Jersey Mike's Subs Inc. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the financial condition and results of operations of Jersey Mike's HoldCo, LLC (collectively with its wholly owned subsidiaries on a consolidated basis, "Jersey Mike's,” the "Company,” "we,” "our,” or "us”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report”) and the audited consolidated financial statements and the related notes as of December 28, 2025 (successor) and for the periods from January 16, 2025 to December 28, 2025 (successor), January 1, 2025 to January 15, 2025 (predecessor) included in our final prospectus (the “IPO Prospectus”) filed with the SEC on July 31, 2026 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to our Registration Statement on Form S-1 (File No. 333-297228) (the “IPO Registration Statement”) filed in connection with our initial public offering (the “IPO”). In addition to historical information, this discussion and analysis contain forward-looking statements based on current expectations that involve risks, uncertainties, and assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Risk Factors” in our IPO Prospectus and “Forward-Looking Statements” herein. The following discussion and analysis reflects the historical results of operations and financial position of Jersey Mike’s HoldCo, LLC prior to the Reorganization Transactions (as defined herein) on July 29, 2026. We operate on a 52- or 53-week fiscal year ending on the last Sunday of each calendar year. Our fiscal quarters are comprised of 13 weeks, with the exception of the fourth quarter of a 53-week year, which contains 14 weeks. Refer to "Factors Affecting the Comparability of our Results of Operations" for further information. Overview Jersey Mike’s is a high-growth franchisor of fast casual, submarine-style sandwich restaurants specializing in authentic, hand-crafted, craveable subs. Built over 70 years on one uncompromising belief – that a truly great sub sandwich can change your day and that a truly great brand changes its community – Jersey Mike’s is now one of the largest and fastest-growing limited-service restaurant brands based on U.S. systemwide sales and unit growth, with 3,378 stores across all 50 states and two countries (U.S. and Canada) – nearly all of which are franchised. We believe our sub sandwiches have a broad appeal and serve a diverse range of customers across the lunch, snack, and dinner dayparts. Since 1956, we have embraced the idea that great food and meaningful impact go hand in hand, built on the highest quality ingredients, authentic relationships, and a commitment to giving back to the communities we serve. We carefully consider every aspect of what we do – every slice, every sandwich, every store. We proof, score, and bake our bread fresh every morning. Fresh vegetables are hand cut daily in-store. Meats and premium cheeses are sliced fresh to order. Subs are finished with our classic Mike’s Way preparation which includes fresh onions, crisp lettuce, juicy tomatoes, sprinkled with the “Juice,” our signature blend of red wine vinegar and oil, and then seasoned to perfection. Our delicious hot subs are made with fresh-grilled proteins, such as steak, chicken and even freshly cooked bacon. That same attention and care carry through to how we engage with and support our communities. This commitment is exemplified by Jersey Mike’s Month of Giving. We run a giving campaign all month in all participating stores and on our app, and we donate 100% of our sales on the last Wednesday of March to local and national charities across the U.S. and Canada. Our franchise owners are both large multi-store operators and smaller, single-store franchise owners who are deeply invested in their local communities. We have developed an operating platform designed to support compelling unit-level economics for our franchise owners, which supports reinvestment in new store development and continued systemwide growth for the Jersey Mike’s brand. This platform includes marketing and digital capabilities aimed at customer acquisition and engagement, as well as supply chain, technology, and operational processes intended to support consistency and efficiency at the store level. We primarily generate revenue from our franchise system including royalties and advertising revenue, which are a percentage of sales that are collected from franchise owners over the course of the term of the franchise agreement. Other sources of revenue include supplier program payments, technology fees, franchise fees and gift card breakage revenue. 