.0 million on the revolving credit facility and made payments of $4.0 million on the revolving credit facility.

In the twenty-four weeks ended June 16, 2015 (Predecessor), cash flows provided by financing activities were $1.9 million. The cash flows provided by financing activities were primarily the result of proceeds from the issuance of common stock of $91.2 million and proceeds from the term loan and revolving credit facilities of $33.7 million, partially offset by the full repayment of the subordinate notes of $108.1 million, payment of tax withholding related to option of exercises and distribution of restricted stock units of $7.5 million, payments on capital lease obligations, deemed landlord financing and debt issue costs of $1.4 million, and payments on the revolving credit facility of $6.0 million.

Debt and Other Obligations

Senior Credit Facility

On April 1, 2013, DTH entered into the 2013 Senior Credit Facility in the amount of $215 million consisting of a $175.0 million term loan and $40.0 million revolving credit facility revolver with maturity dates of October 1, 2018 and April 1, 2018, respectively. On April 21, 2014, DTH amended the 2013 Senior Credit Facility whereby the then outstanding balance of the term loan was increased by $62.0 million to $220.0 million and the revolving credit facility remained at $40 million. The amended term loan bore interest at LIBOR (not to be less than 1.00%) plus a margin of 4.50%. On March 20, 2015, DTH increased the borrowings on its 2013 Senior Credit Facility by $25.1 million and borrowed $10.0 million under the revolving credit facility. In addition, on March 12, 2015, DTH satisfied the rating condition in its 2013 Senior Credit Facility resulting in a decrease in interest rates to LIBOR (not to be less than 1.00%) plus a margin of 4.25% as of March 25, 2015. On June 30, 2015, DTH used $68.6 million of the proceeds from the Business Combination to pay down borrowings under the 2013 Senior Credit Facility.

On August 4, 2015, we refinanced our existing 2013 Senior Credit Facility and entered into a new credit agreement (the "2015 Senior Credit Facility") which matures on August 4, 2020, and provides for a $250 million revolving credit facility. We borrowed $164 million under the 2015 Senior Credit Facility to repay all of existing indebtedness under our existing 2013 Senior Credit Facility and to pay costs associated with the financing. At the time of termination, $162.5 million of term loan borrowings were outstanding under the 2013 Senior Credit Facility and $17.6 million revolver capacity that was utilized to support outstanding letters of credit.

34

At our option, loans under the 2015 Senior Credit Facility may bear interest at a base rate or LIBOR, plus a margin determined in accordance with a consolidated total lease adjusted leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the prime rate of Bank of America, and (c) LIBOR plus 1.00%. For LIBOR loans, the margin is in the range of 1.50% to 2.50%, and for base rate loans the margin is in the range of 0.50% and 1.50%. The margin was initially set at 2.00% for LIBOR loans and at 1.00% for base rate loans until delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending after the closing date of the 2015 Senior Credit Facility. Following delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending December 29, 2015 (Successor), the applicable margin decreased 0.25% for both LIBOR loans and base rate loans on March 18, 2016.

The 2015 Senior Credit Facility contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. We were in compliance with the financial covenants as of June 14, 2016 (Successor).

The 2015 Revolving Credit Facility does not have scheduled principal payments until its maturity on August 4, 2020.

At June 14, 2016 (Successor), the weighted-average interest rate on the outstanding balance of the 2015 Senior Credit Facility was 2.2%. As of June 14, 2016 (Successor) there were $154.0 million of borrowings under the 2015 Senior Credit Facility and letters of credit outstanding of $19.0 million. Unused borrowing capacity at June 14, 2016 (Successor) was $77.0 million.

Subordinated Notes

In connection with DTH's May 2010 restructuring, wholly owned subsidiaries of DTH issued subordinated notes in the aggregate principal amount of $150.0 million which had an interest rate of 13.0%, with interest accrued to principal. The outstanding balance of $111.2 million on these subordinated notes was paid in full on March 20, 2015

Hedging Arrangements

Effective June 30, 2013, DTH entered into an interest rate cap agreement with a three-year term with a fixed notional amount of $87.5 million of the Term Loan that effectively converted that portion of the loan outstanding under the 2013 Senior Credit Facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of three-month LIBOR plus the applicable percentage (as provided by the 2013 Senior Credit Facility) to a capped interest rate of 1.00% to 2.25% plus the applicable percentage.

DTH was hedging forecasted transactions expected to occur through June 30, 2016. As of the July 1, 2015 reset date, however, DTH elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement, and as a result, this hedge became ineffective. Therefore, after July 1, 2015, any changes in fair value was recorded through interest expense. There were no changes in fair value for the interest rate cap from July 1, 2015 through June 14, 2016.

Off-Balance Sheet and Other Arrangements

At June 14, 2016 (Successor), we had a $250.0 million revolving credit facility of which $19.0 million was reserved for outstanding letters of credit and $77.0 million was unused and available for borrowings. We did not have any other material off-balance sheet arrangements, except for restaurant operating leases entered into in the normal course of business.

Stock Repurchase Program

In February 2016, the Board of Directors authorized a share repurchase program under which we may purchase up to $25.0 million in the aggregate of our common stock and warrants. Purchases under the program may be made in open market or privately negotiated transactions. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), we repurchased respectively 542,303 and 628,982 shares for an average price per share of $9.92 and $10.04 for an aggregate cost of approximately $5.4 million and $6.4 million including incremental direct costs to acquire the shares. During both the twelve and twenty-four weeks ended June 14, 2016 (Successor), we repurchased 241,806 warrants for an average price per warrant of $2.36 for an aggregate cost of approximately $0.6 million including incremental direct costs to acquire the shares. As of June 14, 2016 (Successor), there was approximately $18.1 million remaining under the share repurchase program. We have no obligations to repurchase shares or warrants under this authorization, and the timing and value of shares and warrants purchased will depend on our stock price, warrant price, market conditions and other factors.

35

Exchange Offer

On July 11, 2016, we commenced an offer to exchange ("Offer to Exchange") 0.2780 shares of our common stock for each outstanding Company warrant exercisable for shares at an exercise price of $11.50 per share (approximately one share for every 3.6 warrants tendered), up to a maximum of 6,750,000 warrants. 

The Offer to Exchange will expire, unless extended, at 11:59 p.m., Eastern Time, on Friday, August 5, 2016. Tenders of warrants must be made prior to the expiration of the Offer to Exchange and may be withdrawn at any time prior to the expiration of the Offer to Exchange. All outstanding warrants are eligible to be tendered pursuant to the Offer to Exchange (subject to proration). All of our directors and executive officers who beneficially own warrants have agreed to participate in the Offer to Exchange. The purpose of the Offer to Exchange is to reduce the number of common stock that would become outstanding upon the exercise of warrants. The Offer to Exchange described above is made only pursuant to a Tender Offer Statement on Schedule TO and related exhibits, including the Offer to Exchange Letter, Letter of Transmittal and other related documents, filed with the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to market risk from changes in interest rates on our senior credit facility, which currently bears interest at variable rates. As of June 14, 2016 (Successor), we had outstanding variable rate borrowings of $154.0 million. A 1.00% increase in the effective interest rate applied to this borrowing would result in a pre-tax interest expense increase of $1.5 million on an annualized basis.

Commodity Price Risk

We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market conditions and other factors which are not considered predictable or within our control. Although these products are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements used contain risk management techniques designed to minimize price volatility. In many cases, we believe we will be able to address material commodity cost increases by adjusting menu pricing or making other operational adjustments that increase productivity. However, increases in commodity prices, without adjustments to menu prices, could increase restaurant operating costs as a percentage of restaurant sales.

Inflation

Inflation has an impact on food, paper, construction, utility, labor and benefits, rent, general and administrative and other costs, all of which can materially impact operations. We have a substantial number of hourly employees who are paid wage rates at or based on the applicable federal, state or local minimum wage and increases in the minimum wage will increase labor costs. From July 1, 2014 to December 31, 2015, the State of California (where a majority of company-operated restaurants are located) had a minimum wage of $9.00 per hour. From January 1, 2008 to June 30, 2014, California minimum wage had been $8.00 per hour. The California minimum wage increased to $10.00 per hour on January 1, 2016.

On July 1, 2015, the Healthy Workplaces, Healthy Families Act of 2014 went into effect for California employees, which provides up to three days of paid sick leave for employees who work more than 30 days within a year.

In addition, in September 2015, the Los Angeles County Board of Supervisors approved increases to the minimum wage to $15.00 per hour by 2020 with the first phase of the wage increase to $10.50 effective on July 1, 2016. Also, in June 2016, the the Los Angeles City Council approved a paid sick leave ordinance to provide six days of paid sick leave per year, with carry-over of 72 hours, effective July 1, 2016. These ordinances are expected to impact 25 company-owned restaurants and 8 franchise-owned restaurants in the City of Los Angeles and in the unincorporated areas of the County of Los Angeles.

On March 14, 2016, the Pasadena City Council adopted an ordinance to increase the Pasadena’s minimum wage. Beginning on July 1, 2016, employers with 26 or more employees must pay a minimum wage of $10.50 per hour to all employees who work at least 2 hours per week within Pasadena’s geographic bounds. The minimum wage will increase to $12.00 per hour on July 1, 2017, and $13.25 per hour on July 1, 2018. This is expected to impact two company-owned restaurants.

On March 31, 2016, the California Legislature passed legislation which was designed to raise the statewide minimum wage gradually until it reaches $15.00 per hour in 2022 and it was signed into law on April 4, 2016. Under the new California law, minimum wage would increase to $10.50 per hour in 2017, $11.00 in 2018 and then increase by an additional dollar each

36

calendar year through 2022 when it reaches $15.00 per hour. Based on our current number of restaurants in California, this is expected to impact 366 restaurants in California of which 244 are company-owned and 122 are franchised-owned.

On June 7, 2016, San Diego voters voted in favor of an ordinance to increase San Diego's minimum wage rate and allow employees working within the San Diego city limits to earn one hour of paid sick leave for every 30 hours worked. The San Diego City Council certified this minimum wage increase on July 11, 2016 with the increase taking effect on July 11, 2016. Under this ordinance, for any employee who works at least two hours within San Diego city limits, minimum wage would increase to $10.50 per hour on July 11, 2016, $11.50 per hour in 2017 and beginning 2019, the minimum wage rate will increase annually to an amount that corresponds to the prior year's increase, if any, in the cost of living. In addition, the ordinance provides up to five days of paid sick leave and allows unused sick leave to be carried over to the following year. This ordinance is expected to impact four company-owned restaurants and one franchise restaurant.

In general, we have been able to substantially offset cost increases resulting from inflation by increasing menu prices, managing menu mix, improving productivity or through other adjustments. We may or may not be able to offset cost increases in the future.

Critical Accounting Policies and Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. Our significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided by business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances.

Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. Management believes that the critical accounting policies and estimates involve the most difficult management judgments due to the sensitivity of the methods and assumptions used. For a description of our critical accounting policies, refer to “Critical Accounting Policies and Use of Estimates” in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 29, 2015 (Successor) filed with the SEC on March 8, 2016. There have been no material changes in any of our critical accounting policies during the twelve week period ended June 14, 2016 (Successor).

Recently Issued Accounting Standards

See Note 2, Basis of Presentation, of the notes to the accompanying unaudited consolidated financial statements, included elsewhere in this quarterly report on Form 10-Q, for a description of the recently issued accounting standards.

37

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management establishes and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to ensure that the information we disclose under the Securities Exchange Act of 1934 is properly and timely reported. We provide this information to our chief executive and chief financial officers as appropriate to allow for timely decisions.

Our controls and procedures are based on assumptions. Additionally, even effective controls and procedures only provide reasonable assurance of achieving their objectives. Accordingly, we cannot guarantee that our controls and procedures will succeed or be adhered to in all circumstances.

We have evaluated our disclosure controls and procedures with the participation, and under the supervision, of our management, including our chief executive and chief financial officers. Based on this evaluation, our chief executive and chief financial officers have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the period covered by this report that has affected or is reasonably likely to affect materially our internal control over financial reporting.

38

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 14, Commitments and Contingencies, of the notes to the unaudited consolidated financial statements for a discussion of our legal matters.

Item 1A. Risk Factors

See “Item 1A. Risk Factors” included in the Annual Report on Form 10-K for the fiscal year ended December 29, 2015 (Successor) filed with the SEC on March 8, 2016 for a discussion of our risk factors. There have been no material changes to our risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 7, 2016, we announced that our Board of Directors authorized a share repurchase program under which we may purchase up to $25.0 million in the aggregate of our common stock and warrants. Purchases under the program may be made in open market or privately negotiated transactions and expires upon completion of the program, unless earlier terminated by our Board of Directors. During the twelve and twenty-four weeks ended June 14, 2016, we repurchased respectively 542,303 and 628,982 common stock shares in open market transactions under the share repurchase program for an average price per share of $9.92 and $10.04 for an aggregate cost of approximately $5.4 million and $6.4 million including incremental direct costs to acquire the shares. During both the twelve and twenty-four weeks ended June 14, 2016, we repurchased 241,806 warrants in open market transactions and privately negotiated transactions under the share repurchase program for an average price per share of $2.36 for an aggregate cost of approximately $0.6 million including incremental direct costs to acquire the warrants. As of June 14, 2016 (Successor), there was approximately $18.1 million remaining under the share repurchase program.

The following table summarizes shares and warrants repurchased during the quarter ended June 14, 2016 (Successor). The average price paid per share and warrant in column (b) below does not include the cost of brokerage fees or the incremental direct costs to acquire the shares.

	(a)		(b)				(c)		(d)
	Total number of shares/warrants purchased		Average price paid per share		Average price paid per warrant		Total number of shares purchased as part of publicly announced programs	Total number of warrants purchased as part of publicly announced programs	Maximum dollar value that may yet be purchased under these programs
	Common Stock	Warrants
March 23, 2016 - April 19, 2016	505,780	188,600	$	9.99	$	2.45	592,459	188,600	$	18,549,922
April 20, 2016 - May 17, 2016	36,523	53,206	$	8.95	$	2.06	628,982	241,806	$	18,113,437
May 18, 2016 - June 14, 2016	—	—	$	—	$	—	628,982	241,806	$	18,113,437
Total	542,303	241,806	$	9.92	$	2.36

39

Item 6. Exhibits

Exhibit No.	Description
10.1	Severance Agreement, dated June 7, 2016, between Paul J.B. Murphy, III and Del Taco Restaurants, Inc.
10.2	Severance Agreement, dated June 9, 2016, between Steven L. Brake and Del Taco Restaurants, Inc.
10.3	Severance Agreement, dated June 17, 2016, between John D. Cappasola, Jr. and Del Taco Restaurants, Inc.
10.4	Tender Support Agreement, dated as of July 11, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on July 11, 2016).
31.1	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1	Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2	Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Document.

