What changed in this filing

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Item 1. Financial Statements

2025-10-31 compared with 2025-08-01 · 168 added, 157 removed, 568 unchanged (36% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share and per share data)

September 24,

Current assets:

31 unchanged sentences

Common stock, $ 0.01 par value, 200,000,000 shares authorized;

30,008,692 and 29,839,721 shares issued and outstanding as of June 25, 2025 and December 25, 2024, respectively

29,999,694 and 29,839,721 shares issued and outstanding as of September 24, 2025 and December 25, 2024, respectively

Additional paid-in-capital

7 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Company-operated restaurant revenue

25 unchanged sentences

(Amounts in thousands, except share data)

Thirteen Weeks Ended June 25, 2025

Thirteen Weeks Ended September 24, 2025

Stockholders’

Balance, March 26, 2025

Balance, June 25, 2025

Stock-based compensation

5 unchanged sentences

Forfeiture of common stock related to restricted shares

Balance, June 25, 2025

Thirteen Weeks Ended June 26, 2024

Balance, September 24, 2025

Thirteen Weeks Ended September 25, 2024

Stockholders’

Balance, March 27, 2024

Balance, June 26, 2024

Stock-based compensation

3 unchanged sentences

Repurchase of common stock

( 1,737,786 )

Repurchase of common stock - excise tax

Forfeiture of common stock related to restricted shares

Balance, June 26, 2024

Twenty-Six Weeks Ended June 25, 2025

Balance, September 25, 2024

Thirty-Nine Weeks Ended September 24, 2025

Stockholders’

7 unchanged sentences

Forfeiture of common stock related to restricted shares

Balance, June 25, 2025

Twenty-Six Weeks Ended June 26, 2024

Balance, September 24, 2025

Thirty-Nine Weeks Ended September 25, 2024

Stockholders’

8 unchanged sentences

Forfeiture of common stock related to restricted shares

Balance, June 26, 2024

Balance, September 25, 2024

See notes to condensed consolidated financial statements (unaudited).

2 unchanged sentences

(Amounts in thousands)

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

Cash flows from operating activities:

35 unchanged sentences

Cash and cash equivalents, end of period

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

Supplemental cash flow information

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(“EPL”), which develops, franchises, licenses, and operates quick-service restaurants under the name El Pollo Loco® and operates under one operating segment.

At June 25, 2025, the Company operated 174 and franchised 325 El Pollo Loco restaurants in the United States.

As of June 25, 2025, the Company licenses eight restaurants in the Philippines.

This total reflects the closure of two licensed restaurants during the twenty-six weeks ended June 25, 2025.

At September 24, 2025, the Company operated 174 and franchised 324 El Pollo Loco restaurants in the United States.

As of September 24, 2025, the Company licenses eight restaurants in the Philippines.

This total reflects the closure of two licensed restaurants during the thirty-nine weeks ended September 24, 2025.

Basis of Presentation

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The Company’s principal liquidity and capital requirements are new restaurants, existing restaurant capital investments (remodels and maintenance), interest payments on its debt, lease obligations and working capital and general corporate needs.

At June 25, 2025, the Company’s total debt was $ 69.0 million.

At September 24, 2025, the Company’s total outstanding balance on its Revolver was $ 61.0 million.

The Company’s ability to make payments on its indebtedness and to fund planned capital expenditures depends on available cash and its ability to generate adequate cash flows in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond the Company’s control.

Based on current operations, the Company believes that its cash flow from operations, available cash of $ 9.0 million at June 25, 2025, and the outstanding borrowing availability under the 2022 Revolver will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.

Based on current operations, the Company believes that its cash flow from operations, available cash of $ 10.9 million at September 24, 2025, and the outstanding borrowing availability under the 2022 Revolver will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.

Subsequent Events

Subsequent to the quarter-end, the Company paid down an additional $ 1.0 million net of borrowings on its 2022 Revolver resulting in outstanding borrowings of $ 68.0 million as of July 31, 2025.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted into law in the United States, which contains a broad range of tax reform provisions.