22 Tab le of Contents Highlights for the thirteen weeks ended June 28, 2026 compared to the thirteen weeks ended June 29, 2025 • System-wide sales of $1.210 billion increased 10% • 83 new store openings, with net unit growth of 8% • AUVs of $1.376 million • Same-Store sales growth of 2.3% • Digital sales represented 43% of system-wide sales • Total revenue grew 10% to $208 million vs. $189 million in the prior year • Net income of $37 million, a decrease of 37% from $59 million • Adjusted EBITDA growth of 7% to $114 million Factors Affecting the Comparability of our Results of Operations Initial Public Offering On July 29, 2026, our IPO Registration Statement was declared effective by the SEC, and our Class A common stock began trading on the NYSE on July 30, 2026. On July 31, 2026, we completed the offering of 43,478,261 shares of Class A common stock, par value $0.0001 per share (the “Class A common stock”), 29,695,652 of which were sold by certain of our pre-IPO owners consisting of entities associated with Blackstone Inc. (the “selling stockholders”) for cash consideration of $21.85 per share (net of underwriting discounts). As contemplated in the IPO Prospectus, we used the proceeds (net of underwriting discounts) from the issuance of 13,782,609 shares of Class A common stock of approximately $301 million to purchase an equivalent number of newly issued Common Units from Jersey Mike's HoldCo, LLC, which Jersey Mike’s Holdings in turn used on August 17, 2026 to repay a portion of the outstanding indebtedness totaling $301 million under the Series 2026-1 Notes, consisting of $46 million in aggregate principal amount of our $250 million Series 2026-1 Notes, and $255 million aggregate principal amount of our $510 million Series 2026-1A Notes. On August 24, 2026, the underwriters exercised their option to purchase 2,572,560 additional shares of Class A common stock at a price of $21.85 per share (net of underwriting discounts). We did not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders (including sales pursuant to the underwriters’ option to purchase additional shares from the selling stockholders). Reorganization Transactions In connection with the completion of the IPO, we completed a reorganization into a holding corporation structure whereby Jersey Mike’s Subs Inc. became a holding corporation of which the principal asset is a controlling interest in Jersey Mike’s Holdings. As the managing member of Jersey Mike’s Holdings, Jersey Mike’s Subs Inc. operates and controls all the business and affairs of Jersey Mike’s Holdings and, through Jersey Mike’s Holdings and its subsidiaries, conducts our business (collectively, the “Reorganization Transactions”). For additional information, see “Organizational Structure—Reclassification and Amendment and Restatement of the Limited Liability Company Agreement of Jersey Mike’s Holdings” in our IPO Prospectus. Following the completion of the IPO, we have incurred and will continue to incur additional costs associated with operating as a public company. These costs include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company. In addition, following the completion of the IPO, we have begun to incur stock-based compensation expense associated with awards that vest upon our Sponsor achieving certain investment return metrics. For additional information, see “Unaudited Pro Forma Condensed Consolidated Financial Information—Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information—Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations—Reorganization Transactions and Offering Transactions Adjustments” in our IPO Prospectus. In addition, in connection with the Reorganization Transactions and the IPO, we entered into the tax receivable agreement with certain of the pre-IPO owners as described under “Certain Relationships and Related Person Transactions—Tax Receivable Agreement” in our IPO Prospectus. 23 Tab le of Contents Fiscal Calendar and Seasonality On December 12, 2025, our board of directors approved a change in our fiscal year end from December 31 to a 52/53-week fiscal year that ends on the last Sunday of the calendar year. This change is effective for fiscal year ended December 28, 2025 and applied prospectively. Prior-period operating results were not adjusted and remain presented on a calendar basis. While the shift affects comparability of fiscal quarters and the annual period for the year ended December 28, 2025, the impact is not material. Due to the fiscal year change, the year ended December 28, 2025 contained 362 days (comprised of 347 days in the Successor period and 15 days in the Predecessor period). Going forward, our fiscal quarters are comprised of 13 weeks, with the exception of the fourth quarter of a 53-week year, which contains 14 weeks. Fiscal year 2026 contains 52 weeks (364 days). Our business is subject to seasonal fluctuations in that our store sales are typically nominally higher during the summer months affecting the second and third quarters, and nominally lower in the winter months, affecting the first and fourth quarters. Key Performance Measures In assessing the performance of our business, in addition to considering a variety of measures in accordance with GAAP, our management team also considers a variety of key performance measures and non-GAAP financial measures. We believe these key performance measures and non-GAAP measures provide useful information to users of our financial statements in understanding and evaluating our results of operations in the same manner as our management team. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. See “—Non-GAAP Financial Measures” below for a reconciliation of Adjusted EBITDA with the most directly comparable financial measure presented in accordance with GAAP. The key performance measures, some of which are non-GAAP financial measures, used by our management to evaluate our performance are presented below. Systemwide Sales Represents net sales for all Jersey Mike’s stores. This measure allows management to better assess our overall store performance, the health of our brand and the strength of our market position compared to competitors. Our systemwide sales growth is driven by the number and sales volume of new store openings as well as Same-Store Sales Growth. Note that Systemwide Sales do not reflect our revenue and should not be viewed as a substitute for Total revenues discussed below. Same-Store Sales Growth Represents the change in year-over-year sales for the same store base on a constant-currency basis. We define the same-store base to include those traditional stores (whether company-owned or franchised) open for at least 425 days (14 calendar months). This measure highlights the performance of existing traditional stores, while excluding the impact of new traditional store openings and permanent closures. Same-Store Sales Growth is driven by increases in transactions and average check. Average check increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher-priced items. Non-traditional stores, which are not included in Same-Store Sales Growth, include locations or operating models materially different than a standard Jersey Mike’s location, including kiosks, airports, colleges, commissaries, food courts, entertainment venues, etc., which make comparability year-over-year difficult or not meaningful. Digital sales mix Represents the percentage of Systemwide Sales that are generated through our digital channels (mobile app, online ordering, and third-party delivery) and measures the performance of our investments made in our digital platform and partnerships with third-party delivery partners. Average Unit Volume (AUV) Represents (i) the trailing 364 days sales of stores in the comparable store base, divided by (ii) the number of operating days of comparable stores in the same period, multiplied by (iii) 364. We use AUV to assess and understand the overall performance of stores in our system, as well as the profitability of our franchise owners. AUV is impacted by changes in guest traffic, menu prices and product mix. Net Store Growth Represents (i) the total number of open stores as of a specific date divided by (ii) total number of open stores in the prior annual period, (iii) minus one. 24 Tab le of Contents New store openings Represents the number of store openings in a period including franchised and company-owned stores. Total stores Represents the number of stores in our system as of the relevant measurement date, including both company-owned and franchised stores and traditional and non-traditional stores. Total revenues Reflects royalty and advertising revenue derived from Systemwide Sales across our franchised store base, supplemented by contributions from company-operated locations, as well as other revenues such as supplier program payments, upfront development and franchise fees, technology fees and gift card income. Adjusted EBITDA Defined as Net income plus (i) interest expense, net of interest income; (ii) income tax expense; (iii) depreciation and amortization; (iv) equity-based compensation and related payroll tax; (v) acquisition-related expenses; (vi) IPO-related expenses; (vii) founder-related discretionary expenses that by their nature have not recurred and are not expected to recur in periods following the Sponsor Acquisition; (viii) Area Director buyouts; and (ix) corporate transition (severance, early contract termination, etc.) and other expenses, which includes gain (loss) on the sale or disposal of assets and extinguishment of debt. Examples of such founder-related discretionary expenses include founder-directed discretionary bonuses and charitable donations. Adjusted EBITDA is a non-GAAP financial measure. See “—Non-GAAP Financial Measures.” The following table sets forth our key performance measures for the periods presented: Thirteen Weeks Ended Twenty-Six Weeks Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Systemwide sales (in billions) $ 1.210 $ 1.101 $ 2.307 $ 2.111 Same-store sales growth 2.3 % 3.6 % 2.0 % 4.2 % Digital sales percentage 43 % 41 % 44 % 42 % Average unit volume (AUV, in millions) $ 1.376 $ 1.354 $ 1.376 $ 1.354 Net store growth 8.1 % 10.0 % 8.1 % 10.0 % New store openings (gross) 83 73 130 132 Total stores (end of period) (a) 3,378 3,124 3,378 3,124 (a) Includes 36 non-traditional stores as of June 28, 2026 and 33 non-traditional stores as of June 29, 2025. T he following table