40

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DEL TACO RESTAURANTS, INC.

Date: July 20, 2016

/s/ Paul J.B. Murphy III

Name: Paul J.B. Murphy III

Title: President and Chief Executive Officer

(principal executive officer)

/s/ Steven L. Brake

Name: Steven L. Brake

Title: Executive Vice President and Chief Financial Officer

(principal financial officer)

41

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement")is made and entered into as of the 7th day of June, 2016, by and between Del Taco LLC, a California limited liability company (the "Company"), and Paul J.B. Murphy, III (the "Employee").

WHEREAS, the Employee is currently employed by the Company as its Chief Executive Officer and President; and

WHEREAS, Del Taco Restaurants, Inc., the parent corporation of the Company (the “Parent”) and the Employee are parties to that certain Restricted Stock Award dated December 16, 2015, under the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the parties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee hereby covenant and agree with each other as follows:

1. Definitions.For purposes of the Agreement, the following terms shall have the following
meanings:

(a)"Base Salary" shall mean the Employee's annual base salary, as determined by the Company from time to time.

(b)"Disability" shall mean, as a result of the Employee's incapacity because of physical or mental illness, the Employee shall have been absent from the Employee's duties with the Company on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

(c)    "For Cause" shall mean: (i) being convicted of, a criminal offense involving moral turpitude, or involving fraud or dishonest conduct pertaining to the business or affairs of the Company, including, without limitation, peculation, or being guilty of any act or omission, the intended or likely consequence of which is material injury to the business, property or reputation of the Company, or any of its affiliates; (ii) engaging in a course of conduct after written notice from the Board of Directors, determined by the Board of Directors of the Company to be in material violation of the Employee's duties, fiduciary or otherwise, to the Company or any of its affiliates; (iii) committing an act of gross negligence or otherwise acting with willful disregard for the best interests of the Company or its affiliates; (iv) committing an act of fraud, seizing a corporate opportunity for the Employee instead of offering such opportunity to the Company or its affiliates or otherwise breaching any fiduciary duty owed to the Company or its affiliates; (v) absence (and not traveling on business) for a reason other than illness, vacation, or approved leave for more than 10 consecutive days; or (vi) committing a material violation of a material Company or affiliate policy. For purposes of this Agreement, a good faith determination by the Board whether the Employee was terminated For Cause shall be final and binding.

2.    Severance Payment.

(a)Termination by the Company For Cause. Upon termination of the Employee's employment by the Company For Cause, the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement or as required by law, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(b)Termination by Reason of Death or Disability of the Employee.

i.Death of Employee. If the Employee's employment terminates by reason of the Employee's death, the Company shall, within 90 days of the Date of Termination, pay in a lump sum amount to such person as the Employee shall designate in a notice filed with the Company or,

if no such person is designated, to the Employee's estate, the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Such payment shall fully discharge the Company's obligations hereunder.

ii.Disability of Employee. During any period that the Employee fails to perform the Employee's duties hereunder as a result of incapacity because of physical or mental illness, the Employee shall continue to receive the Employee's accrued and unpaid Base Salary and accrued and unpaid incentive compensation, if any, until the Employee's employment is terminated because of Disability. Upon the Employee's termination of employment because of Disability, the Company shall pay in a lump sum amount to the Employee the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Any termination due to Disability and any payments as a result of Disability will be provided in a manner which is consistent with federal and state law. Upon termination because of death prior to termination as a result of the Employee's Disability, Subparagraph 2(b)(i) shall apply.

(c)Termination by the Employee. If the Employee's employment is terminated by the Employee, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(d)Termination by the Company Other than For Cause, Death or Disability. If the Employee's employment is terminated by the Company other than For Cause or because of the Employee's death or Disability, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given and the Employee's accrued and unpaid incentive compensation, if any. In addition, subject to signing by the Employee of a general release of claims in a form and manner satisfactory to the Company, the Employee shall be entitled:

i.    To receive an amount equal to the sum of (A) and (B) (the "Termination Payment"), where (A) is 100% of the Employee's Base Salary at the rate in effect at the time Notice of Termination is given and (B) is the pro-rata portion of the cash bonus (if any) paid to the Employee in the immediately preceding year based on the number of days since the first day of the current year and through the Date of Termination. Subject to Section 16(b) hereof, the Termination Payment shall be paid in 12 equal monthly installments, the first of which shall be due and payable on the first day of the month next succeeding the Date of Termination.

ii.    To participate in the Company's health insurance plan on the same terms and conditions (including the same cost-sharing percentage) as in effect immediately prior to the Date of Termination, for a period of twelve (12) months following the Date of Termination. If such benefits cannot be provided to the Employee by reason of the Employee's termination, the Company shall reimburse the Employee for the cost of obtaining comparable benefits; provided, however,that the Company's obligation to reimburse the Employee for such costs shall not exceed 125% of the cost to the Company of providing such benefits to the Employee immediately prior to the Date of Termination.

3. Notice of Termination. Except for termination by reason of the death of the Employee, any termination of the Employee's employment by the Company or any such termination by the Employee shall be communicated by written Notice of Termination to the other party hereto. For purposes of this

Agreement, a "Notice of Termination"shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

4. Date of Termination. The "Date of Termination" shall be: (A) if the Employee's employment is terminated by the Employee's death, the date of the Employee's death; (B) if the Employee's employment is terminated other than by reason of the death of the Employee, the date on which Notice of Termination is given.

5. Withholding. All payments made to the Employee under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

6. Confidentiality Agreement. In the event the Employee breaches the terms of the Confidentiality Agreement, in addition to any other remedy that the Company may have under the Confidentiality Agreement or other applicable law, the Company shall have the right to cease making the Termination Payment and the Employee agrees to forfeit back to the Company any portion of the Termination Payment already paid to the Employee under this Agreement.

7. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee:

At the Employee's home address as shown in the Company's personnel records; If to the Company:

25521 Commercentre Drive, Suite 200

Lake Forest, California 92630

Attention: Jack T. Tang

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

8. Amendment. No provisions of this Agreement may be amended, modified, or discharged unless such amendment, modification, or discharge is agreed to in writing and signed by the Employee and such officer of the Company as may be specifically designated by the Board.

9. Entire Agreement. This Agreement and the Restricted Stock Award constitute the entire agreement between the parties and supersede all prior agreements and understandings relating to the subject matter of this Agreement. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

10. Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California (without regard to principles of conflicts of laws).

11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

12. ARBITRATION; OTHER DISPUTES. ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH, TERMINATION OR VALIDITY HEREOF SHALL

BE FINALLY SETTLED PURSUANT TO THE TERMS OF THE COMPANY'S EMPLOYEE DISPUTE RESOLUTION PROGRAM, ATTACHED HERETO AT APPENDIX A.

13. Assignment. This Agreement shall inure to the benefit of and be binding upon the Company and the Employee, their respective successors, executors, administrators, heirs and permitted assigns; provided, however,that the Employee shall not assign the Employee's duties hereunder. In the event of the Employee's death prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Employee's beneficiary designated in writing to the Company prior to the Employee's death (or to the Employee's estate, if the Employee fails to make such designation).

14. Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the full extent permitted by law.

15. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

16. Compliance With Code Section 409A.

(a)    Notwithstanding Section 4 of this Agreement, for purposes of determining the timing and application of Code Section 409A to amounts payable upon termination of the Employee’s employment with the Company, the Date of Termination shall mean the date of the Employee’s “separation from service” as such term is defined under Code Section 409A. Each payment and each installment of any severance payments provided for under this Agreement shall be treated as a separate payment for purposes of application of Code Section 409A. Subsection (c) below shall not apply to that portion of any amounts payable upon termination of employment which shall qualify as “involuntary severance” under Code Section 409A because such amount (i) does not exceed the lesser of (1) two hundred percent (200%) of the Employee’s annualized compensation from the Company for the calendar year immediately preceding the calendar year during which the termination of employment occurs, or (2) two hundred percent (200%) of the annual limitation amount under Code Section 401(a)(17) (the maximum amount of compensation that may be taken into account for purposes of a tax-qualified retirement plan) for the calendar year during which termination of employment occurs, and (ii) is paid no later than the end of the second calendar year commencing after termination of employment.

(b)    All payments to Employee determined to come within the definition of “nonqualified deferred compensation” within the meaning of Code Section 409A (“409A Payment”) are intended to comply with all requirements of Code Section 409A, and shall be interpreted in accordance therewith. Neither party individually, nor in combination may accelerate, offset or assign any 409A Payment, except in compliance with Code Section 409A, and no amount shall be paid prior to the earliest date on which it is permitted to be paid under Code Section 409A. Employee shall have no discretion with respect to the timing of payments except as permitted under Code Section 409A. In the event that the Employee is determined to be a “specified employee” (as defined and determined under Code Section 409A) of Company at a time when its stock is deemed to be publicly traded on an established securities market, 409A Payments payable by reason of separation from service shall be paid no earlier than (i) the

first day of the seventh (7th) calendar month commencing after separation from service, or (ii) the Employee’s death, consistent with and to the extent necessary to meet the requirements Code Section 409A without the imposition of penalty taxes. Any 409A Payments which are subject to execution of a waiver and release which may be executed and/or revoked in a calendar year following the calendar year in which the payment event (such as termination of employment) occurs shall commence payment only in the calendar year in which the release revocation period ends as necessary to comply with Code Section 409A. Any payment delayed by reason of this subsection (c) shall be paid out in a single lump sum on the earliest date permitted under Code Section 409A in order to catch up to the original specified payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance with Code Section 409A.

(c)    All benefit plans, programs and policies sponsored by the Company are intended to comply with all requirements of Code Section 409A or to be structured so as to be exempt from the application of Code Section 409A. All expense reimbursement or in-kind benefits provided under this Agreement or, unless otherwise specified in an applicable program or policy, to the extent subject to Code Section 409A, shall comply with the following rules: (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect. It is the intent of the Company that the provisions of this Agreement and all other plans and programs sponsored by the Company be interpreted to comply in all respects with Code Section 409A, however, the Company shall have no liability to the Employee, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes may ultimately be determined to be applicable to any payment or benefit received by the Employee or any successor or beneficiary thereof, nor for reporting in good faith any payment or benefit as subject to Code Section 409A.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

Del Taco LLC

By: /s/ Jack Tang

Name: Jack Tang

Title: General Counsel

Paul J.B. Murphy, III

By: /s/ Paul J.B. Murphy, III

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement")is made and entered into as of the 9th day of June, 2016, by and between Del Taco LLC, a California limited liability company (the "Company"), and Steven L. Brake (the "Employee").

WHEREAS, the Employee is currently employed by the Company as its Executive Vice President and Chief Financial Officer; and

WHEREAS, Del Taco Restaurants, Inc., the parent corporation of the Company (the “Parent”) and the Employee are parties to that certain Restricted Stock Award dated December 16, 2015, under the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the parties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee hereby covenant and agree with each other as follows:

1. Definitions.For purposes of the Agreement, the following terms shall have the following
meanings:

(a)"Base Salary" shall mean the Employee's annual base salary, as determined by the Company from time to time.

(b)"Disability" shall mean, as a result of the Employee's incapacity because of physical or mental illness, the Employee shall have been absent from the Employee's duties with the Company on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

(c)    "For Cause" shall mean: (i) being convicted of, a criminal offense involving moral turpitude, or involving fraud or dishonest conduct pertaining to the business or affairs of the Company, including, without limitation, peculation, or being guilty of any act or omission, the intended or likely consequence of which is material injury to the business, property or reputation of the Company, or any of its affiliates; (ii) engaging in a course of conduct after written notice from the Board of Directors, determined by the Board of Directors of the Company to be in material violation of the Employee's duties, fiduciary or otherwise, to the Company or any of its affiliates; (iii) committing an act of gross negligence or otherwise acting with willful disregard for the best interests of the Company or its affiliates; (iv) committing an act of fraud, seizing a corporate opportunity for the Employee instead of offering such opportunity to the Company or its affiliates or otherwise breaching any fiduciary duty owed to the Company or its affiliates; (v) absence (and not traveling on business) for a reason other than illness, vacation, or approved leave for more than 10 consecutive days; or (vi) committing a material violation of a material Company or affiliate policy. For purposes of this Agreement, a good faith determination by the Board whether the Employee was terminated For Cause shall be final and binding.

2.    Severance Payment.

(a)Termination by the Company For Cause. Upon termination of the Employee's employment by the Company For Cause, the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement or as required by law, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(b)Termination by Reason of Death or Disability of the Employee.

i.Death of Employee. If the Employee's employment terminates by reason of the Employee's death, the Company shall, within 90 days of the Date of Termination, pay in a lump sum amount to such person as the Employee shall designate in a notice filed with the Company or,

if no such person is designated, to the Employee's estate, the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Such payment shall fully discharge the Company's obligations hereunder.

ii.Disability of Employee. During any period that the Employee fails to perform the Employee's duties hereunder as a result of incapacity because of physical or mental illness, the Employee shall continue to receive the Employee's accrued and unpaid Base Salary and accrued and unpaid incentive compensation, if any, until the Employee's employment is terminated because of Disability. Upon the Employee's termination of employment because of Disability, the Company shall pay in a lump sum amount to the Employee the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Any termination due to Disability and any payments as a result of Disability will be provided in a manner which is consistent with federal and state law. Upon termination because of death prior to termination as a result of the Employee's Disability, Subparagraph 2(b)(i) shall apply.

(c)Termination by the Employee. If the Employee's employment is terminated by the Employee, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(d)Termination by the Company Other than For Cause, Death or Disability. If the Employee's employment is terminated by the Company other than For Cause or because of the Employee's death or Disability, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given and the Employee's accrued and unpaid incentive compensation, if any. In addition, subject to signing by the Employee of a general release of claims in a form and manner satisfactory to the Company, the Employee shall be entitled:

i.    To receive an amount equal to the sum of (A) and (B) (the "Termination Payment"), where (A) is 100% of the Employee's Base Salary at the rate in effect at the time Notice of Termination is given and (B) is the pro-rata portion of the cash bonus (if any) paid to the Employee in the immediately preceding year based on the number of days since the first day of the current year and through the Date of Termination. Subject to Section 16(b) hereof, the Termination Payment shall be paid in 12 equal monthly installments, the first of which shall be due and payable on the first day of the month next succeeding the Date of Termination.

ii.    To participate in the Company's health insurance plan on the same terms and conditions (including the same cost-sharing percentage) as in effect immediately prior to the Date of Termination, for a period of twelve (12) months following the Date of Termination. If such benefits cannot be provided to the Employee by reason of the Employee's termination, the Company shall reimburse the Employee for the cost of obtaining comparable benefits; provided, however,that the Company's obligation to reimburse the Employee for such costs shall not exceed 125% of the cost to the Company of providing such benefits to the Employee immediately prior to the Date of Termination.