The Company is currently evaluating the provisions of the OBBB Act on its financial position, but does not expect the OBBB Act to have a significant impact to the estimated effective tax rate for fiscal 2025, or the Company’s condensed consolidated financial statements .

Subsequent to the quarter-end, the Company paid down an additional $ 6.0 million on its 2022 Revolver resulting in outstanding borrowings of $ 55.0 million as of October 30, 2025.

Concentration of Risk

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The Company has never experienced any losses related to these balances.

The Company had one supplier for which amounts due totaled 17.5 % of the Company’s accounts payable at June 25, 2025.

The Company had no suppliers for which amounts due totaled more than 10% of the Company’s accounts payable at September 24, 2025.

The Company had one supplier to whom amounts due totaled 19.7 % of the Company’s accounts payable at December 25, 2024.

Purchases from the Company’s largest supplier totaled 23.8 % and 16.0 % of total expenses for the thirteen and twenty-six weeks ended June 25, 2025, respectively, and 24.2 % and 24.4 % of total expenses for the thirteen and twenty-six weeks ended June 26, 2024, respectively.

Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.7 % of total revenue for both the thirteen and twenty-six weeks ended June 25, 2025, and 71.8 % and 71.7 % of total revenue for the thirteen and twenty-six weeks ended June 26, 2024, respectively.

Purchases from the Company’s largest supplier totaled 24.7 % and 18.9 % of total expenses for the thirteen and thirty-nine weeks ended September 24, 2025, respectively, and 24.0 % and 24.3 % of total expenses for the thirteen and thirty-nine weeks ended September 25, 2024, respectively.

Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 72.2 % and 71.9 % of total revenue for the thirteen and thirty-nine weeks ended September 24, 2025, respectively, and 72.5 % and 71.9 % of total revenue for the thirteen and thirty-nine weeks ended September 25, 2024, respectively.

Goodwill and Indefinite Lived Intangible Assets

6 unchanged sentences

The Company reports as one reporting unit.

franchisee, which includes a deduction for the anticipated, future royalties the franchisee will pay the Company associated with the franchise agreement entered into simultaneously with the refranchising transition.

The fair value of the portion of the reporting unit disposed of in a refranchising is determined by reference to the discounted value of the future cash flows expected to be generated by the restaurant and retained by the franchisee, which includes a deduction for the anticipated, future royalties the franchisee will pay the Company associated with the franchise agreement entered into simultaneously with the refranchising transition.

The fair value of the reporting unit retained is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise agreements.

As such, the fair value of the reporting unit retained can include expected cash flows from future royalties from those restaurants currently being refranchised, future royalties from existing franchise businesses and company restaurant operations.

The Company did no t record any decrement to goodwill related to the disposition of restaurants in fiscal 2024 or the twenty-six weeks ended June 25, 2025.

As such, the fair value of the reporting unit retained can include expected cash flows from future

royalties from those restaurants currently being refranchised, future royalties from existing franchise businesses and company restaurant operations.

The Company did no t record any decrement to goodwill related to the disposition of restaurants in fiscal 2024 or the thirty-nine weeks ended September 24, 2025.

The Company performs an annual impairment test for goodwill during the fourth fiscal quarter of each year, or more frequently if impairment indicators arise.

10 unchanged sentences

These assumptions are subject to change as a result of changing economic and competitive conditions.

The Company determined that there were no indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen and twenty-six weeks ended June 25, 2025.

Accordingly, the Company did no t record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen and twenty-six weeks ended June 25, 2025.

The Company determined that there were no indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 24, 2025.

Accordingly, the Company did no t record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended September 24, 2025.

Fair Value Measurements

8 unchanged sentences

In other words, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances (e.g., when there is evidence of impairment).

There were no non-financial instruments measured at fair value on a nonrecurring basis as of and for the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024.