presents the changes in our portfolio for 2026: Domestic Franchised International Franchised Company- owned Total System Store count as of December 28, 2025 3,209 21 26 3,256 Openings 47 — — 47 Closures (3) — — (3) Net transfers (a) (10) — 10 — Store count as of March 29, 2026 3,243 21 36 3,300 Openings 73 9 1 83 Closures (5) — — (5) Net transfers (a) 11 — (11) — Store count as of June 28, 2026 3,322 30 26 3,378 (a) Represents store transfers between franchise owners and the Company 25 Tab le of Contents The following table sets forth our financial results of operations for the periods presented: Successor Predecessor Thirteen Weeks Ended Twenty-Six Weeks Ended June 28, 2026 Period from January 16 to June 29, 2025 Period from January 1 to January 15, 2025 ($ in millions) June 28, 2026 June 29, 2025 Total revenues $ 208 $ 189 $ 393 $ 328 $ 28 Net income (loss) $ 37 $ 59 $ 13 $ 73 $ (4) Adjusted EBITDA $ 114 $ 107 $ 198 $ 163 $ 12 Key Factors Affecting Our Performance Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Key Factors Affecting Our Performance” in our IPO Prospectus for additional information. Components of Results of Operations We have one core business activity and operate in one operating and reportable segment. The components of our results of operations are presented below: Royalties and other revenue Consist of (i) sales-based fees calculated as a percentage of franchised store sales and (ii) other revenue, which primarily includes supplier program payments, technology fees, initial franchise fees and upfront development fees in connection with franchise and area development agreements, and gift card income. Advertising revenue Consist of fees charged to franchise owners based on a percentage of their gross sales. These fees are collected and administered by us to support systemwide brand marketing and advertising, including national and local media campaigns. Although recognized as revenue, these activities are performed for the benefit of the overall brand and franchise system. Company-owned stores sales Represents the revenue from sales of food and beverage products from all company-owned Jersey Mike’s stores. General and administrative expenses Consists of administrative costs, compensation, and other costs associated with corporate and administrative function. Advertising expenses Represents brand-level marketing and advertising on behalf of our franchise owners and the Jersey Mike’s brand. Company-owned store expenses Consist of store-level cost of goods sold (food, beverage and paper costs) as well as labor, occupancy and other operating expenses (i.e. credit card and delivery fees, supplies, utilities, etc.) for all company-owned Jersey Mike’s stores. Depreciation and amortization Consists of amortization of finite-lived intangible assets (principally franchise agreements) and depreciation of fixed assets at both corporate office and company owned stores over their useful lives. Interest income Consists primarily of interest earned on cash and cash equivalents. Interest expense Consists of interest on long-term debt and notes payable as well as the amortization of deferred financing costs and the amortization of fair value adjustments to debt recorded in connection with purchase accounting. Loss on debt extinguishment Consists of the non-cash write-off of unamortized debt issuance costs and debt discount associated with former debt. Other income (expenses), net Consists primarily of the gain (loss) on the sale or disposal of assets. Income tax expense Historically consists of state income taxes. Following the Reorganization Transactions, Jersey Mike’s Subs Inc. is subject to taxation, including federal taxes as a corporation. 26 Tab le of Contents Results of Operations Comparison of the Thirteen Weeks Ended June 28, 2026 and the Thirteen Weeks Ended June 29, 2025 The following table sets forth our results of operations for the periods presented: (in millions) Thirteen Weeks Ended June 28, 2026 Thirteen Weeks Ended June 29, 2025 Revenue: Royalties and other revenues $ 138 $ 124 Advertising revenue 57 54 Company-owned stores sales 13 11 Total revenues 208 189 Operating expenses: General and administrative expenses 66 34 Advertising expenses 54 41 Depreciation and amortization 25 25 Company-owned stores expenses 11 8 Total operating expenses 156 108 Gain on sale of company-owned stores 14 — Operating income 66 81 Interest income (2) (2) Interest expense 31 24 Income before income tax expense 37 59 Income tax expense — — Net income $ 37 $ 59 Adjusted EBITDA $ 114 $ 107 During the thirteen weeks ended June 28, 2026, royalties and other revenue totaled $138 million, increasing $14 million, or 11% year-over-year. Advertising revenue was $57 million, increasing $3 million, or 6% year-over-year. The growth in both revenue streams was driven by Net Store Growth of 8.1% and Same-Store Sales Growth of 2.3% with Same-Store Sales Growth primarily driven by transaction growth. Advertising revenue increased less than