3. Notice of Termination. Except for termination by reason of the death of the Employee, any termination of the Employee's employment by the Company or any such termination by the Employee shall be communicated by written Notice of Termination to the other party hereto. For purposes of this

Agreement, a "Notice of Termination"shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

4. Date of Termination. The "Date of Termination" shall be: (A) if the Employee's employment is terminated by the Employee's death, the date of the Employee's death; (B) if the Employee's employment is terminated other than by reason of the death of the Employee, the date on which Notice of Termination is given.

5. Withholding. All payments made to the Employee under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

6. Confidentiality Agreement. In the event the Employee breaches the terms of the Confidentiality Agreement, in addition to any other remedy that the Company may have under the Confidentiality Agreement or other applicable law, the Company shall have the right to cease making the Termination Payment and the Employee agrees to forfeit back to the Company any portion of the Termination Payment already paid to the Employee under this Agreement.

7. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee:

At the Employee's home address as shown in the Company's personnel records; If to the Company:

25521 Commercentre Drive, Suite 200

Lake Forest, California 92630

Attention: Jack T. Tang

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

8. Amendment. No provisions of this Agreement may be amended, modified, or discharged unless such amendment, modification, or discharge is agreed to in writing and signed by the Employee and such officer of the Company as may be specifically designated by the Board.

9. Entire Agreement. This Agreement and the Restricted Stock Award constitute the entire agreement between the parties and supersede all prior agreements and understandings relating to the subject matter of this Agreement. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

10. Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California (without regard to principles of conflicts of laws).

11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

12. ARBITRATION; OTHER DISPUTES. ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH, TERMINATION OR VALIDITY HEREOF SHALL

BE FINALLY SETTLED PURSUANT TO THE TERMS OF THE COMPANY'S EMPLOYEE DISPUTE RESOLUTION PROGRAM, ATTACHED HERETO AT APPENDIX A.

13. Assignment. This Agreement shall inure to the benefit of and be binding upon the Company and the Employee, their respective successors, executors, administrators, heirs and permitted assigns; provided, however,that the Employee shall not assign the Employee's duties hereunder. In the event of the Employee's death prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Employee's beneficiary designated in writing to the Company prior to the Employee's death (or to the Employee's estate, if the Employee fails to make such designation).

14. Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the full extent permitted by law.

15. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

16. Compliance With Code Section 409A.

(a)    Notwithstanding Section 4 of this Agreement, for purposes of determining the timing and application of Code Section 409A to amounts payable upon termination of the Employee’s employment with the Company, the Date of Termination shall mean the date of the Employee’s “separation from service” as such term is defined under Code Section 409A. Each payment and each installment of any severance payments provided for under this Agreement shall be treated as a separate payment for purposes of application of Code Section 409A. Subsection (c) below shall not apply to that portion of any amounts payable upon termination of employment which shall qualify as “involuntary severance” under Code Section 409A because such amount (i) does not exceed the lesser of (1) two hundred percent (200%) of the Employee’s annualized compensation from the Company for the calendar year immediately preceding the calendar year during which the termination of employment occurs, or (2) two hundred percent (200%) of the annual limitation amount under Code Section 401(a)(17) (the maximum amount of compensation that may be taken into account for purposes of a tax-qualified retirement plan) for the calendar year during which termination of employment occurs, and (ii) is paid no later than the end of the second calendar year commencing after termination of employment.

(b)    All payments to Employee determined to come within the definition of “nonqualified deferred compensation” within the meaning of Code Section 409A (“409A Payment”) are intended to comply with all requirements of Code Section 409A, and shall be interpreted in accordance therewith. Neither party individually, nor in combination may accelerate, offset or assign any 409A Payment, except in compliance with Code Section 409A, and no amount shall be paid prior to the earliest date on which it is permitted to be paid under Code Section 409A. Employee shall have no discretion with respect to the timing of payments except as permitted under Code Section 409A. In the event that the Employee is determined to be a “specified employee” (as defined and determined under Code Section 409A) of Company at a time when its stock is deemed to be publicly traded on an established securities market, 409A Payments payable by reason of separation from service shall be paid no earlier than (i) the

first day of the seventh (7th) calendar month commencing after separation from service, or (ii) the Employee’s death, consistent with and to the extent necessary to meet the requirements Code Section 409A without the imposition of penalty taxes. Any 409A Payments which are subject to execution of a waiver and release which may be executed and/or revoked in a calendar year following the calendar year in which the payment event (such as termination of employment) occurs shall commence payment only in the calendar year in which the release revocation period ends as necessary to comply with Code Section 409A. Any payment delayed by reason of this subsection (c) shall be paid out in a single lump sum on the earliest date permitted under Code Section 409A in order to catch up to the original specified payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance with Code Section 409A.

(c)    All benefit plans, programs and policies sponsored by the Company are intended to comply with all requirements of Code Section 409A or to be structured so as to be exempt from the application of Code Section 409A. All expense reimbursement or in-kind benefits provided under this Agreement or, unless otherwise specified in an applicable program or policy, to the extent subject to Code Section 409A, shall comply with the following rules: (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect. It is the intent of the Company that the provisions of this Agreement and all other plans and programs sponsored by the Company be interpreted to comply in all respects with Code Section 409A, however, the Company shall have no liability to the Employee, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes may ultimately be determined to be applicable to any payment or benefit received by the Employee or any successor or beneficiary thereof, nor for reporting in good faith any payment or benefit as subject to Code Section 409A.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

Del Taco LLC

By: /s/ Jack Tang

Name: Jack Tang

Title: General Counsel

Steven L. Brake

By: /s/ Steven L. Brake

EX-10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement")is made and entered into as of the 17th day of June, 2016, by and between Del Taco LLC, a California limited liability company (the "Company"), and John D. Cappasola, Jr. (the "Employee").

WHEREAS, the Employee is currently employed by the Company as its Executive Vice President and Chief Brand Officer; and

WHEREAS, Del Taco Restaurants, Inc., the parent corporation of the Company (the “Parent”) and the Employee are parties to that certain Restricted Stock Award dated December 16, 2015, under the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the parties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee hereby covenant and agree with each other as follows:

1. Definitions.For purposes of the Agreement, the following terms shall have the following
meanings:

(a)"Base Salary" shall mean the Employee's annual base salary, as determined by the Company from time to time.

(b)"Disability" shall mean, as a result of the Employee's incapacity because of physical or mental illness, the Employee shall have been absent from the Employee's duties with the Company on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

(c)    "For Cause" shall mean: (i) being convicted of, a criminal offense involving moral turpitude, or involving fraud or dishonest conduct pertaining to the business or affairs of the Company, including, without limitation, peculation, or being guilty of any act or omission, the intended or likely consequence of which is material injury to the business, property or reputation of the Company, or any of its affiliates; (ii) engaging in a course of conduct after written notice from the Board of Directors, determined by the Board of Directors of the Company to be in material violation of the Employee's duties, fiduciary or otherwise, to the Company or any of its affiliates; (iii) committing an act of gross negligence or otherwise acting with willful disregard for the best interests of the Company or its affiliates; (iv) committing an act of fraud, seizing a corporate opportunity for the Employee instead of offering such opportunity to the Company or its affiliates or otherwise breaching any fiduciary duty owed to the Company or its affiliates; (v) absence (and not traveling on business) for a reason other than illness, vacation, or approved leave for more than 10 consecutive days; or (vi) committing a material violation of a material Company or affiliate policy. For purposes of this Agreement, a good faith determination by the Board whether the Employee was terminated For Cause shall be final and binding.

2.    Severance Payment.

(a)Termination by the Company For Cause. Upon termination of the Employee's employment by the Company For Cause, the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement or as required by law, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(b)Termination by Reason of Death or Disability of the Employee.

i.Death of Employee. If the Employee's employment terminates by reason of the Employee's death, the Company shall, within 90 days of the Date of Termination, pay in a lump sum amount to such person as the Employee shall designate in a notice filed with the Company or,

if no such person is designated, to the Employee's estate, the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Such payment shall fully discharge the Company's obligations hereunder.

ii.Disability of Employee. During any period that the Employee fails to perform the Employee's duties hereunder as a result of incapacity because of physical or mental illness, the Employee shall continue to receive the Employee's accrued and unpaid Base Salary and accrued and unpaid incentive compensation, if any, until the Employee's employment is terminated because of Disability. Upon the Employee's termination of employment because of Disability, the Company shall pay in a lump sum amount to the Employee the Employee's accrued and unpaid Base Salary to the Date of Termination (including compensation for any accrued vacation or other benefits) and the Employee's accrued and unpaid incentive compensation, if any. Any termination due to Disability and any payments as a result of Disability will be provided in a manner which is consistent with federal and state law. Upon termination because of death prior to termination as a result of the Employee's Disability, Subparagraph 2(b)(i) shall apply.

(c)Termination by the Employee. If the Employee's employment is terminated by the Employee, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given. Thereafter, the Company shall have no further obligations to the Employee except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter the Employee's rights under any employee benefit plan of the Company in which the Employee, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(d)Termination by the Company Other than For Cause, Death or Disability. If the Employee's employment is terminated by the Company other than For Cause or because of the Employee's death or Disability, then the Company shall, through the Date of Termination, pay the Employee the Employee's accrued and unpaid Base Salary (including compensation for any accrued vacation) at the rate in effect at the time Notice of Termination is given and the Employee's accrued and unpaid incentive compensation, if any. In addition, subject to signing by the Employee of a general release of claims in a form and manner satisfactory to the Company, the Employee shall be entitled:

i.    To receive an amount equal to the sum of (A) and (B) (the "Termination Payment"), where (A) is 100% of the Employee's Base Salary at the rate in effect at the time Notice of Termination is given and (B) is the pro-rata portion of the cash bonus (if any) paid to the Employee in the immediately preceding year based on the number of days since the first day of the current year and through the Date of Termination. Subject to Section 16(b) hereof, the Termination Payment shall be paid in 12 equal monthly installments, the first of which shall be due and payable on the first day of the month next succeeding the Date of Termination.

ii.    To participate in the Company's health insurance plan on the same terms and conditions (including the same cost-sharing percentage) as in effect immediately prior to the Date of Termination, for a period of twelve (12) months following the Date of Termination. If such benefits cannot be provided to the Employee by reason of the Employee's termination, the Company shall reimburse the Employee for the cost of obtaining comparable benefits; provided, however,that the Company's obligation to reimburse the Employee for such costs shall not exceed 125% of the cost to the Company of providing such benefits to the Employee immediately prior to the Date of Termination.

3. Notice of Termination. Except for termination by reason of the death of the Employee, any termination of the Employee's employment by the Company or any such termination by the Employee shall be communicated by written Notice of Termination to the other party hereto. For purposes of this

Agreement, a "Notice of Termination"shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

4. Date of Termination. The "Date of Termination" shall be: (A) if the Employee's employment is terminated by the Employee's death, the date of the Employee's death; (B) if the Employee's employment is terminated other than by reason of the death of the Employee, the date on which Notice of Termination is given.

5. Withholding. All payments made to the Employee under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

6. Confidentiality Agreement. In the event the Employee breaches the terms of the Confidentiality Agreement, in addition to any other remedy that the Company may have under the Confidentiality Agreement or other applicable law, the Company shall have the right to cease making the Termination Payment and the Employee agrees to forfeit back to the Company any portion of the Termination Payment already paid to the Employee under this Agreement.

7. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee:

At the Employee's home address as shown in the Company's personnel records; If to the Company:

25521 Commercentre Drive, Suite 200

Lake Forest, California 92630

Attention: Jack T. Tang

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

8. Amendment. No provisions of this Agreement may be amended, modified, or discharged unless such amendment, modification, or discharge is agreed to in writing and signed by the Employee and such officer of the Company as may be specifically designated by the Board.

9. Entire Agreement. This Agreement and the Restricted Stock Award constitute the entire agreement between the parties and supersede all prior agreements and understandings relating to the subject matter of this Agreement. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

10. Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California (without regard to principles of conflicts of laws).

11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

12. ARBITRATION; OTHER DISPUTES. ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH, TERMINATION OR VALIDITY HEREOF SHALL

BE FINALLY SETTLED PURSUANT TO THE TERMS OF THE COMPANY'S EMPLOYEE DISPUTE RESOLUTION PROGRAM, ATTACHED HERETO AT APPENDIX A.

13. Assignment. This Agreement shall inure to the benefit of and be binding upon the Company and the Employee, their respective successors, executors, administrators, heirs and permitted assigns; provided, however,that the Employee shall not assign the Employee's duties hereunder. In the event of the Employee's death prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Employee's beneficiary designated in writing to the Company prior to the Employee's death (or to the Employee's estate, if the Employee fails to make such designation).

14. Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the full extent permitted by law.

15. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

16. Compliance With Code Section 409A.

(a)    Notwithstanding Section 4 of this Agreement, for purposes of determining the timing and application of Code Section 409A to amounts payable upon termination of the Employee’s employment with the Company, the Date of Termination shall mean the date of the Employee’s “separation from service” as such term is defined under Code Section 409A. Each payment and each installment of any severance payments provided for under this Agreement shall be treated as a separate payment for purposes of application of Code Section 409A. Subsection (c) below shall not apply to that portion of any amounts payable upon termination of employment which shall qualify as “involuntary severance” under Code Section 409A because such amount (i) does not exceed the lesser of (1) two hundred percent (200%) of the Employee’s annualized compensation from the Company for the calendar year immediately preceding the calendar year during which the termination of employment occurs, or (2) two hundred percent (200%) of the annual limitation amount under Code Section 401(a)(17) (the maximum amount of compensation that may be taken into account for purposes of a tax-qualified retirement plan) for the calendar year during which termination of employment occurs, and (ii) is paid no later than the end of the second calendar year commencing after termination of employment.