There were no non-financial instruments measured at fair value on a nonrecurring basis as of and for the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024.

Impairment of Property and Equipment and ROU Assets

The Company reviews its property and equipment and right-of-use assets (“ROU assets”) for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain property and equipment and ROU assets may not be recoverable.

The Company considers a triggering event, related to property and equipment assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s average unit volume (“AUV”) for the last twelve months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.

The Company considers a triggering event, related to

property and equipment assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s average unit volume (“AUV”) for the last twelve months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.

Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been closed or subleased and future estimated sublease income is less than current lease payments.

3 unchanged sentences

If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

The Company determined that triggering events occurred for certain stores during the twenty-six weeks ended June 25, 2025 that required an impairment review of certain of the Company’s property and equipment and ROU assets.

Based on the results of this analysis, the Company did no t record any non-cash impairment charges for the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024.

The Company determined that triggering events occurred for certain stores during the thirty-nine weeks ended September 24, 2025 that required an impairment review of certain of the Company’s property and equipment and ROU assets.

Based on the results of this analysis, the Company did no t record any non-cash impairment charges for the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024.

Closed-Store Reserves

2 unchanged sentences

Additionally, any property tax and common area maintenance (“CAM”) payments relating to closed restaurants are included within closed-store expense.

During both the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024, the Company recognized less than $ 0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed location.

During both the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, the Company recognized less than $ 0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed location.

Gain on Recovery of Insurance Proceeds and Lost Profits

During the twenty-six weeks ended June 26, 2024, the Company recognized gains of less than $ 0.1 million related to the reimbursement of property and equipment and expenses.

The gain on recovery of insurance proceeds and lost profits, net of the related costs, is included in the accompanying condensed consolidated statements of income, for the twenty-six weeks ended June 26, 2024, as a reduction of company restaurant expenses.

During the thirty-nine weeks ended September 25, 2024, the Company recognized gains of less than $ 0.1 million related to the reimbursement of property and equipment and expenses.

The gain on recovery of insurance proceeds and lost profits, net of the related costs, is included in the accompanying condensed consolidated statements of income, for the thirty-nine weeks ended September 25, 2024, as a reduction of company restaurant expenses.

Loss on Disposition of Restaurants

During the thirty-nine weeks ended September 25, 2024, the Company completed the sale of one restaurant within California to an existing franchisee due to an expiring lease term on April 30, 2024.

This sale resulted in cash proceeds of $ 0.1 million and a net loss on sale of restaurant of less than $ 0.1 million during the thirty-nine weeks ended September 25, 2024.

The provision for income taxes, income taxes payable and deferred income taxes is determined using the asset and liability method.

5 unchanged sentences

When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities.

The term “more likely than not” means a likelihood of more than 50 percent.

The term “more likely than not” means a likelihood of more than

Otherwise, the Company may not recognize any of the potential tax benefit associated with the position.

1 unchanged sentence

Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained.

The final resolution of uncertain

tax positions could result in adjustments to recorded amounts and may affect the Company’s condensed consolidated financial position, results of operations, and cash flows.

The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect the Company’s condensed consolidated financial position, results of operations, and cash flows.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

The Company had no accrual for interest or penalties at June 25, 2025 or at December 25, 2024.

The Company did no t recognize interest or penalties during the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024, since there were no material unrecognized tax benefits.

The Company had no accrual for interest or penalties at September 24, 2025 or at December 25, 2024.

The Company did no t recognize interest or penalties during the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, since there were no material unrecognized tax benefits.

Management believes no significant changes to the amount of unrecognized tax benefits will occur within the next twelve months.

For the thirteen weeks ended June 25, 2025, the Company recorded an income tax provision of $ 3.0 million, reflecting an estimated effective tax rate of 29.6 %.

For the thirteen weeks ended June 26, 2024, the Company recorded an income tax provision of $ 3.2 million, reflecting an estimated effective tax rate of approximately 29.3 %.