royalties and other revenue primarily as a result of changes to our delivery strategy at the end of 2025 wherein we no longer collect advertising revenue on third-party delivery markups. General and administrative expenses were $66 million during the thirteen weeks ended June 28, 2026, increasing $32 million, or 94% year-over-year. This increase includes $20 million of incremental expenses associated with Area Director buyouts (see Note 2, Summary of Significant Accounting Policies), $7 million in IPO-related expenses, and $6 million of incremental corporate transition expenses. Absent these items, general and administrative expenses were consistent with the prior year, as variable costs associated with our revenue growth and $3 million in equity-based compensation expense, were partially offset by $8 million in lower expenses related to our prior area director expenses program as a result of our transition to an internally-staffed franchise support model. Advertising expenses were $54 million during the thirteen weeks ended June 28, 2026, increasing by $13 million, or 32% year-over-year. The increase primarily reflects higher contributions by franchise owners, which were deployed into sales-generating marketing investments, as well as the timing of digital marketing spend as we execute against our strategy to shift toward higher-return initiatives. During the thirteen weeks ended June 28, 2026, net income was $37 million, compared to net income of $59 million in the prior year, decreasing $22 million, or 37% year-over-year. The decrease was primarily driven by higher general and administrative expenses and advertising expenses previously mentioned, as well as higher net 27 Tab le of Contents interest expense; these increases were partially offset by our revenue growth and a $14 million gain on sale of company-owned stores this quarter. Comparison of the Twenty-Six Weeks Ended June 28, 2026 (Successor), the Period from January 1 to January 15, 2025 (Predecessor) and the Period from January 16 to June 29, 2025 (Successor) The following table sets forth our results of operations for the periods presented: Successor Predecessor Twenty-Six Weeks Ended June 28, 2026 Period from January 16 to June 29, 2025 Period from January 1 to January 15, 2025 Revenue: Royalties and other revenues $ 260 $ 216 $ 19 Advertising revenue 108 94 7 Company-owned stores sales 25 18 2 Total revenues 393 328 28 Operating expenses: General and administrative expenses 144 73 19 Advertising expenses 115 85 8 Depreciation and amortization 51 46 — Company-owned stores expenses 19 14 1 Total operating expenses 329 218 28 Gain on sale of company-owned stores 14 — — Operating income 78 110 — Interest income (3) (5) (1) Interest expense 61 42 5 Loss on debt extinguishment 7 — — Income (loss) before income tax expense 13 73 (4) Income tax expense — — — Net income (loss) $ 13 $ 73 $ (4) Adjusted EBITDA $ 198 $ 163 $ 12 During the twenty-six weeks ended June 28, 2026, royalties and other revenue totaled $260 million, increasing $25 million, or 11%, year-over-year. Advertising revenue was $108 million, increasing $7 million, or 7% year-over-year. The growth in both revenue streams was driven by Net Store Growth of 8.1% and Same-Store Sales Growth of 2.0% with Same-Store Sales Growth primarily driven by transaction growth. Advertising revenue increased less than royalties and other revenue primarily as a result of changes to our delivery strategy at the end of 2025 wherein we no longer collect advertising revenue on third-party delivery markups. General and administrative expenses were $144 million during the twenty-six weeks ended June 28, 2026, increasing $52 million, or 57%, year-over-year. This increase includes $48 million of incremental expenses associated with Area Director buyouts (see Note 2, Summary of Significant Accounting Policies), $13 million in IPO-related expenses and $9 million of incremental corporate transition and other expenses. Absent these items, general and administrative expenses decreased $18 million, or 20%, year-over-year primarily due to $14 million in lower expenses related to our prior Area Director program as a result of our transition to an internally-staffed franchise support model and $11 million of lower founder-related discretionary expenses, which were partially offset by $6 million in equity-based compensation expense. 