(b)    All payments to Employee determined to come within the definition of “nonqualified deferred compensation” within the meaning of Code Section 409A (“409A Payment”) are intended to comply with all requirements of Code Section 409A, and shall be interpreted in accordance therewith. Neither party individually, nor in combination may accelerate, offset or assign any 409A Payment, except in compliance with Code Section 409A, and no amount shall be paid prior to the earliest date on which it is permitted to be paid under Code Section 409A. Employee shall have no discretion with respect to the timing of payments except as permitted under Code Section 409A. In the event that the Employee is determined to be a “specified employee” (as defined and determined under Code Section 409A) of Company at a time when its stock is deemed to be publicly traded on an established securities market, 409A Payments payable by reason of separation from service shall be paid no earlier than (i) the

first day of the seventh (7th) calendar month commencing after separation from service, or (ii) the Employee’s death, consistent with and to the extent necessary to meet the requirements Code Section 409A without the imposition of penalty taxes. Any 409A Payments which are subject to execution of a waiver and release which may be executed and/or revoked in a calendar year following the calendar year in which the payment event (such as termination of employment) occurs shall commence payment only in the calendar year in which the release revocation period ends as necessary to comply with Code Section 409A. Any payment delayed by reason of this subsection (c) shall be paid out in a single lump sum on the earliest date permitted under Code Section 409A in order to catch up to the original specified payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance with Code Section 409A.

(c)    All benefit plans, programs and policies sponsored by the Company are intended to comply with all requirements of Code Section 409A or to be structured so as to be exempt from the application of Code Section 409A. All expense reimbursement or in-kind benefits provided under this Agreement or, unless otherwise specified in an applicable program or policy, to the extent subject to Code Section 409A, shall comply with the following rules: (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect. It is the intent of the Company that the provisions of this Agreement and all other plans and programs sponsored by the Company be interpreted to comply in all respects with Code Section 409A, however, the Company shall have no liability to the Employee, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes may ultimately be determined to be applicable to any payment or benefit received by the Employee or any successor or beneficiary thereof, nor for reporting in good faith any payment or benefit as subject to Code Section 409A.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

Del Taco LLC

By: /s/ Jack Tang

Name: Jack Tang

Title: General Counsel

John D. Cappasola, Jr.

By: /s/ John D. Cappasola, Jr.

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Paul J.B. Murphy, III, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Del Taco Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 20, 2016

/s/ Paul J.B. Murphy, III

Paul J.B. Murphy, III

President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Steven L. Brake, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Del Taco Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 20, 2016

/s/ Steven L. Brake

Steven L. Brake

Executive Vice President and Chief Financial Officer

(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIOD REPORT

I, Paul J.B. Murphy, III, President and Chief Executive Officer of Del Taco Restaurants, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 14, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

Date: July 20, 2016

/s/ Paul J.B. Murphy, III

Paul J.B. Murphy, III

President and Chief Executive Officer

(principal executive officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIOD REPORT

I, Steven L. Brake, Executive Vice President and Chief Financial Officer of Del Taco Restaurants, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 14, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

Date: July 20, 2016

/s/ Steven L. Brake

Steven L. Brake

Executive Vice President and Chief Financial Officer

(principal financial officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 14, 2016	Jul. 20, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 14, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	TACO
Entity Registrant Name	Del Taco Restaurants, Inc.
Entity Central Index Key	0001585583
Current Fiscal Year End Date	--01-03
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		37,976,206

XML

Condensed Consolidated Balance Sheets - Successor [Member] - USD ($) $ in Thousands	Jun. 14, 2016	Dec. 29, 2015
Current assets:
Cash and cash equivalents	$ 7,298	$ 10,194
Accounts and other receivables, net	2,361	3,220
Inventories	2,427	2,806
Prepaid expenses and other current assets	3,174	3,545
Total current assets	15,260	19,765
Property and equipment, net	119,459	114,030
Goodwill	319,056	318,275
Trademarks	220,300	220,300
Intangible assets, net	26,692	28,373
Other assets, net	3,050	2,829
Total assets	703,817	703,572
Current liabilities:
Accounts payable	17,266	16,831
Other accrued liabilities	29,319	32,897
Current portion of capital lease obligations and deemed landlord financing liabilities	1,667	1,725
Total current liabilities	48,252	51,453
Long-term debt, capital lease obligations and deemed landlord financing liabilities, excluding current portion, net	167,387	167,968
Deferred income taxes	83,355	79,523
Other non-current liabilities	33,835	36,251
Total liabilities	332,829	335,195
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.0001 par value; 400,000,000 shares authorized; 38,173,443 shares issued and outstanding at June 14, 2016; 38,802,425 shares issued and outstanding at December 29, 2015	4	4
Additional paid-in capital	366,946	372,260
Retained earnings (accumulated deficit)	4,038	(3,887)
Total shareholders’ equity	370,988	368,377
Total liabilities and shareholders’ equity	$ 703,817	$ 703,572

XML

Condensed Consolidated Balance Sheets (Parenthetical) - Successor [Member] - $ / shares	Jun. 14, 2016	Dec. 29, 2015
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	400,000,000	400,000,000
Common stock, shares issued (in shares)	38,173,443	38,802,425
Common stock, shares outstanding (in shares)	38,173,443	38,802,425

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 14, 2016	Jun. 16, 2015	Jun. 14, 2016	Jun. 16, 2015
Successor [Member]
Revenue:
Company restaurant sales	$ 95,917		$ 189,467
Franchise revenue	3,576		6,905
Franchise sublease income	533		1,057
Total revenue	100,026		197,429
Restaurant operating expenses:
Food and paper costs	26,358		52,487
Labor and related expenses	30,249		60,033
Occupancy and other operating expenses	19,526		39,649
General and administrative	8,214		16,506
Depreciation and amortization	5,532		11,018
Occupancy and other - franchise subleases	510		1,013
Pre-opening costs	35		128
Restaurant closure charges, net	(166)		12
Loss on disposal of assets	62		137
Total operating expenses	90,320		180,983
Income from operations	9,706		16,446
Other expenses:
Interest expense	1,405		2,877
Transaction-related costs	126		191
Debt modification costs	0		0
Change in fair value of warrant liability			0
Total other expenses	1,531		3,068
Income from operations before provision for income taxes	8,175		13,378
Provision for income taxes	3,311		5,453
Net income	4,864		7,925
Other comprehensive income (loss):
Change in fair value of interest rate cap	0		0
Reclassification of interest rate cap amortization included in net income	0		0
Total other comprehensive income, net	0		0
Comprehensive income	$ 4,864		$ 7,925
Earnings per share:
Basic (in dollars per share)	$ 0.13		$ 0.21
Diluted (in dollars per share)	$ 0.13		$ 0.20
Weighted-average shares outstanding
Basic (in shares)	38,292,215		38,545,115
Diluted (in shares)	38,442,304		38,672,425
Predecessor [Member]
Revenue:
Company restaurant sales		$ 93,902		$ 184,785
Franchise revenue		3,147		6,148
Franchise sublease income		554		1,088
Total revenue		97,603		192,021
Restaurant operating expenses:
Food and paper costs		26,859		52,841
Labor and related expenses		28,486		56,409
Occupancy and other operating expenses		19,924		39,958
General and administrative		6,550		13,846
Depreciation and amortization		3,796		7,588
Occupancy and other - franchise subleases		517		1,022
Pre-opening costs		129		248
Restaurant closure charges, net		72		94
Loss on disposal of assets		14		14
Total operating expenses		86,347		172,020
Income from operations		11,256		20,001
Other expenses:
Interest expense		4,018		10,829
Transaction-related costs		877		7,193
Debt modification costs		2		137
Change in fair value of warrant liability				(35)
Total other expenses		4,897		18,124
Income from operations before provision for income taxes		6,359		1,877
Provision for income taxes		1,731		2,189
Net income		4,628		(312)
Other comprehensive income (loss):
Change in fair value of interest rate cap		(2)		(23)
Reclassification of interest rate cap amortization included in net income		36		58
Total other comprehensive income, net		34		35
Comprehensive income		$ 4,662		$ (277)
Earnings per share:
Basic (in dollars per share)		$ 0.69		$ (0.06)
Diluted (in dollars per share)		$ 0.69		$ (0.06)
Weighted-average shares outstanding
Basic (in shares)		6,707,776		5,391,137
Diluted (in shares)		6,707,776		5,391,137

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 14, 2016	Jun. 16, 2015
Successor [Member]
Operating activities
Net income (loss)	$ 7,925
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	11,018
Amortization of favorable and unfavorable lease assets and liabilities, net	(280)
Amortization of deferred financing costs	178
Subordinated note interest paid-in-kind	0
Debt modification costs	0
Stock-based compensation	1,629
Change in fair value of warrant liability	0
Deferred income taxes	3,052
Loss on disposal of assets	137
Charges for accretion in current period	(137)
Changes in operating assets and liabilities:
Accounts and other receivables, net	859
Inventories	379
Prepaid expenses and other current assets	371
Accounts payable	435
Other accrued liabilities	(3,609)
Other non-current liabilities	(904)
Net cash provided by operating activities	21,053
Investing activities
Purchases of property and equipment	(15,546)
Proceeds from disposal of property and equipment	4
Purchases of other assets	(647)
Net cash used in investing activities	(16,189)
Financing activities
Proceeds from term loan, net of debt discount	0
Proceeds from issuance of common stock	0
Repurchase of common stock and warrants	(6,943)
Payment of tax withholding related to option exercises and distribution of restricted stock units	0
Payments on capital leases and deemed landlord financing	(817)
Payment on subordinated notes	0
Proceeds from revolving credit facility	4,000
Payments on revolving credit facility	(4,000)
Payments for debt issue costs	0
Net cash (used in) provided by financing activities	(7,760)
Decrease in cash and cash equivalents	(2,896)
Cash and cash equivalents at beginning of period	10,194
Cash and cash equivalents at end of period	7,298
Supplemental cash flow information:
Cash paid during the period for interest	2,872
Cash paid during the period for income taxes	800
Supplemental schedule of non-cash activities:
Accrued property and equipment purchases	1,939
Write-offs of accounts receivables	72
Amortization of interest rate cap into net loss, net of tax	0
Change in other asset for fair value of interest rate cap recorded to other comprehensive loss, net	0
Warrant liability reclassified to equity upon exercise of warrants	$ 0
Predecessor [Member]
Operating activities
Net income (loss)		$ (312)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,590
Amortization of favorable and unfavorable lease assets and liabilities, net		(2)
Amortization of deferred financing costs		835
Subordinated note interest paid-in-kind		37
Debt modification costs		137
Stock-based compensation		532
Change in fair value of warrant liability		(35)
Deferred income taxes		0
Loss on disposal of assets		14
Charges for accretion in current period		0
Changes in operating assets and liabilities:
Accounts and other receivables, net		961
Inventories		93
Prepaid expenses and other current assets		571
Accounts payable		2,358
Other accrued liabilities		(95)
Other non-current liabilities		(1,822)
Net cash provided by operating activities		10,862
Investing activities
Purchases of property and equipment		(13,357)
Proceeds from disposal of property and equipment		38
Purchases of other assets		(472)
Net cash used in investing activities		(13,791)
Financing activities
Proceeds from term loan, net of debt discount		23,654
Proceeds from issuance of common stock		91,236
Repurchase of common stock and warrants		0
Payment of tax withholding related to option exercises and distribution of restricted stock units		(7,533)
Payments on capital leases and deemed landlord financing		(768)
Payment on subordinated notes		(108,113)
Proceeds from revolving credit facility		10,000
Payments on revolving credit facility		(6,000)
Payments for debt issue costs		(591)
Net cash (used in) provided by financing activities		1,885
Decrease in cash and cash equivalents		(1,044)
Cash and cash equivalents at beginning of period		8,553
Cash and cash equivalents at end of period		7,509
Supplemental cash flow information:
Cash paid during the period for interest		8,953
Cash paid during the period for income taxes		8
Supplemental schedule of non-cash activities:
Accrued property and equipment purchases		996
Write-offs of accounts receivables		0
Amortization of interest rate cap into net loss, net of tax		58
Change in other asset for fair value of interest rate cap recorded to other comprehensive loss, net		(23)
Warrant liability reclassified to equity upon exercise of warrants		$ 8,274

XML

Description of Business

6 Months Ended

Jun. 14, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

Del Taco Restaurants, Inc. (f/k/a Levy Acquisition Corp. (“LAC”)) is a Delaware corporation headquartered in Lake Forest, California. The consolidated financial statements include the accounts of Del Taco Restaurants, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Del Taco”). The Company develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants. At June 14, 2016 (Successor), there were 298 company-operated and 245 franchised Del Taco restaurants located in 16 states, including one franchised unit in Guam. At June 16, 2015 (Predecessor), there were 306 company-operated and 241 franchised Del Taco restaurants located in 16 states, including one franchised unit in Guam.

The Company was originally incorporated in Delaware on August 2, 2013 as a special purpose acquisition company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On June 30, 2015 (the “Closing Date”), the Company consummated its business combination with Del Taco Holdings, Inc. (“DTH”) pursuant to the agreement and plan of merger dated as of March 12, 2015 by and among LAC, Levy Merger Sub, LLC (“Levy Merger Sub”), LAC’s wholly owned subsidiary, and DTH (the “Merger Agreement”). Under the Merger Agreement, Levy Merger Sub merged with and into DTH, with DTH surviving the merger as a wholly-owned subsidiary of the Company (the “Business Combination” or “Merger”). In connection with the closing of the Business Combination, the Company changed its name from Levy Acquisition Corp. to Del Taco Restaurants, Inc. See Note 3 for further discussion of the Business Combination.

XML

Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 14, 2016

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of Securities and Exchange Commission (“SEC”). For additional information, these consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 29, 2015 ("2015 Form 10-K"). The accounting policies used in preparing these consolidated financial statements are the same as those described in our 2015 Form 10-K.

As a result of the Business Combination, the Company is the acquirer for accounting purposes, and DTH is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for DTH for periods prior to the Closing Date. The Company is the “Successor” for periods after the Closing Date, which includes consolidation of DTH subsequent to the Business Combination on June 30, 2015. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. See Note 3 for further discussion of the Business Combination. As a result of the application of the acquisition method of accounting as of the Closing Date, the financial statements for the Predecessor period and for the Successor period are presented on a different basis and are therefore, not comparable. The historical financial information of Del Taco, formerly LAC, prior to the Business Combination have not been reflected in the financial statements as those amounts have been considered de-minimus.

The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2016 is the fifty-three week period ended January 3, 2017 (Successor). Fiscal year 2015 is the fifty-two week period ended December 29, 2015 (Successor). In a fifty-three week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes seventeen weeks of operations. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2016, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor). For fiscal year 2015, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 16, 2015 (Predecessor).

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance will result in key changes to lease accounting and will aim to bring leases onto balance sheets to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations as well as the assets it owns versus leases. The new leasing standard will be effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements as well as the expected adoption method.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires a company to recognize revenue in an amount that reflects the consideration it expects to receive for the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This ASU is effective for annual periods and interim periods beginning after December 15, 2017. The ASU is to be applied retrospectively or using a cumulative effect transition method. The Company is currently evaluating which transition method to use and the effect that this pronouncement will have on its consolidated financial statements and related disclosures.