For the twenty-six weeks ended June 25, 2025, the Company recorded an income tax provision of $ 5.3 million, reflecting an estimated effective tax rate of approximately 29.7 %.

For the twenty-six weeks ended June 26, 2024, the Company recorded an income tax provision of $ 5.4 million, reflecting an estimated effective tax rate of approximately 28.4 %.

The difference between the 21.0 % statutory rate and the effective tax rate of 29.7 % for the twenty-six weeks ended June 25, 2025 is primarily a result of state taxes, the impact of non-tax deductible executive compensation, and the impact of lower stock compensation expense related to vesting of restricted stock awards deductible for tax as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by a federal Work Opportunity Tax Credit benefit .

For the thirteen weeks ended September 24, 2025, the Company recorded an income tax provision of $ 3.0 million, reflecting an estimated effective tax rate of 28.8 %.

For the thirteen weeks ended September 25, 2024, the Company recorded an income tax provision of $ 2.4 million, reflecting an estimated effective tax rate of approximately 28.1 %.

For the thirty-nine weeks ended September 24, 2025, the Company recorded an income tax provision of $ 8.3 million, reflecting an estimated effective tax rate of approximately 29.3 %.

For the thirty-nine weeks ended September 25, 2024, the Company recorded an income tax provision of $ 7.8 million, reflecting an estimated effective tax rate of approximately 28.3 %.

The difference between the 21.0 % statutory rate and the effective tax rate of 29.3 % for the thirty-nine weeks ended September 24, 2025 is primarily a result of state taxes, the impact of non-tax deductible executive compensation, and the impact of lower stock compensation expense related to vesting of restricted stock awards deductible for tax as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by a federal Work Opportunity Tax Credit benefit .

Recently Issued Accounting Pronouncements

16 unchanged sentences

Prepaid expenses and other current assets consist of the following (in thousands):

June 25, 2025

September 24, 2025

December 25, 2024

5 unchanged sentences

The costs and related accumulated depreciation and amortization of major classes of property and equipment are as follows (in thousands):

June 25, 2025

September 24, 2025

December 25, 2024

4 unchanged sentences

Total property and equipment, net

Depreciation and amortization expense was $ 3.9 million for both the thirteen weeks ended June 25, 2025 and June 26, 2024, and $ 7.8 million and $ 7.7 million for the twenty-six weeks ended June 25, 2025 and June 26, 2024, respectively.

Based on the Company’s review of its property and equipment assets for impairment, the Company did no t record any non-cash impairment charges for the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024.

Depreciation and amortization expense was $ 4.0 million for both the thirteen weeks ended September 24, 2025 and September 25, 2024, and $ 11.8 million for both the thirty-nine weeks ended September 24, 2025 and September 25, 2024.

Based on the Company’s review of its property and equipment assets for impairment, the Company did no t record any non-cash impairment charges for the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024.

See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies – Impairment of Property and Equipment and ROU Assets” for additional information.

STOCK-BASED COMPENSATION

Stock Options

Pursuant to the Company’s 2018 Omnibus Equity Incentive Plan (as amended, the “Incentive Plan”), the Company grants stock options (“options”), restricted stock units, performance-based stock units (“PSUs”) and restricted stock to the Company’s employees, officers, directors, and other eligible participants.

Pursuant to the Company’s 2018 Omnibus Equity Incentive Plan (as amended, the “Incentive Plan”), the Company grants stock options (“options”), restricted stock units, performance-based restricted stock units (“PSUs”) and restricted stock to the Company’s employees, officers, directors, and other eligible participants.

On May 29, 2025, the Company’s stockholders approved an amendment to the Incentive Plan, under which the new aggregate share limit was increased by 1,250,000 shares for a total of 4,500,000 shares.

As of June 25, 2025, 1,397,957 shares of common stock remained available for issuance under the Incentive Plan.

At June 25, 2025, options to purchase 1,437,961 shares of common stock were outstanding, including 465,605 vested and 972,356 unvested options.