28 Tab le of Contents Advertising expenses were $115 million during the twenty-six weeks ended June 28, 2026, increasing by $22 million, or 24% year-over-year. The increase is primarily driven by digital spending in connection with our strategic plan to shift spending to higher-return initiatives. During the twenty-six weeks ended June 28, 2026, net income was $13 million, compared to $69 million in the prior year. The decrease was primarily driven by higher general and administrative expenses and advertising expenses previously mentioned, higher net interest expense, and a $7 million loss on debt extinguishment; these increases were partially offset by our revenue growth and a $14 million gain on sale of company-owned stores this quarter. Non-GAAP Financial Measures Management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods to help investors, securities analysts and other parties better understand underlying trends in our business. The non-GAAP financial measures used by our management to evaluate our performance are presented below. Adjusted EBITDA As previously defined under “—Key Performance Measures,” management uses Adjusted EBITDA to assess operating performance, evaluate trends, and compare results with those of other restaurant companies. We believe this measure provides useful insight into our ability to generate earnings from core operations and to inform decisions related to budgeting, capital allocation, and debt servicing. Adjusted EBITDA is not a liquidity measure and should not be considered as a measure of discretionary cash available to us to reinvest in the growth of our business or to distribute to stockholders or as a measure of cash that will be available to us to meet our obligations. This non-GAAP measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. These limitations include, among others: • Adjusted EBITDA does not reflect period-to-period changes in taxes, income tax expense, or the cash necessary to pay income taxes; • Adjusted EBITDA does not reflect the impact of earnings or cash charges resulting from matters we consider not to be indicative of our ongoing operations; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect financing activities of our business; and • Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, these non-GAAP measures should be viewed as a supplement to, and not substitutes for, GAAP results. To properly and prudently evaluate our business, we encourage you to review the financial statements included elsewhere herein and not rely on a single financial measure to evaluate our business. We also strongly urge you to review the reconciliation of each of these non-GAAP measures to their most comparable GAAP measure. 29 Tab le of Contents The following tables provide reconciliations of the non-GAAP measures to the most directly comparable GAAP financial measures for all periods presented: Successor Predecessor Thirteen Weeks Ended Twenty-Six Weeks Ended June 28, 2026 Period from January 16 to June 29, 2025 Period from January 1 to January 15, 2025 (in millions) June 28, 2026 June 29, 2025 Net income (loss) $ 37 $ 59 $ 13 $ 73 $ (4) Add back: Interest income (2) (2) (3) (5) (1) Interest expense 31 24 61 42 5 Income tax expense — — — — — Loss on extinguishment of debt — — 7 — — Gain on sale of company-owned stores (14) — (14) — — Depreciation and amortization 25 25 51 46 — Equity-based compensation expense (a) 3 — 6 — — Acquisition-related expenses (b) — — — — 1 IPO-related expenses (c) 7 — 13 — — Founder-related discretionary expenses (d) — — — — 11 Area Director buyouts (e) 20 — 52 4 — Corporate transition and other expenses (f) 7 1 12 3 — Adjusted EBITDA $ 114 $ 107 $ 198 $ 163 $ 12 (a) Represents non-cash expense and related payroll taxes associated with equity incentive compensation; included within G&A. (b) Represents costs incurred in connection with the Sponsor Acquisition, included within G&A. (c) Represents legal, consulting, accounting and other professional fees associated with preparing for the IPO, included within G&A. (d) Represents certain historical expenses that are a legacy of the Company’s operations as a private, founder-led organization, including large, founder-directed discretionary bonuses paid to certain individuals and charitable donations, that by their nature have not recurred and are not expected to recur after the Sponsor Acquisition. Included in G&A (e) Represents payments made to third-party Area Directors to terminate certain contracts that mandated payment of a percentage of gross sales for a geographic region. Included in G&A. (f) Represents expenses incurred in connection with restructuring our operations to a corporate-led business, including severance and settlement payments, as well as any gains or losses on the sale or disposal of assets. This includes $6 million of lease-related exit costs related to our corporate office transition for both the thirteen and twenty-six weeks ended June 28, 2026. Liquidity and Capital Resources Our primary sources of liquidity are our cash and cash equivalents, available borrowings under our variable funding notes (“VFN”) facility and cash generated by operating activities. As an asset-light franchisor, our primary non-operational uses of cash include capital expenditures to support technological initiatives, investments in our corporate headquarters, development of a limited number of company-owned stores and debt service. At times, we may also elect to purchase or divest company-operated stores, though we currently have no plans to materially increase the number of company-owned stores. We believe that cash provided