XML

Business Combination

6 Months Ended

Jun. 14, 2016

Business Combinations [Abstract]

Business Combination

Business Combination

On June 30, 2015, the Company and DTH completed the Business Combination pursuant to the Merger Agreement under which the Company’s wholly-owned subsidiary, Levy Merger Sub, merged with and into DTH, with DTH surviving the merger as a wholly-owned subsidiary of the Company.

Concurrent with the execution of the Merger Agreement, Levy Epic Acquisition Company, LLC (“Levy Newco”), Levy Epic Acquisition Company II, LLC (“Levy Newco II” and with Levy Newco, the “Levy Newco Parties”), DTH and the DTH stockholders entered into a stock purchase agreement (the “Stock Purchase Agreement”). Pursuant to the Stock Purchase Agreement, the Levy Newco Parties agreed to purchase 2,348,968 shares of DTH common stock from DTH for $91.2 million in cash, and to purchase 740,564 shares of DTH common stock directly from existing DTH shareholders for $28.8 million in cash (the “Initial Investment”). As a result of this Initial Investment, an aggregate of 3,089,532 shares of DTH common stock was purchased by the Levy Newco Parties for total cash consideration of $120.0 million.

The total purchase price paid to DTH stockholders (except for the Levy NewCo Parties) was $284.3 million. The closing of the Business Combination and the Initial Investment were accounted for as related events transferring control of DTH to the Company through a minority investment in the Initial Investment and a controlling interest at the closing of the Business Combination.

The Company recorded an allocation of the purchase price to DTH’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value as of the Closing Date. The final purchase price allocation is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	5,173
Accounts receivable and other receivables	3,228
Inventories	2,541
Prepaid expenses and other current assets	4,266
Total current assets	15,208
Property and equipment	105,524
Intangible assets	250,490
Other assets	4,194
Total identifiable assets acquired	375,416
Accounts payable	(18,866		)
Other accrued liabilities	(26,607		)
Current portion of capital lease obligations and deemed landlord financing liabilities	(1,670		)
Long-term debt, capital lease obligations and deemed landlord financing liabilities	(246,562		)
Deferred income taxes	(80,254		)
Other long-term liabilities	(36,208		)
Net identifiable liabilities assumed	(34,751		)
Goodwill	319,056
Total gross consideration	$	284,305

During the twenty-four weeks ended June 14, 2016 (Successor), the Company recorded a net $0.8 million adjustment to goodwill due to a change in estimate for the liability for deferred income taxes.

For the twelve and twenty-four weeks ended June 14, 2016 (Successor) and the twelve and twenty-four weeks ended June 16, 2015 (Predecessor), the Company incurred approximately $0.1 million, $0.2 million, $0.9 million and $7.2 million, respectively, of transaction expenses directly related to the Business Combination.

XML

Restaurant Closure Charges, Net

6 Months Ended

Jun. 14, 2016

Restructuring and Related Activities [Abstract]

Restaurant Closure Charges, Net

Restaurant Closure Charges, Net

At June 14, 2016 (Successor) and December 29, 2015 (Successor), the restaurant closure liability is $3.7 million and $4.8 million, respectively. The details of the restaurant closure activities are discussed below.

Restaurant Closures and Lease Reserves

The following table represents other restaurant closure liability activity related to prior restaurant closures and sublease income shortfalls (in thousands):

	Total
Balance at December 29, 2015 (Successor)	$	1,023
Charges for accretion in current period	39
Cash payments	(37		)
Balance at June 14, 2016 (Successor)	$	1,025

The current portion of the restaurant closure liability is $0.1 million at both June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $0.9 million at both June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other non-current liabilities in the consolidated balance sheets.

Restaurant Closure and Other Related Charges for 12 Underperforming Restaurants

During the fourth fiscal quarter of 2015, the Company closed 12 company-operated restaurants. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company recorded accretion expense related to the closures as well as $0.1 million related to the write-off of fixed assets associated with the closures. During the twenty-four weeks ended June 14, 2016 (Successor), the Company recorded an adjustment to decrease the lease termination liability for one closed restaurant due to a change in estimate, partially offset by an adjustment to increase the lease termination liability for two closed restaurants due to changes in estimates.

A summary of the restaurant closure liability activity for these 12 closed restaurants consisted of the following (in thousands):

	Contract termination costs			Other associated costs			Total
Balance at December 29, 2015 (Successor)	$	3,637		$	163		$	3,800
Charges for accretion in current period	67			—			67
Cash payments	(800		)	(163		)	(963		)
Adjustments to estimates based on current activity	(273		)	—			(273		)
Balance at June 14, 2016 (Successor)	$	2,631		$	—		$	2,631

The current portion of the restaurant closure liability is $1.0 million and $1.5 million at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $1.6 million and $2.3 million at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively, and is included in other non-current liabilities in the consolidated balance sheets.

XML

Goodwill and other Intangible Assets

6 Months Ended

Jun. 14, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other Intangible Assets

Goodwill and other Intangible Assets

Goodwill was $319.1 million at June 14, 2016 (Successor) compared to $318.3 million at December 29, 2015 (Successor). The increase was due to an adjustment to the purchase price allocation as described in more detail in Note 3.

There have been no changes in the carrying amount of trademarks since December 29, 2015 (Successor).

The Company’s other intangible assets at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

	Successor
	June 14, 2016							December 29, 2015
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Favorable lease assets	$	14,207	$	(1,946	)	$	12,261	$	14,207	$	(1,020	)	$	13,187
Franchise rights	15,789		(1,358		)	14,431		15,897		(711		)	15,186
Total amortized other intangible assets	$	29,996	$	(3,304	)	$	26,692	$	30,104	$	(1,731	)	$	28,373

Goodwill and intangible assets at June 14, 2016 (Successor) and December 29, 2015 (Successor) are based on the purchase price allocation of DTH, which is based on valuations performed to determine the fair value of the acquired assets as of the acquisition date. See Note 3 for further discussion of the acquisition of DTH. During the twenty-four weeks ended June 14, 2016 (Successor), we wrote-off $0.1 million of franchise rights associated with the closure of two franchise locations.

XML

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities

6 Months Ended

Jun. 14, 2016

Debt Disclosure [Abstract]

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities

The Company’s long-term debt, capital lease obligations and deemed landlord financing liabilities at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

	Successor
	June 14, 2016		December 29, 2015
2015 Senior Credit Facility, net of debt discount of $1,195 and $1,328 and deferred financing costs of $403 and $448 at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively	$	152,402	$	152,224
Total outstanding indebtedness	152,402		152,224
Obligations under capital leases and deemed landlord financing liabilities	16,652		17,469
Total debt	169,054		169,693
Less: amounts due within one year	1,667		1,725
Total amounts due after one year, net	$	167,387	$	167,968

At June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company assessed the amounts recorded under the 2015 Senior Credit Facility and determined that such amounts approximated fair value.

2015 Revolving Credit Facility (Successor)

On August 4, 2015, the Company refinanced its existing senior credit facility (“2013 Senior Credit Facility”) and entered into a new credit agreement (the “Credit Agreement”). The Credit Agreement, which matures on August 4, 2020, provides for a $250 million revolving credit facility (the “2015 Senior Credit Facility”). The Company utilized $164 million of proceeds from the Credit Agreement to refinance in total its 2013 Senior Credit Facility and pay costs associated with the refinancing. The 2013 Senior Credit Facility, as amended March 20, 2015, totaled $267.1 million, consisting of an initial $227.1 million term loan (“2013 Term Loan”) and a $40 million revolver (“2013 Revolver”). At the time of the refinance, a $162.5 million term loan balance was outstanding and $17.6 million of revolver capacity was utilized to support outstanding letters of credit under the 2013 Senior Credit Facility.

At the Company’s option, loans under the 2015 Senior Credit Facility may bear interest at a base rate or LIBOR, plus an applicable margin determined in accordance with a consolidated total lease adjusted leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the prime rate of Bank of America, and (c) LIBOR plus 1.00%. For LIBOR loans, the applicable margin is in the range of 1.50% to 2.50%, and for base rate loans the applicable margin is in the range of 0.50% and 1.50%. The applicable margin was initially set at 2.00% for LIBOR loans and at 1.00% for base rate loans until delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending after the closing date of the Credit Agreement. Following delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending December 29, 2015 (Successor), the applicable margin decreased 0.25% for both LIBOR loans and base rate loans during the first fiscal quarter of 2016. The 2015 Senior Credit Facility capacity used to support letters of credit currently incurs fees equal to the applicable margin of 1.75%. The 2015 Senior Credit Facility unused commitment currently incurs a 0.20% fee.

The Credit Agreement contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of June 14, 2016 (Successor). Substantially all of the assets of the Company are pledged as collateral under the 2015 Senior Credit Facility.

The Company capitalized lender costs and deferred financing costs of $1.4 million and $0.5 million, respectively, in connection with the refinancing. Lender debt discount costs and deferred financing costs associated with the 2015 Senior Credit Facility are presented net of the 2015 Senior Credit Facility balance on the consolidated balance sheets and will be amortized to interest expense over the term of the 2015 Senior Credit Facility. Amortization of deferred financing costs and debt discount related to the 2015 Senior Credit Facility totaled $0.1 million and $0.2 million during the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor), respectively.

At June 14, 2016 (Successor), the weighted-average interest rate on the outstanding balance of the Senior Credit Facility was 2.2%. At June 14, 2016 (Successor), the Company had a total of $77.0 million of availability for additional borrowings under the 2015 Senior Credit Facility as the Company had $154.0 million of outstanding borrowings and letters of credit outstanding of $19.0 million which reduce availability under the 2015 Senior Credit Facility.

DTH 2013 Senior Credit Facility

In March 2015, DTH amended its 2013 Senior Credit Facility to increase the 2013 Term Loan by $25.1 million to $227.1 million (the “March 2015 Debt Refinance”). A portion of the proceeds from Step 1 of the Business Combination, described in Note 3, proceeds of $10 million from the 2013 Revolver and the March 2015 Debt Refinance proceeds were used to fully redeem the then outstanding balance of the subordinated notes of $111.2 million.

On March 12, 2015, DTH satisfied the rating condition in its 2013 Senior Credit Facility resulting in a decrease in interest rate to LIBOR (not to be less than 1.00%) plus a margin of 4.25%.

The Company incurred lender costs and third-party costs associated with the March 2015 Debt Refinance of $1.6 million of which $1.5 million was capitalized as lender debt discount and $0.1 million was expensed as debt modification costs in the consolidated statements of comprehensive income (loss) for the twenty-four weeks ended June 16, 2015 (Predecessor).

Lender debt discount costs and deferred financing costs associated with the 2013 Senior Credit Facility were amortized to interest expense over the term of the 2013 Term Loan using the effective interest method. Amortization of deferred financing costs including debt discount totaled $0.4 million and $0.8 million during the twelve weeks and twenty-four weeks ended June 16, 2015 (Predecessor), respectively.

Subordinated Notes (Predecessor)

In connection with Step 1 of the Business Combination and the March 2015 Debt Refinance discussed above, DTH fully redeemed the outstanding balance of the Sagittarius Restaurants LLC (SAG Restaurants) subordinated notes (“SAG Restaurants Sub Notes”) and F&C Restaurant Holding Co. (F&C RHC) subordinated notes (“F&C RHC Sub Notes”) on March 20, 2015 of $111.2 million.

For the twenty-four weeks ended June 16, 2015 (Predecessor), interest expense related to the SAG Restaurants Sub Notes and F&C RHC Sub Notes was $3.1 million.

XML

Derivative Instruments

6 Months Ended

Jun. 14, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

As of June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company had an interest rate cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. This agreement had a notional amount of $87.5 million as of June 14, 2016 (Successor) and December 29, 2015 (Successor). The individual caplet contracts within the remaining interest rate cap agreement expire at various dates through June 30, 2016.

Interest Rate Cap Agreement

To ensure the effectiveness of the interest rate cap agreement through June 30, 2015 (Predecessor) , the Company elected the three-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement as of each reset date. The reset dates and other critical terms on the term loans perfectly match with the interest rate cap reset dates and other critical terms during the twelve and twenty-four weeks ended June 16, 2015 (Predecessor).

As of the July 1, 2015 interest reset date, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement, and as a result, this hedge became ineffective. Therefore, after July 1, 2015, any changes in fair value will be recorded through interest expense. For the twelve and twenty-four weeks ended June 14, 2016 (Successor), there have been no changes in the fair value of the interest rate cap agreement.

The effective portion of the interest rate cap agreement through June 30, 2015 (Predecessor) was included in accumulated other comprehensive income and included as a fair value adjustment through the purchase price allocation as described in Note 3.

Warrant Liability (Predecessor)

On March 20, 2015, warrants to purchase 597,802 shares of DTH common stock held by a former large shareholder of DTH were exercised at a strike price of $25.00 per share based on a fair value of $8.3 million determined based on the common stock price of the Initial Investment discussed above in Note 3. Upon exercise, 384,777 shares of DTH common stock were redeemed as payment for the strike price resulting in 213,025 shares of DTH common stock being issued. DTH recorded a mark-to-market adjustment of $35,000 to reduce the liability during the twenty-four weeks ended June 16, 2015 (Predecessor) and then reclassified the balance of the warrant liability of $8.3 million to shareholders’ equity.

XML

Fair Value Measurements

6 Months Ended

Jun. 14, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The fair values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying amounts due to their short maturities. The carrying value of the 2015 Senior Credit Facility approximated fair value. The interest rate cap agreement is recorded at fair value in the Company’s consolidated balance sheets.

As of June 14, 2016 (Successor) and December 29, 2015 (Successor), the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. For both periods, these included derivative instruments related to interest rates. The Company determined the fair values of the interest rate cap contracts based on counterparty quotes, with appropriate adjustments for any significant impact of nonperformance risk of the parties to the interest rate cap contracts. Therefore, the Company has categorized these interest rate cap contracts as Level 2 fair value measurements. The fair value of the interest rate cap agreement was zero at June 14, 2016 (Successor) and December 29, 2015 (Successor).