As of September 24, 2025, 1,425,040 shares of common stock remained available for issuance under the Incentive Plan.

Total stock-based compensation expense was $ 1.4 million and $ 4.1 million for the thirteen and thirty-nine weeks ended September 24, 2025, and $ 1.1 million and $ 2.9 million for the thirteen and thirty-nine weeks ended September 25, 2024.

Stock Options

At September 24, 2025, options to purchase 1,414,613 shares of common stock were outstanding, including 461,847 vested and 952,766 unvested options.

Unvested options vest over time;

however, pursuant to the Incentive Plan, upon a change in control, the Company’s Board of Directors (the “Board”) may accelerate vesting.

A summary of stock option activity at June 25, 2025 and changes during the twenty-six weeks ended June 25, 2025 is as follows:

A summary of stock option activity at September 24, 2025 and changes during the thirty-nine weeks ended September 24, 2025 is as follows:

Weighted-Average

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Forfeited, cancelled or expired

Outstanding – June 25, 2025

Vested and expected to vest at June 25, 2025

Exercisable at June 25, 2025

Outstanding – September 24, 2025

Vested and expected to vest at September 24, 2025

Exercisable at September 24, 2025

The fair value of each stock option was estimated on the grant date using an exercise price of the closing stock price on the day prior to date of grant and the Black-Scholes option-pricing model with the following weighted average assumptions:

June 25, 2025

June 26, 2024

September 24, 2025

September 25, 2024

Expected volatility

2 unchanged sentences

Expected dividends

At June 25, 2025, the Company had total unrecognized compensation expense of $ 4.4 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.75 years.

At September 24, 2025, the Company had total unrecognized compensation expense of $ 4.0 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.51 years.

Restricted Shares

A summary of restricted share activity as of June 25, 2025 and changes during the twenty-six weeks ended June 25, 2025 is as follows:

A summary of restricted share activity as of September 24, 2025 and changes during the thirty-nine weeks ended September 24, 2025 is as follows:

Weighted-Average

1 unchanged sentence

Forfeited and cancelled

Unvested shares at June 25, 2025

Unvested shares at June 25, 2025, included 767,293 unvested restricted shares and 30,254 performance-based restricted stock units that have been earned based on performance targets but still unvested.

At June 25, 2025, the Company had unrecognized compensation expense of $ 6.9 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.47 years.

Unvested shares at September 24, 2025

Unvested shares at September 24, 2025, included 737,936 unvested restricted shares and 30,254 performance-based restricted stock units that have been earned based on performance targets but still unvested.

At September 24, 2025, the Company had unrecognized compensation expense of $ 6.0 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.29 years.

Performance-Based Restricted Stock Units

During the twenty-six weeks ended June 25, 2025, the Company granted 159,948 restricted stock units under the Incentive Plan subject to performance-based vesting conditions based on revenue and restaurant contribution margin to certain officers.

Each PSU has a grant date fair value of $ 10.42 and a vesting period from the grant date through the date the audit of the Company's fiscal 2027 financial results is expected to be completed.

During the twenty-six weeks ended June 25, 2025, 11,996 PSUs were forfeited.

The fair value of each PSU is expensed based on management's current estimate of the level that the performance goal will be achieved.

As of June 25, 2025, based on the target level of performance, the total unrecognized compensation expense related to unvested PSUs was $ 1.6 million, which is expected to be recognized over a weighted-average period of 2.55 years.

Total stock-based compensation expense was $ 1.7 million and $ 2.7 million for the thirteen and twenty-six weeks ended June 25, 2025, and $ 0.9 million and $ 1.8 million for the thirteen and twenty-six weeks ended June 26, 2024.

During the thirty-nine weeks ended September 24, 2025, the Company granted 159,948 restricted stock units under the Incentive Plan subject to performance-based vesting conditions based on revenue and restaurant contribution margin to certain officers.

PSUs have a grant date fair value of $ 10.42 and a vesting period from the grant date through the date the audit of the Company's fiscal 2027 financial results is expected to be completed.