by operating activities and existing cash and cash equivalents on hand, together with amounts available under our VFN facility, are sufficient to satisfy our anticipated cash requirements for at least the next twelve months. To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds, such as attempts to raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. We cannot ensure that we could obtain refinancing or additional financing on favorable terms or at all. 30 Tab le of Contents Cash Flows We had cash, cash equivalents and restricted cash of $265 million and $246 million as of June 28, 2026 and December 28, 2025, respectively. The following table summarizes our cash flows for the periods presented: Successor Predecessor (in millions) Twenty-Six Weeks Ended June 28, 2026 Period from January 16 to June 29, 2025 Period from January 1 to January 15, 2025 Net cash and cash equivalents and restricted cash provided by (used in): Operating Activities $ 105 $ (277) $ — Investing Activities (a) (7) (5) 5 Financing Activities (79) (143) 14 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 19 $ (425) $ 19 (a) Capital expenditures, comprising of purchases of property and equipment and capitalized software costs, for the twenty-six weeks ended June 28, 2026 (Successor), for the period from January 16, to June 29, 2025 (Successor), and for the period January 1 to January 15, 2025 (Predecessor) were $4 million, $7 million and none, respectively. Twenty-Six Weeks Ended June 28, 2026 compared to the Twenty-Six Weeks Ended June 29, 2025 Operating Activities : For the twenty-six weeks ended June 28, 2026, we generated $105 million of cash from operating activities, compared to $277 million of cash used in operating activities during the twenty-six weeks ended June 29, 2025, an increase of $382 million. The increase was primarily driven by $411 million of transaction bonuses paid during 2025 under a liability assumed in connection with the Sponsor Acquisition that did not recur in 2026, as well as higher cash generated from net income. These increases were partially offset by $47 million of incremental cash used for Area Director buyouts in 2026. Investing Activities : The increase in net cash used in investing activities for the twenty-six weeks ended June 28, 2026 was driven by the acquisition of 10 franchise-owned stores for $23 million partially offset by the sale of 11 stores for $18 million. Financing Activities : For the twenty-six weeks ended June 28, 2026, net cash used for financing activities was $79 million and principally reflected member distributions of $78 million. For the period ended June 29, 2025, we used $129 million for financing activities primarily reflecting net member distributions of $120 million. Securitized Financing Facilities On December 23, 2019, we entered into a securitization financing arrangement pursuant to which Jersey Mike’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of the Company, issued secured notes under a base indenture (the “Indenture”). The Indenture allows the Master Issuer to issue multiple series of notes (collectively, the “Securitization Notes”). The Securitization Notes are guaranteed by certain subsidiaries of the Company and secured by substantially all assets of the securitization entities, including intellectual property, such as trademarks and software, as well as all franchise agreements and area development agreements, and substantially all related rights associated with the Jersey Mike’s brand (collectively, the “Securitization Assets”). As of June 28, 2026, we had $2,096 million of notes outstanding under this facility with interest rates ranging from 2.49% to 5.64%. In February 2026, we issued $760 million of notes under this facility at fixed rates of 4.95% and 5.48% to refinance existing notes. Interest and principal of all notes are payable quarterly. The nearest final maturity date is February 2052 with the nearest anticipated repayment date of February 2029. We also hold Series 2024-1 Class A-1 Notes, a VFN facility, that permit borrowings of up to $100 million and may be used to issue letters of credit and provide additional liquidity. Borrowings under our VFN bear interest at variable rates based on the prime rate, federal funds rate, or SOFR, in each case plus an applicable margin. The 31 Tab le of Contents facility also includes a commitment fee of 1.25% on the unused portion of the commitment. As of June 28, 2026, we had no borrowings outstanding under the facility and a borrowing capacity of $72 million, which reflects $28 million of letters of credit issued against the VFN primarily related to interest reserve requirements. The Securitization Notes are subject to customary covenants and restrictions for transactions of this type. These provisions include, among other things, requirements that the Master Issuer maintain specified reserve accounts to fund required payments on the Securitization Notes, provisions governing optional and mandatory prepayments (including make-whole payments under certain circumstances), indemnification obligations relating to defects or impairments in the pledged collateral, and operational covenants relating to recordkeeping, reporting, and access to information. The securitization structure also includes restrictions that prioritize payment of principal and interest on the Securitization Notes through the related payment waterfall. The Securitization Notes include provisions that allow for optional principal payments when a specified leverage ratio, which is a measure of outstanding securitization debt (net of certain cash accounts, eligible investments, and amounts available under letters of credit) to net cash flow is less than or equal to 5.0x. This leverage ratio is calculated quarterly and allows the Company to elect whether to make principal payments unless the threshold is exceeded. As of June 28, 2026, our leverage ratio exceeded 5.0x and accordingly, we were required to make total principal payments of $5 million. In connection with the IPO, Jersey Mike’s Subs Inc. used net proceeds of approximately $301 million to acquire an equivalent number of newly issued Common Units from Jersey Mike’s Holdings. On August 17, 2026, Jersey Mike’s Holdings used a portion of the net proceeds to repay approximately $301 million of the outstanding indebtedness under the Series 2026-1 Notes consisting of $46 million in aggregate principal amount of our $250 million Series 2026-1 Notes, and $255 million aggregate principal amount of our $510 million Series 2026-1A Notes. Tax Receivable Agreement In connection with the IPO, Jersey Mike’s Subs Inc. entered into a tax receivable agreement with certain of the pre-IPO owners that provides for the payment by Jersey Mike’s Subs Inc. to such pre-IPO owners of 90% of certain tax benefits, if any, that Jersey Mike’s Subs Inc. actually realizes, or is deemed to realize (calculated using certain assumptions), as a result of certain events. While the amount of existing tax basis and anticipated tax basis adjustments and utilization of tax attributes, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, we expect the payments that Jersey Mike’s Subs Inc. may make under the tax receivable agreement will be substantial. Assuming: (i) a price of $23.00 per share of our Class A common stock; (ii) a constant U.S. federal, state, and local corporate income tax rate of 24.8%; (iii) we will have sufficient taxable income to fully utilize the tax benefits; and (iv) no material changes in tax law, if certain pre-IPO holders of Class A Units and Class B Units who hold Common Units following the reclassification of the partnership interests of Jersey Mike’s Holdings (the "Continuing Unitholders") were to exchange all of the Common Units that they will hold immediately following the IPO, and assuming all Incentive Units are converted to Common Units and subsequently exchanged for shares of Class A common stock, we estimate that we would, as a result of the Reorganization Transactions, the offering of Class A common stock in connection with the IPO and certain related transactions (the “Offering Transactions") and such hypothetical exchange, record a deferred tax asset of approximately $503 million and that the aggregate noncurrent liability we would record based on our estimate of the aggregate amount that Jersey Mike’s Subs Inc. would pay under the tax receivable agreement is approximately $2,084 million. These amounts are estimates and have been prepared for informational purposes only. The actual amount of deferred tax assets and related noncurrent liabilities that we will recognize as a result of any such future exchanges will differ based on, among other things: (i) the amount and timing of future exchanges of Common Units (including Common Units issued upon conversion of vested Incentive Units) by Continuing Unitholders, and the extent to which such exchanges are taxable; (ii) the price per share of our Class A common stock at the time of the exchanges; (iii) the amount and timing of future income against which to offset the tax benefits; and (iv) the tax rates then in effect. See the sections titled “Organizational Structure—Offering Transactions” and “Certain Relationships and Related Person Transactions—Tax Receivable Agreement” in our IPO Prospectus for additional information. 32 Tab le of Contents Critical Accounting Policies and Estimates The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates may require application of management’s most difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be reported using different assumptions. Our most significant accounting estimates are more fully described in our IPO Prospectus in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates", and there have been no material changes to our critical accounting estimates from those disclosed in our IPO Prospectus. Recent Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies, of the Notes to the condensed consolidated financial statements.