The following is a summary of the estimated fair values for the long-term debt instruments (in thousands):

	Successor
	June 14, 2016				December 29, 2015
	Estimated Fair Value		Book Value		Estimated Fair Value		Book Value
2015 Senior Credit Facility	$	152,402	$	152,402	$	152,224	$	152,224

XML

Other Accrued Liabilities and Other Non-current Liabilities

6 Months Ended

Jun. 14, 2016

Other Liabilities Disclosure [Abstract]

Other Accrued Liabilities and Other Non-current Liabilities

Other Accrued Liabilities and Other Non-current Liabilities

A summary of other accrued liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Employee compensation and related items	$	7,852	$	7,818
Accrued insurance	7,003		7,168
Accrued sales tax	4,448		3,604
Accrued bonus	1,885		5,352
Accrued income taxes	1,632		30
Restaurant closure liability	1,172		1,617
Accrued real property tax	1,113		1,378
Other	4,214		5,930
	$	29,319	$	32,897

A summary of other non-current liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Unfavorable lease liabilities	$	18,479	$	19,685
Insurance reserves	6,168		5,963
Restaurant closure liability	2,484		3,206
Unearned trade discount, non-current	1,843		2,028
Deferred development and initial franchise fees	1,720		1,920
Deferred gift card income	1,484		2,217
Deferred rent liability	1,136		731
Other	521		501
	$	33,835	$	36,251

XML

Stock-Based Compensation

6 Months Ended

Jun. 14, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

In connection with the approval of the Business Combination, the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, other stock-based awards, other cash-based compensation and performance awards. Under the plan, there were 3,300,000 share of common stock reserved and authorized. At June 14, 2016 (Successor), there were 2,010,502 shares of common stock available for grant under the 2015 Plan.

Stock-Based Compensation Expense (Successor)

The total compensation expense related to the 2015 Plan was $0.9 million and $1.6 million for the twelve and twenty-four weeks ended June 14, 2016 (Successor), respectively.

Restricted Stock Awards (Successor)

A summary of outstanding and unvested restricted stock activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

	Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 29, 2015 (Successor)	946,494	$	11.16
Granted	114,004	9.90
Vested	—	—
Forfeited	—	—
Nonvested at June 14, 2016 (Successor)	1,060,498	$	11.03

As of June 14, 2016 (Successor), $8.5 million of total unrecognized expense related to unvested restricted stock grants is expected to be recognized over a weighted-average period of 2.8 years. The fair value of these awards was determined based on the Company’s stock price on the grant date.

Stock Options (Successor)

A summary of stock option activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)
Options outstanding at December 29, 2015 (Successor)	224,000		$	10.40	6.5	$	—
Granted	7,000		9.88		6.6	—
Exercised	—		—		—	—
Forfeited	(2,000	)	10.40		—	—
Options outstanding at June 14, 2016 (Successor)	229,000		$	10.38	6.4	$	—
Options exercisable at June 14, 2016 (Successor)	—		$	—	—	$	—
Options exercisable and expected to vest at June 14, 2016 (Successor)	207,173		$	10.38	6.4	$	—

The aggregate intrinsic value in the table above is the amount by which the current market price of the Company's stock on December 29, 2015 (Successor) or June 14, 2016 (Successor), respectively, exceeds the exercise price.

As of June 14, 2016 (Successor), $0.6 million of total unrecognized stock compensation expense, net of forfeitures, related to stock option grants is expected to be recognized over a weighted average period of 3.1 years.

Stock-Based Compensation Expense (Predecessor)

In connection with Step 1 of the Business Combination consummated on March 20, 2015, all unvested restricted stock units (“RSUs”) under the Predecessor incentive plan became fully vested and all vested RSUs were then immediately settled for shares of DTH common stock, net of shares withheld for minimum statutory employee tax withholding obligations and all unvested stock options under the Predecessor plan became fully vested and all vested stock options were also exercised and shares were issued, net of shares withheld for the applicable option strike price and employee tax withholding obligations. An aggregate of 237,948 shares of DTH common stock were issued and 247,552 shares of DTH common stock were withheld for applicable option strike price and employee tax withholding obligations. In exchange for the shares withheld, DTH made payments of $7.5 million related to employee tax withholding obligations.

No RSUs or stock options remained outstanding under the Predecessor plan after March 20, 2015 or as of June 14, 2016 (Successor). DTH recorded stock-based compensation expense of $0.5 million, which included all remaining unrecognized compensation expense related to the accelerated vesting on RSUs and stock options on March 20, 2015, for the twenty-four weeks ended June 16, 2015 (Predecessor).

XML

Shareholders' Equity

6 Months Ended

Jun. 14, 2016

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

On February 26, 2016, the Company's Board of Directors authorized a share repurchase program covering up to $25.0 million of the Company's common stock and warrants which was effective immediately and expires upon completion of the repurchase program, unless terminated earlier by the Board of Directors. Purchases under the program may be made in open market or privately negotiated transactions. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company repurchased respectively 542,303 and 628,982 shares of common stock for an average price per share of $9.92 and $10.04 for an aggregate cost of approximately $5.4 million and $6.4 million including incremental direct costs to acquire the shares. During both the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company repurchased 241,806 warrants for an average price per warrant of $2.36 for an aggregate cost of approximately $0.6 million including incremental direct costs to acquire the warrants. The Company expects to retire the repurchased shares and warrants and therefore has accounted for them as constructively retired as of June 14, 2016 (Successor). As of June 14, 2016 (Successor), there was approximately $18.1 million remaining under the share repurchase program. The Company has no obligations to repurchase shares or warrants under this authorization, and the timing and value of shares and warrants purchased will depend on the Company's stock price, warrant price, market conditions and other factors.

XML

Earnings per Share

6 Months Ended

Jun. 14, 2016

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic income (loss) per share is calculated by dividing net income (loss) attributable to Del Taco’s common shareholders for the Successor period and to DTH’s common shareholders for the Predecessor period by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including warrants, restricted stock, common stock options and restricted stock units.

Below are basic and diluted net income (loss) per share for the periods indicated (amounts in thousands except share and per share data):

	Successor		Predecessor
	12 Weeks Ended June 14, 2016		12 Weeks Ended June 16, 2015
Numerator:
Net income	$	4,864	$	4,628
Denominator:
Weighted-average shares outstanding - basic	38,292,215		6,707,776
Dilutive effect of unvested restricted stock and RSUs	150,089		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,442,304		6,707,776
Net income per share - basic	$	0.13	$	0.69
Net income per share - diluted	$	0.13	$	0.69
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,720,918		—
	Successor		Predecessor
	24 Weeks Ended June 14, 2016		24 Weeks Ended June 16, 2015
Numerator:
Net income (loss)	$	7,925	$	(312	)
Denominator:
Weighted-average shares outstanding - basic	38,545,115		5,391,137
Dilutive effect of unvested restricted stock and RSUs	127,310		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,672,425		5,391,137
Net income (loss) per share - basic	$	0.21	$	(0.06	)
Net income (loss) per share - diluted	$	0.20	$	(0.06	)
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,800,021		142,009

Antidilutive stock options, unvested restricted stock and warrants were excluded from the computation of diluted net income (loss) per share due to the assumed proceeds from the award’s exercise or vesting being greater than the average market price of the common shares or due to the Company incurring net losses for the periods presented.

XML

Income Taxes

6 Months Ended

Jun. 14, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective income tax rates were 40.5% for the twelve weeks ended June 14, 2016 (Successor) compared to 27.2% for the twelve weeks ended June 16, 2015 (Predecessor), respectively. The provision for income taxes consisted of income tax expense of $3.3 million for the twelve weeks ended June 14, 2016 (Successor) and $1.7 million for the twelve weeks ended June 16, 2015 (Predecessor), respectively. The effective income tax rates were 40.8% and 116.6% for the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor), respectively. The provision for income taxes consisted of income tax expense of $5.5 million and $2.2 million for the twenty-four weeks ended June 14, 2016 (Successor) and June 16, 2015 (Predecessor).

The income tax expense related to the twelve weeks ended June 14, 2016 (Successor) is driven by the estimated effective income tax rate of 40.5% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twelve weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

The income tax expense related to the twenty-four weeks ended June 14, 2016 (Successor) is driven by the estimated effective income tax rate of 40.8% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense related to the twenty-four weeks ended June 16, 2015 (Predecessor) primarily related to the increase in deferred tax liabilities for indefinite-lived assets and the related effect of maintaining a full valuation allowance against certain of deferred tax assets as of June 16, 2015 (Predecessor).

XML

Commitments and Contingencies

6 Months Ended

Jun. 14, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The primary claims in the Company’s business are workers’ compensation and general liabilities. These insurance programs are self-insured or high deductible programs with excess coverage that management believes is sufficient to adequately protect the Company. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured or high deductible limits, including provision for estimated claims incurred but not reported. Because of the uncertainty of the ultimate resolution of outstanding claims, as well as the uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially. However, no estimate can currently be made of the range of additional losses.

Purchasing Commitments

The Company enters into various purchase obligations in the ordinary course of business, generally of short term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, information technology service agreements and marketing initiatives, some of which are related to both Company-operated and franchised locations. The Company also has a long-term beverage supply agreement with a major beverage vendor whereby marketing rebates are provided to the Company and its franchisees based upon the volumes of purchases for system-wide restaurants which vary according to demand for beverage syrup. This contract has terms extending into 2021. The Company’s future estimated cash payments under existing contractual purchase obligations for goods and services as of June 14, 2016 (Successor), are approximately $85.4 million. The Company has excluded agreements that are cancelable without penalty.

Litigation

On April 23, 2015, a purported class action and derivative complaint, Jeffery Tomasulo, on behalf of himself and all others similarly situated v. Levy Acquisition Sponsor, LLC, Lawrence F. Levy, Howard B. Bernick, Marc S. Simon, Craig J. Duchossois, Ari B. Levy, Steven C. Florsheim, Gregory G. Flynn, Del Taco Holdings, Inc., and Levy Acquisition Corp. (“Complaint”), was filed in the Circuit Court of Cook County, Illinois (the “Circuit Court”), relating to the then proposed Business Combination pursuant to the Merger Agreement. The Complaint, which purported to be brought as a class action on behalf of all of the holders of the Company’s common stock, generally alleged that the Company’s pre-merger directors breached their fiduciary duties to stockholders by facilitating the then proposed Business Combination and in negotiating and approving the Merger Agreement. The Complaint also alleged that the Company’s preliminary proxy statement that was filed with the SEC on April 2, 2015 is materially misleading and/or incomplete. The Complaint further alleged that DTH and Levy Acquisition Sponsor LLC aided and abetted the alleged breaches by the Company’s pre-merger directors. The Complaint sought (a) a declaration that the Company’s pre-merger directors breached their fiduciary duties; (b) injunctive relief enjoining the Business Combination until corrective disclosures were made; (c) compensatory and/or rescissory damages; and (d) an award of costs and attorney’s fees. On May 19, 2016, the parties entered into a Stipulation of Settlement, which is subject to final Court approval on July 26, 2016.

The Company has a directors and officers liability insurance policy to cover legal defense costs and settlements stemming from covered claims, subject to an insurance deductible of $0.25 million per claim. The Company's insurance company has acknowledged coverage for claims asserted in the Complaint against covered persons, subject to a reservation of rights. The Company anticipates that any attorney's fees or expenses awarded by the Court in connection with any settlement will be paid in full by the insurance company, together with all or substantially all of any additional legal fees that may be incurred in connection with the action. As of December 29, 2015 (Successor), the Company had an insurance receivable of $0.3 million for legal defense costs it paid in excess of the deductible. The reimbursement from the insurance company was received in January 2016. During the twelve and twenty-four weeks ended June 14, 2016 (Successor), the Company has incurred $0.1 million and $0.3 million, respectively, in legal defense fees for which the Company has recorded a corresponding insurance receivable of $0.2 million as of June 14, 2016 (Successor).

In July 2013, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has failed to pay overtime wages and has not appropriately provided meal breaks to its California general managers. Discovery has been completed and the parties are preparing their motions for and opposition to class certification. Del Taco has several defenses to the action that it believes should prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 14, 2016 (Successor).

In March 2014, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has not appropriately provided meal breaks and failed to pay wages to its California hourly employees. Discovery is in process and Del Taco intends to assert all of its defenses to this threatened class action and the individual claims. Del Taco has several defenses to the action that it believes should prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 14, 2016 (Successor).

The Company and its subsidiaries are parties to other legal proceedings incidental to their businesses, including claims alleging the Company’s restaurants do not comply with the Americans with Disabilities Act of 1990. In the opinion of management, based upon information currently available, the ultimate liability with respect to those other actions will not have a material effect on the operating results, cash flows or the financial position of the Company.

XML

Subsequent Events (Notes)

6 Months Ended

Jun. 14, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Subsequent Events

On July 11, 2016, the Company commenced an offer to exchange 0.2780 shares of the Company's common stock for each outstanding Company warrant exercisable for shares at an exercise price of $11.50 per share (approximately one share for every 3.6 warrants tendered), up to a maximum of 6,750,000 warrants.

XML

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 14, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of Securities and Exchange Commission (“SEC”). For additional information, these consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 29, 2015 ("2015 Form 10-K"). The accounting policies used in preparing these consolidated financial statements are the same as those described in our 2015 Form 10-K.

As a result of the Business Combination, the Company is the acquirer for accounting purposes, and DTH is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for DTH for periods prior to the Closing Date. The Company is the “Successor” for periods after the Closing Date, which includes consolidation of DTH subsequent to the Business Combination on June 30, 2015. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. See Note 3 for further discussion of the Business Combination. As a result of the application of the acquisition method of accounting as of the Closing Date, the financial statements for the Predecessor period and for the Successor period are presented on a different basis and are therefore, not comparable. The historical financial information of Del Taco, formerly LAC, prior to the Business Combination have not been reflected in the financial statements as those amounts have been considered de-minimus.

The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2016 is the fifty-three week period ended January 3, 2017 (Successor). Fiscal year 2015 is the fifty-two week period ended December 29, 2015 (Successor). In a fifty-three week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes seventeen weeks of operations. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2016, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 14, 2016 (Successor). For fiscal year 2015, the Company’s accompanying financial statements reflect the twelve weeks and twenty-four weeks ended June 16, 2015 (Predecessor).

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year.

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance will result in key changes to lease accounting and will aim to bring leases onto balance sheets to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations as well as the assets it owns versus leases. The new leasing standard will be effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements as well as the expected adoption method.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires a company to recognize revenue in an amount that reflects the consideration it expects to receive for the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This ASU is effective for annual periods and interim periods beginning after December 15, 2017. The ASU is to be applied retrospectively or using a cumulative effect transition method. The Company is currently evaluating which transition method to use and the effect that this pronouncement will have on its consolidated financial statements and related disclosures.