During the thirty-nine weeks ended September 24, 2025, 11,996 PSUs were forfeited.

The fair value of PSUs are expensed based on management's current estimate of the level that the performance goal will be achieved.

As of September 24, 2025, based on the target level of performance, the total unrecognized compensation expense related to unvested PSUs was $ 1.4 million, which is expected to be recognized over a weighted-average period of 2.45 years.

Share Repurchases

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The Share Repurchase Program expired on March 31, 2025.

For the thirteen and twenty-six weeks ended June 25, 2025, the Company repurchased 3,479 and 163,229 shares of common stock, respectively, under the Share Repurchase Program, using open market purchases, for total consideration of less than approximately $ 0.1 million and $ 1.8 million, respectively.

The Company did no t repurchase any shares of its common stock during the thirteen weeks ended September 24, 2025.

For the thirty-nine weeks ended September 24, 2025, the Company repurchased 163,229 shares of common stock under the Share Repurchase Program, using open market purchases, for total consideration of $ 1.8 million.

For the thirteen and thirty-nine weeks ended September 25, 2024, the Company repurchased 92,043 and 431,926 shares of common stock, respectively, under the Share Repurchase Program, using open market purchases, for total consideration of approximately $ 1.1 million and $ 4.3 million, respectively.

Other Share Repurchases

During the thirty-nine week period ended September 25, 2024, the Company repurchased 1,534,303 shares for a total purchase price of $ 15.0 million under the Stock Repurchase Agreement with FS Equity Partners V, L.P.

and FS Affiliates V, L.P.

LONG-TERM DEBT

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The obligations of Holdings, EPL and Intermediate under the 2022 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets subject to certain customary exceptions.

Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $ 1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates) of the Company upon death, disability, or termination of employment, (ii) pay under its Tax Receivable Agreement, and (iii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $ 0.5 million in any 12-month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $ 2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $ 5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2022 Revolver.

Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $ 1.0 million per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates) of the Company upon death, disability, or termination of employment, and (ii) so long as no default or event of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by directors, officers and management, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options, (b) pay up to $ 0.5 million in any 12-month consecutive period to redeem, repurchase or otherwise acquire equity interests of any subsidiary that is not a wholly-owned subsidiary from any holder of equity interest in such subsidiary, (c) pay up to $ 2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (d) make up to $ 5.0 million in other restricted payments per year, and (e) make other restricted payments, subject to its compliance, on a pro forma basis, with (x) a lease-adjusted consolidated leverage ratio not to exceed 4.25 times and (y) the financial covenants applicable to the 2022 Revolver.

Borrowings under the 2022 Credit Agreement (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either the secured overnight financing rate (“SOFR”) or a base rate, plus, for each rate, a margin determined in accordance with a lease-adjusted consolidated leverage ratio-based pricing grid.

2 unchanged sentences

Borrowings under the 2022 Revolver may be repaid and reborrowed.

The interest rate range under the 2022 Revolver was 5.67 % to 5.93 % and 5.65 % to 7.75 % for the thirteen and twenty-six weeks ended June 25, 2025, respectively, and 6.67 % to 6.94 % and 6.67 % to 6.96 % for the thirteen and twenty-six weeks ended June 26, 2024 , respectively.

The interest rate range under the 2022 Revolver was 5.63 % to 5.96 % and 5.63 % to 7.75 % for the thirteen and thirty-nine weeks ended September 24, 2025, respectively, and 6.52 % to 6.95 % and 6.52 % to 6.96 % for the thirteen and thirty-nine weeks ended September 25, 2024 , respectively.

The 2022 Credit Agreement contains certain customary financial covenants, subject to certain exceptions.

The Company was in compliance with the financial covenants as of June 25, 2025.

At June 25, 2025, the Company had $ 69.0 million in outstanding borrowings under the 2022 Revolver and one letter of credit in the amount of $ 10.3 million outstanding, and as a result, the Company had $ 70.7 million in borrowing availability.

During the thirteen and twenty-six weeks ended June 25, 2025, the Company borrowed $ 2.0 million and $ 8.0 million, respectively, and paid down $ 6.0 million and $ 10.0 million, respectively, on the 2022 Revolver.

During the thirteen and twenty-six weeks ended June 26, 2024, the Company borrowed $ 14.0 million and paid down $ 7.0 million and $ 11.0 million, respectively, on the 2022 Revolver.

The Company was in compliance with the financial covenants as of September 24, 2025.

At September 24, 2025, the Company had $ 61.0 million in outstanding borrowings under the 2022 Revolver and two letters of credit in the amount of $ 10.3 million outstanding, and as a result, the Company had $ 78.7 million in borrowing availability.

During the thirteen and thirty-nine weeks ended September 24, 2025, the Company borrowed $ 1.0 million and $ 9.0 million, respectively, and paid down $ 9.0 million and $ 19.0 million, respectively, on the 2022 Revolver.

thirteen and thirty-nine weeks ended September 25, 2024, the Company paid down $ 11.0 million and $ 22.0 million, respectively, on the 2022 Revolver.

During the thirty-nine weeks ended September 25, 2024, the Company borrowed $ 14.0 million on the 2022 Revolver.

There are no required principal payments prior to maturity of the 2022 Revolver on July 27, 2027.

1 unchanged sentence

Other accrued expenses and current liabilities consist of the following (in thousands):

June 25, 2025

September 24, 2025

December 25, 2024

8 unchanged sentences

Other noncurrent liabilities consist of the following (in thousands):

June 25, 2025

September 24, 2025

December 25, 2024

10 unchanged sentences

These contracts have terms extending through the end of 2032.

At June 25, 2025, the Company’s total estimated commitment to purchase chicken was $ 11.8 million.

At September 24, 2025, the Company’s total estimated commitment to purchase chicken was $ 2.1 million.

Contingent Lease Obligations

1 unchanged sentence

These leases have various terms, the latest of which expires in 2038 .

As of June 25, 2025, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $ 3.7 million.

The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at June 25, 2025 was $ 2.5 million.

As of September 24, 2025, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $ 3.7 million.

The present value of these potential payments discounted at the Company’s estimated

pre-tax cost of debt at September 24, 2025 was $ 2.5 million.

The Company’s franchisees are primarily liable on the leases.

2 unchanged sentences

Employment Agreements

As of June 25, 2025, the Company had employment agreements with three of the officers of the Company.

As of September 24, 2025, the Company had employment agreements with three of the officers of the Company.

These agreements provide for minimum salary levels, possible annual adjustments for cost-of-living changes, and incentive bonuses that are payable under certain business conditions.

4 unchanged sentences

EARNINGS PER SHARE

Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024.

Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024.

Diluted EPS is calculated using the weighted-average number of shares of common stock outstanding and potentially dilutive during the period, using the treasury stock method.

1 unchanged sentence

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Weighted-average shares outstanding—basic

5 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Weighted-average shares outstanding—basic

15 unchanged sentences

A portion of the transaction price is then allocated to loyalty points, if necessary, on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty points terms.

As of June 25, 2025 and December 25, 2024, the revenue allocated to loyalty points that have not been redeemed was $ 1.0 million and $ 0.8 million, respectively, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

As of September 24, 2025 and December 25, 2024, the revenue allocated to loyalty points that have not been redeemed was $ 1.1 million and $ 0.8 million, respectively, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

Changes in the loyalty rewards program liability included in deferred revenue within other accrued expenses and current liabilities on the condensed consolidated balance sheets were as follows (in thousands):

June 25, 2025

December 25, 2024

September 24, 2025

September 25, 2024

Loyalty rewards liability, beginning balance

2 unchanged sentences

Loyalty rewards liability, ending balance

The Company expects all loyalty points revenue related to performance obligations that were unsatisfied as of June 25, 2025 to be recognized within one year .