XML

Business Combination (Tables)

6 Months Ended

Jun. 14, 2016

Business Combinations [Abstract]

Schedule of Allocation of Purchase Price to Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed Based on Fair Value

The Company recorded an allocation of the purchase price to DTH’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value as of the Closing Date. The final purchase price allocation is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	5,173
Accounts receivable and other receivables	3,228
Inventories	2,541
Prepaid expenses and other current assets	4,266
Total current assets	15,208
Property and equipment	105,524
Intangible assets	250,490
Other assets	4,194
Total identifiable assets acquired	375,416
Accounts payable	(18,866		)
Other accrued liabilities	(26,607		)
Current portion of capital lease obligations and deemed landlord financing liabilities	(1,670		)
Long-term debt, capital lease obligations and deemed landlord financing liabilities	(246,562		)
Deferred income taxes	(80,254		)
Other long-term liabilities	(36,208		)
Net identifiable liabilities assumed	(34,751		)
Goodwill	319,056
Total gross consideration	$	284,305

XML

Restaurant Closure Charges, Net (Tables)

6 Months Ended

Jun. 14, 2016

Restructuring and Related Activities [Abstract]

Restaurant Closure Liability Activity

The following table represents other restaurant closure liability activity related to prior restaurant closures and sublease income shortfalls (in thousands):

	Total
Balance at December 29, 2015 (Successor)	$	1,023
Charges for accretion in current period	39
Cash payments	(37		)
Balance at June 14, 2016 (Successor)	$	1,025

Closure Liability Activity for 12 Closed Restaurants

A summary of the restaurant closure liability activity for these 12 closed restaurants consisted of the following (in thousands):

	Contract termination costs			Other associated costs			Total
Balance at December 29, 2015 (Successor)	$	3,637		$	163		$	3,800
Charges for accretion in current period	67			—			67
Cash payments	(800		)	(163		)	(963		)
Adjustments to estimates based on current activity	(273		)	—			(273		)
Balance at June 14, 2016 (Successor)	$	2,631		$	—		$	2,631

XML

Goodwill and other Intangible Assets (Tables)

6 Months Ended

Jun. 14, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Other Intangible Assets

The Company’s other intangible assets at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

	Successor
	June 14, 2016							December 29, 2015
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Favorable lease assets	$	14,207	$	(1,946	)	$	12,261	$	14,207	$	(1,020	)	$	13,187
Franchise rights	15,789		(1,358		)	14,431		15,897		(711		)	15,186
Total amortized other intangible assets	$	29,996	$	(3,304	)	$	26,692	$	30,104	$	(1,731	)	$	28,373

XML

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities (Tables)

6 Months Ended

Jun. 14, 2016

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s long-term debt, capital lease obligations and deemed landlord financing liabilities at June 14, 2016 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):

	Successor
	June 14, 2016		December 29, 2015
2015 Senior Credit Facility, net of debt discount of $1,195 and $1,328 and deferred financing costs of $403 and $448 at June 14, 2016 (Successor) and December 29, 2015 (Successor), respectively	$	152,402	$	152,224
Total outstanding indebtedness	152,402		152,224
Obligations under capital leases and deemed landlord financing liabilities	16,652		17,469
Total debt	169,054		169,693
Less: amounts due within one year	1,667		1,725
Total amounts due after one year, net	$	167,387	$	167,968

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 14, 2016

Fair Value Disclosures [Abstract]

Summary of Estimated Fair Values of Long-term Debt Instruments, Warrant Liability and Interest Rate Cap Agreement

The following is a summary of the estimated fair values for the long-term debt instruments (in thousands):

	Successor
	June 14, 2016				December 29, 2015
	Estimated Fair Value		Book Value		Estimated Fair Value		Book Value
2015 Senior Credit Facility	$	152,402	$	152,402	$	152,224	$	152,224

XML

Other Accrued Liabilities and Other Non-current Liabilities (Tables)

6 Months Ended

Jun. 14, 2016

Other Liabilities Disclosure [Abstract]

Summary of Other Accrued Liabilities

A summary of other accrued liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Employee compensation and related items	$	7,852	$	7,818
Accrued insurance	7,003		7,168
Accrued sales tax	4,448		3,604
Accrued bonus	1,885		5,352
Accrued income taxes	1,632		30
Restaurant closure liability	1,172		1,617
Accrued real property tax	1,113		1,378
Other	4,214		5,930
	$	29,319	$	32,897

Summary of Other Non-current Liabilities

A summary of other non-current liabilities follows (in thousands):

	Successor
	June 14, 2016		December 29, 2015
Unfavorable lease liabilities	$	18,479	$	19,685
Insurance reserves	6,168		5,963
Restaurant closure liability	2,484		3,206
Unearned trade discount, non-current	1,843		2,028
Deferred development and initial franchise fees	1,720		1,920
Deferred gift card income	1,484		2,217
Deferred rent liability	1,136		731
Other	521		501
	$	33,835	$	36,251

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 14, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Outstanding and Unvested Restricted Stock Activity

A summary of outstanding and unvested restricted stock activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

	Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 29, 2015 (Successor)	946,494	$	11.16
Granted	114,004	9.90
Vested	—	—
Forfeited	—	—
Nonvested at June 14, 2016 (Successor)	1,060,498	$	11.03

Summary of Stock Options Activity

A summary of stock option activity as of June 14, 2016 (Successor) and changes during the period December 29, 2015 (Successor) through June 14, 2016 (Successor) is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)
Options outstanding at December 29, 2015 (Successor)	224,000		$	10.40	6.5	$	—
Granted	7,000		9.88		6.6	—
Exercised	—		—		—	—
Forfeited	(2,000	)	10.40		—	—
Options outstanding at June 14, 2016 (Successor)	229,000		$	10.38	6.4	$	—
Options exercisable at June 14, 2016 (Successor)	—		$	—	—	$	—
Options exercisable and expected to vest at June 14, 2016 (Successor)	207,173		$	10.38	6.4	$	—

XML

Earnings per Share (Tables)

6 Months Ended

Jun. 14, 2016

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Income (Loss) Per Share Data

Below are basic and diluted net income (loss) per share for the periods indicated (amounts in thousands except share and per share data):

	Successor		Predecessor
	12 Weeks Ended June 14, 2016		12 Weeks Ended June 16, 2015
Numerator:
Net income	$	4,864	$	4,628
Denominator:
Weighted-average shares outstanding - basic	38,292,215		6,707,776
Dilutive effect of unvested restricted stock and RSUs	150,089		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,442,304		6,707,776
Net income per share - basic	$	0.13	$	0.69
Net income per share - diluted	$	0.13	$	0.69
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,720,918		—
	Successor		Predecessor
	24 Weeks Ended June 14, 2016		24 Weeks Ended June 16, 2015
Numerator:
Net income (loss)	$	7,925	$	(312	)
Denominator:
Weighted-average shares outstanding - basic	38,545,115		5,391,137
Dilutive effect of unvested restricted stock and RSUs	127,310		—
Dilutive effect of stock options	—		—
Dilutive effect of warrants	—		—
Weighted-average shares outstanding - diluted	38,672,425		5,391,137
Net income (loss) per share - basic	$	0.21	$	(0.06	)
Net income (loss) per share - diluted	$	0.20	$	(0.06	)
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations	12,800,021		142,009

XML

Description of Business - Additional Information (Details)	6 Months Ended
	Jun. 14, 2016 state restaurant	Jun. 16, 2015 state restaurant
Franchisor Disclosure [Line Items]
Stock purchase agreement date	Mar. 12, 2015
Successor [Member]
Franchisor Disclosure [Line Items]
Number of states in which entity operates | state	16
Successor [Member] | Entity Operated Units [Member]
Franchisor Disclosure [Line Items]
Number of restaurants	298
Successor [Member] | Franchised Units [Member]
Franchisor Disclosure [Line Items]
Number of restaurants	245
Successor [Member] | Franchised Units [Member] | GUAM
Franchisor Disclosure [Line Items]
Number of restaurants	1
Predecessor [Member]
Franchisor Disclosure [Line Items]
Number of states in which entity operates | state		16
Predecessor [Member] | Entity Operated Units [Member]
Franchisor Disclosure [Line Items]
Number of restaurants		306
Predecessor [Member] | Franchised Units [Member]
Franchisor Disclosure [Line Items]
Number of restaurants		241
Predecessor [Member] | Franchised Units [Member] | GUAM
Franchisor Disclosure [Line Items]
Number of restaurants		1

XML

Business Combination - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 14, 2016	Jun. 16, 2015	Jun. 14, 2016	Jun. 16, 2015
Business Acquisition [Line Items]
Payments to acquire businesses, gross	$ 120,000
DTH
Business Acquisition [Line Items]
Payments to acquire businesses, gross	$ 284,300
Successor [Member]
Business Acquisition [Line Items]
Proceeds from issuance of common stock				$ 0
Payments of transaction cost		$ 126		191
Successor [Member] | DTH
Business Acquisition [Line Items]
Goodwill adjustments				$ (800)
Predecessor [Member]
Business Acquisition [Line Items]
Number of shares issued (in shares)	3,089,532
Proceeds from issuance of common stock					$ 91,236
Payments of transaction cost			$ 877		$ 7,193
Predecessor [Member] | DTH
Business Acquisition [Line Items]
Number of shares issued (in shares)	2,348,968
Proceeds from issuance of common stock	$ 91,200
DTH Share Holders [Member] | Predecessor [Member]
Business Acquisition [Line Items]
Number of shares issued (in shares)	740,564
Proceeds from issuance of common stock	$ 28,800

XML

Business Combination - Schedule of Preliminary Allocation of Purchase Price to Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed Based on Fair Value (Detail) - DTH $ in Thousands	Jun. 30, 2015 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 5,173
Accounts receivable and other receivables	3,228
Inventories	2,541
Prepaid expenses and other current assets	4,266
Total current assets	15,208
Property and equipment	105,524
Intangible assets	250,490
Other assets	4,194
Total identifiable assets acquired	375,416
Accounts payable	(18,866)
Other accrued liabilities	(26,607)
Current portion of capital lease obligations and deemed landlord financing liabilities	(1,670)
Long-term debt, capital lease obligations and deemed landlord financing liabilities	(246,562)
Deferred income taxes	(80,254)
Other long-term liabilities	(36,208)
Net identifiable liabilities assumed	(34,751)
Goodwill	319,056
Total gross consideration	$ 284,305

XML

Restaurant Closure Charges, Net - Additional Information (Details) - Successor [Member] $ in Thousands	3 Months Ended	4 Months Ended	6 Months Ended
	Jun. 14, 2016 USD ($)	Dec. 29, 2015 USD ($) location	Jun. 14, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring closure liability	$ 3,700	$ 4,800	$ 3,700
Current portion of restaurant closure liability	1,172	1,617	1,172
Non-current portion of restaurant closure liability	2,484	3,206	2,484
Write-off of fixed assets	100		100
Closure of 12 Underperforming Restaurants [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring closure liability	2,631	3,800	2,631
Current portion of restaurant closure liability	1,000		1,000
Non-current portion of restaurant closure liability	1,600	$ 2,300	1,600
Number of underperforming locations | location		12
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring closure liability	1,025	$ 1,023	1,025
Current portion of restaurant closure liability	100	100	100
Non-current portion of restaurant closure liability	$ 900	$ 900	$ 900

XML

Restaurant Closure Charges, Net - Restaurant Closure Liability Activity (Details) - Successor [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 14, 2016	Dec. 29, 2015
Restructuring Reserve [Roll Forward]
Closure liability, Beginning balance	$ 4,800
Charges for accretion in current period	(137)
Closure liability, Ending balance	3,700
Non-current portion of restaurant closure liability	2,484	$ 3,206
Facility Closing [Member]
Restructuring Reserve [Roll Forward]
Closure liability, Beginning balance	1,023
Charges for accretion in current period	39
Cash payments	(37)
Closure liability, Ending balance	1,025
Non-current portion of restaurant closure liability	900	900
Closure of 12 Underperforming Restaurants [Member]
Restructuring Reserve [Roll Forward]
Closure liability, Beginning balance	3,800
Charges for accretion in current period	67
Cash payments	(963)
Closure liability, Ending balance	2,631
Restructuring Reserve, Accrual Adjustment	(273)
Non-current portion of restaurant closure liability	1,600	$ 2,300
Closure of 12 Underperforming Restaurants [Member] | Contract termination costs
Restructuring Reserve [Roll Forward]
Closure liability, Beginning balance	3,637
Charges for accretion in current period	67
Cash payments	(800)
Closure liability, Ending balance	2,631
Restructuring Reserve, Accrual Adjustment	(273)
Closure of 12 Underperforming Restaurants [Member] | Other associated costs
Restructuring Reserve [Roll Forward]
Closure liability, Beginning balance	163
Charges for accretion in current period	0
Cash payments	(163)
Closure liability, Ending balance	0
Restructuring Reserve, Accrual Adjustment	$ 0

XML

Goodwill and other Intangible Assets - Schedule of Other Intangible Assets (Detail) - Successor [Member] - USD ($) $ in Thousands	Jun. 14, 2016	Dec. 29, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 29,996	$ 30,104
Accumulated Amortization	(3,304)	(1,731)
Net	26,692	28,373
Favorable Lease Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	14,207	14,207
Accumulated Amortization	(1,946)	(1,020)
Net	12,261	13,187
Franchise rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	15,789	15,897
Accumulated Amortization	(1,358)	(711)
Net	$ 14,431	$ 15,186

XML

Goodwill and other Intangible Assets - Additional Information (Details) - Successor [Member] $ in Thousands	6 Months Ended
	Jun. 14, 2016 USD ($) location	Dec. 29, 2015 USD ($)
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 319,056	$ 318,275
Number of franchise locations closed | location	2
Franchise rights [Member]
Finite-Lived Intangible Assets [Line Items]
Franchise rights written off	$ 100

XML

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Schedule of Debt (Detail) - Successor [Member] - USD ($) $ in Thousands	Jun. 14, 2016	Dec. 29, 2015	Aug. 04, 2015
Debt Instrument [Line Items]
Total outstanding indebtedness	$ 152,402	$ 152,224
Obligations under capital leases and deemed landlord financing liabilities	16,652	17,469
Total debt	169,054	169,693
Less: amounts due within one year	1,667	1,725
Total amounts due after one year, net	167,387	167,968
2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt discount	1,195	1,328	$ 1,400
Deferred finance costs	403	448
Revolving credit facility	$ 152,402	$ 152,224

XML

Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Additional Information (Detail) - USD ($)			1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 04, 2015	Mar. 12, 2015	Mar. 31, 2015	Jun. 14, 2016	Jun. 16, 2015	Jun. 14, 2016	Jun. 16, 2015	Dec. 29, 2015	Mar. 20, 2015
DTH 2013 Senior Credit Facility [Member]
Debt Instrument [Line Items]
Proceed from revolver			$ 10,000,000
Outstanding amount of subordinated notes									$ 111,200,000
Successor [Member]
Debt Instrument [Line Items]
Payment of senior secured debt and costs associated with refinancing						$ 4,000,000
Amortization of deferred financing costs including debt discount				$ 100,000		200,000
Successor [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit agreement issuance date	Aug. 04, 2015
Credit agreement maturity date	Aug. 04, 2020
Credit facility amount	$ 250,000,000
Credit facility				19,000,000		19,000,000
Credit fees applicable margin percentage (percent)	1.75%
Unused commitment fee percentage (percent)	0.20%
Unamortized debt discount	$ 1,400,000			$ 1,195,000		$ 1,195,000		$ 1,328,000
Deferred financing costs	$ 500,000
Interest rate on outstanding balance of credit facility (percent)				2.20%		2.20%
Availability for additional borrowings under credit facility				$ 77,000,000		$ 77,000,000
Credit facility				$ 154,000,000		$ 154,000,000
Successor [Member] | LIBOR [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Effective base rate, margins on variable rate (percent)	1.00%
Credit facility margins on variable rate (percent)	2.00%
Decrease on applicable margin (percent)						(0.25%)
Successor [Member] | LIBOR [Member] | 2015 Revolving Credit Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Credit facility margins on variable rate (percent)	1.50%
Successor [Member] | LIBOR [Member] | 2015 Revolving Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Credit facility margins on variable rate (percent)	2.50%
Successor [Member] | Base Rate [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Decrease on applicable margin (percent)				(0.25%)
Successor [Member] | Base Rate [Member] | 2015 Revolving Credit Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Credit facility margins on variable rate (percent)	0.50%
Successor [Member] | Base Rate [Member] | 2015 Revolving Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Credit facility margins on variable rate (percent)	1.50%
Successor [Member] | Federal Funds Effective Swap Rate [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Effective base rate, margins on variable rate (percent)	0.50%
Successor [Member] | DTH 2013 Senior Credit Facility [Member]
Debt Instrument [Line Items]
Credit facility amount									267,100,000.0
Credit facility	$ 17,600,000
Successor [Member] | DTH 2013 Senior Credit Facility [Member] | 2013 Term Loan [Member]
Debt Instrument [Line Items]
Credit facility	162,500,000								227,100,000
Successor [Member] | DTH 2013 Senior Credit Facility [Member] | 2013 Revolver [Member]
Debt Instrument [Line Items]
Credit facility amount									40,000,000
Successor [Member] | DTH 2013 Senior Credit Facility [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Payment of senior secured debt and costs associated with refinancing	$ 164,000,000
Predecessor [Member]
Debt Instrument [Line Items]
Payment of senior secured debt and costs associated with refinancing							$ 6,000,000
Unamortized debt discount					$ 1,500,000		1,500,000
Outstanding amount of subordinated notes									$ 111,200,000
Debt refinancing cost					1,600,000
Interest expenses related to subordinated notes							3,100,000
Predecessor [Member] | Line of Credit [Member] | DTH 2013 Senior Credit Facility [Member]
Debt Instrument [Line Items]
Debt modification costs					100,000
Predecessor [Member] | Medium-term Notes [Member] | DTH 2013 Senior Credit Facility [Member]
Debt Instrument [Line Items]
Increase (decrease) in borrowing capacity			$ 25,100,000
Predecessor [Member] | DTH 2013 Senior Credit Facility [Member]
Debt Instrument [Line Items]
Amortization of deferred financing costs including debt discount					$ 400,000		$ 800,000
Predecessor [Member] | DTH 2013 Senior Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Credit facility margins on variable rate (percent)		4.25%
Predecessor [Member] | DTH 2013 Senior Credit Facility [Member] | LIBOR [Member] | Maximum [Member]
Debt Instrument [Line Items]
Increase (Decrease) in interest rate		1.00%

XML

Derivative Instruments - Additional Information (Details) - USD ($)		6 Months Ended
	Mar. 20, 2015	Jun. 16, 2015	Jun. 14, 2016	Dec. 29, 2015
Predecessor [Member]
Derivative [Line Items]
Exercise and settlement of warrants (in shares)	213,025
Reduction in warrant liability due to mark-to-market adjustment		$ 35,000
GSMP [Member] | Predecessor [Member]
Derivative [Line Items]
Warrants to purchase of common stock (in shares)	597,802
Warrant exercise price per share (in dollars per share)	$ 25.00
Fair value of warrant liability	$ 8,300,000
Common shares redeemed	384,777
Interest Rate Cap [Member] | Cash Flow Hedging [Member] | Successor [Member]
Derivative [Line Items]
Notional amount			$ 87,500,000.0	$ 87,500,000.0

XML

Fair Value Measurements - Additional Information (Detail) - USD ($)	Jun. 14, 2016	Dec. 29, 2015
Successor [Member] | Interest Rate Cap [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate cap	$ 0	$ 0

XML

Fair Value Measurements - Summary of Estimated Fair Values of Long-term Debt Instruments, Warrant Liability and Interest Rate Cap Agreement (Detail) - Successor [Member] - 2015 Revolving Credit Facility [Member] - USD ($) $ in Thousands	Jun. 14, 2016	Dec. 29, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit Facility	$ 154,000
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit Facility	152,402	$ 152,224
Book Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit Facility	$ 152,402	$ 152,224

XML

Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Accrued Liabilities (Detail) - Successor [Member] - USD ($) $ in Thousands	Jun. 14, 2016	Dec. 29, 2015
Accounts Payable And Accrued Liabilities Current And Noncurrent [Line Items]
Employee compensation and related items	$ 7,852	$ 7,818
Accrued insurance	7,003	7,168
Accrued sales tax	4,448	3,604
Accrued bonus	1,885	5,352
Accrued income taxes	1,632	30
Restaurant closure liability	1,172	1,617
Accrued real property tax	1,113	1,378
Other	4,214	5,930
Other accrued liabilities	$ 29,319	$ 32,897

XML

Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Non-current Liabilities (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 14, 2016	Dec. 29, 2015
Other Non Current Liabilities [Line Items]
Document Period End Date	Jun. 14, 2016
Successor [Member]
Other Non Current Liabilities [Line Items]
Unfavorable lease liabilities	$ 18,479	$ 19,685
Insurance reserves	6,168	5,963
Restaurant closure liability	2,484	3,206
Unearned trade discount, non-current	1,843	2,028
Deferred development and initial franchise fees	1,720	1,920
Deferred gift card income	1,484	2,217
Deferred rent liability	1,136	731
Other	521	501
Other non-current liabilities	$ 33,835	$ 36,251

XML

Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Mar. 20, 2015	Jun. 14, 2016	Jun. 14, 2016	Jun. 16, 2015	Dec. 29, 2015
2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved and authorized for issuance (in shares)		3,300,000	3,300,000
Common stock authorized and available for grant (in shares)		2,010,502	2,010,502
Successor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense		$ 600	$ 600
Payments related to employee tax withholding obligations			$ 0
Number of awards outstanding (in shares)		1,060,498	1,060,498		946,494
Number of stock options outstanding (in shares)		229,000	229,000		224,000
Successor [Member] | 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense recorded		$ 900	$ 1,600
Successor [Member] | Restricted Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, net		$ 8,500	$ 8,500
Weighted average period of recognition (in years)			2 years 9 months 11 days
Vesting period (in years)			3 years 22 days
Predecessor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense recorded				$ 500
Shares issued for employee tax withholding obligations (in shares)	237,948
Shares redeemed for employee tax withholding obligations (in shares)	247,552
Payments related to employee tax withholding obligations	$ 7,500			$ 7,533
Number of stock options outstanding (in shares)		0	0
Predecessor [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards outstanding (in shares)		0	0

XML

Stock-Based Compensation - Summary of Outstanding and Unvested Restricted Stock Activity (Details) - Successor [Member]	6 Months Ended
	Jun. 14, 2016 $ / shares shares
Shares
Nonvested Shares, Beginning balance (in shares) | shares	946,494
Granted (in shares) | shares	114,004
Vested (in shares) | shares	0
Forfeited (in shares) | shares	0
Nonvested Shares, Ending balance (in shares) | shares	1,060,498
Weighted-Average Grant Date Fair Value
Weighted-Average Grant Date Fair Value, Beginning balance (in dollars per share) | $ / shares	$ 11.16
Weighted-Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares	9.90
Weighted-Average Grant Date Fair Value, Vested (in dollars per share) | $ / shares	0.00
Weighted-Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares	0.00
Weighted-Average Grant Date Fair Value, Ending balance (in dollars per share) | $ / shares	$ 11.03

XML

Stock-Based Compensation - Summary of Stock Options Activity (Details) - Successor [Member] - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 14, 2016	Dec. 29, 2015
Shares
Options outstanding, Beginning balance (in shares)	224,000
Granted (in shares)	7,000
Exercised (in shares)	0
Forfeited (in shares)	(2,000)
Options outstanding, Ending balance (in shares)	229,000	224,000
Options exercisable (in shares)	0
Options exercisable and expected to vest (in shares)	207,173
Weighted Average Exercise Price
Weighted Average Exercise Price, Options outstanding, Beginning balance (in dollars per share)	$ 10.40
Weighted Average Exercise Price, Granted (in dollars per share)	9.88
Weighted Average Exercise Price, Exercised (in dollars per share)	0.00
Weighted Average Exercise Price, Forfeited (in dollars per share)	10.40
Weighted Average Exercise Price, Options outstanding, Ending balance (in dollars per share)	10.38	$ 10.40
Weighted Average Exercise Price, Options exercisable (in dollars per share)	0.00
Weighted Average Exercise Price, Options exercisable and expected (in dollars per share)	$ 10.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Contractual Term, Options outstanding (in years)	6 years 4 months 17 days	6 years 6 months
Weighted Average Remaining Contractual Term, Granted (in years)	6 years 6 months 26 days
Weighted Average Remaining Contractual Term, Options exercisable and expected to vest (in years)	6 years 4 months 21 days
Aggregate Intrinsic Value, Options outstanding, Beginning balance	$ 0
Aggregate Intrinsic Value, Options outstanding, Ending balance	0	$ 0
Aggregate Intrinsic Value, Options exercisable and expected to vest	$ 0

XML

Shareholders' Equity - Additional Information (Detail) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 14, 2016	Jun. 14, 2016	Feb. 26, 2016
Common Stock and Warrants [Member]
Class of Stock [Line Items]
Maximum authorized stock repurchase amount (up to)			$ 25,000,000.0
Successor [Member] | Common Stock and Warrants [Member]
Class of Stock [Line Items]
Remaining authorized stock repurchase amount	$ 18,100,000	$ 18,100,000
Successor [Member] | Common Stock [Member]
Class of Stock [Line Items]
Shares repurchased (in shares)	542,303	628,982
Treasury Stock Acquired, Average Cost Per Share	$ 9.92	$ 10.04
Shares repurchased, value	$ 5,400,000	$ 6,400,000
Successor [Member] | Warrants [Member]
Class of Stock [Line Items]
Shares repurchased (in shares)	241,806	241,806
Treasury Stock Acquired, Average Cost Per Share	$ 2.36	$ 2.36
Shares repurchased, value	$ 600,000	$ 600,000

XML

Earnings per Share - Schedule of Basic and Diluted Net Income per Share Data (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 14, 2016	Jun. 16, 2015	Jun. 14, 2016	Jun. 16, 2015
Successor [Member]
Numerator:
Net income (loss)	$ 4,864		$ 7,925
Denominator:
Weighted-average shares outstanding - basic (in shares)	38,292,215		38,545,115
Weighted-average shares outstanding - diluted	38,442,304		38,672,425
Net (loss) income per share - basic (in dollars per share)	$ 0.13		$ 0.21
Net (loss) income per share - diluted (in dollars per share)	$ 0.13		$ 0.20
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations (in dollars per share)	12,720,918		12,800,021
Successor [Member] | Restricted Stock and RSUs [Member]
Denominator:
Dilutive effect (in shares)	150,089		127,310
Successor [Member] | Stock Options [Member]
Denominator:
Dilutive effect (in shares)	0		0
Successor [Member] | Warrants [Member]
Denominator:
Dilutive effect (in shares)	0		0
Predecessor [Member]
Numerator:
Net income (loss)		$ 4,628		$ (312)
Denominator:
Weighted-average shares outstanding - basic (in shares)		6,707,776		5,391,137
Weighted-average shares outstanding - diluted		6,707,776		5,391,137
Net (loss) income per share - basic (in dollars per share)		$ 0.69		$ (0.06)
Net (loss) income per share - diluted (in dollars per share)		$ 0.69		$ (0.06)
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations (in dollars per share)		0		142,009
Predecessor [Member] | Restricted Stock and RSUs [Member]
Denominator:
Dilutive effect (in shares)		0		0
Predecessor [Member] | Stock Options [Member]
Denominator:
Dilutive effect (in shares)		0		0
Predecessor [Member] | Warrants [Member]
Denominator:
Dilutive effect (in shares)		0		0

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 14, 2016	Jun. 16, 2015	Jun. 14, 2016	Jun. 16, 2015
Successor [Member]
Income Tax Disclosure [Line Items]
Effective income tax rates (percent)	40.50%		40.80%
Provision for income taxes	$ 3,311		$ 5,453
Predecessor [Member]
Income Tax Disclosure [Line Items]
Effective income tax rates (percent)		(27.20%)		(116.60%)
Provision for income taxes		$ 1,731		$ 2,189

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 14, 2016	Jun. 14, 2016	Dec. 29, 2015
Loss Contingencies [Line Items]
Purchasing commitments contract extended terms		2021
Litigation Case on April 2015
Loss Contingencies [Line Items]
Insurance deductible per claim		$ 250
Successor [Member]
Loss Contingencies [Line Items]
Contractual purchase obligations for goods and services	$ 85,400	85,400
Successor [Member] | Litigation Case on April 2015
Loss Contingencies [Line Items]
Legal defense fees	100	300
Successor [Member] | Insurance Claims [Member]
Loss Contingencies [Line Items]
Reimbursement form insurance claim			$ 300
Successor [Member] | Insurance Claims [Member] | Litigation Case on April 2015
Loss Contingencies [Line Items]
Reimbursement form insurance claim	$ 200	$ 200

XML

Subsequent Events (Details) - Subsequent Event [Member]	Jul. 11, 2016 $ / shares shares
Subsequent Event [Line Items]
Class Of Warrant Or Right, Number Of Shares Received In Exchange For Each Warrant	0.2780
Warrant exercise price per share (in dollars per share) | $ / shares	$ 11.50
Class Of Warrant Or Right, Number Of Shares Received In Exchange Offer	1
Class Of Warrant Or Right, Number Of Warrants Exchanged For Each Share	3.6
Class of Warrant or Right, Number of Warrants Eligible for Exchange Offer, Maximum	6,750,000