The Company expects all loyalty points revenue related to performance obligations that were unsatisfied as of September 24, 2025 to be recognized within one year .

The Company sells gift cards to its customers in the restaurants and through selected third parties.

4 unchanged sentences

The gift card liability included in other accrued expenses and current liabilities on the condensed consolidated balance sheets was as follows (in thousands):

June 25, 2025

September 24, 2025

December 25, 2024

2 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Revenue recognized from gift card liability balance at the beginning of the year

9 unchanged sentences

The fixed fee, as determined by the signed development and/or franchise agreement, is due at the time the development agreement is entered into, and/or when the franchise agreement is signed, and does not include a finance component.

The revenue-based royalty fee and revenue-based advertising fee are considered variable consideration and are recognized as revenue as such revenue are earned by the franchisees.

The revenue-based royalty fee and revenue-based advertising fee are considered variable consideration and are recognized as franchise revenue as such revenue are earned by the franchisees.

Both revenue-based fees qualify under the royalty constraint exception, and do not require an estimate of future transaction price.

5 unchanged sentences

As the Company is considered the principal in this relationship, payment received for the hardware is considered revenue, and is received upon transfer of the goods from the Company to the franchisee.

As of June 25, 2025, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.

As of September 24, 2025, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.

The following table presents the Company-operated revenue disaggregated by geographic market:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Greater Los Angeles area market

3 unchanged sentences

The Company receives area development fees from franchisees when they execute multi-unit area development agreements.

Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise agreement.

Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise

Revenue is recognized from these agreements as the underlying performance obligation is satisfied, which is over the term of the agreement.

The following table provides information about the change in the franchise contract liability balances during the twenty-six weeks ended June 25, 2025 and June 26, 2024 (in thousands):

The following table provides information about the change in the franchise contract liability balances during the thirty-nine weeks ended September 24, 2025 and September 25, 2024 (in thousands):

December 25, 2024

1 unchanged sentence

Revenue recognized

June 25, 2025

September 24, 2025

December 27, 2023

1 unchanged sentence

Revenue recognized

June 26, 2024

The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of June 25, 2025 (in thousands):

September 25, 2024

Franchise revenues:

4 unchanged sentences

Additionally, the Company has various contracts with vendors that have been determined to contain an embedded lease in accordance with Topic 842.

As of June 25, 2025, the Company had two leases that it had entered into, but had not yet commenced.

As of September 24, 2025, the Company had one lease that it had entered into, but had not yet commenced.

Significant Assumptions and Judgments

2 unchanged sentences

The Company also made significant assumptions and judgments in determining an appropriate discount rate for property leases.

These included using a consistent discount rate for a portfolio of leases entered into at varying dates, using the full 20-year term of the lease, excluding any options, and using the total minimum lease payments.

These included using a consistent discount rate for a portfolio of leases entered into at varying dates, using the

full 20-year term of the lease, excluding any options, and using the total minimum lease payments.

The Company utilizes a third-party valuation firm in determining the discount rate, based on the above assumptions.

11 unchanged sentences

Furthermore, there are no residual value guarantees and no restrictions imposed by the lease.

During the thirteen and twenty-six weeks ended June 25, 2025, the Company reassessed the lease terms on seven and nine restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew or exercise an option.

This reassessment resulted in an additional $ 5.7 million and $ 7.1 million of ROU asset and lease liabilities for the thirteen and twenty-six weeks ended June 25, 2025, respectively, which were recognized and will be amortized over the new lease term.

During the thirteen and twenty-six weeks ended June 26, 2024, the Company reassessed the lease terms on four and 12 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew or exercise an option.

This reassessment resulted in an additional $ 1.8 million and $ 8.1 million of ROU asset and lease liabilities for the thirteen and twenty-six weeks ended June 26, 2024, respectively, which were recognized and will be amortized over the new lease term.

During the thirteen and thirty-nine weeks ended September 24, 2025, the Company reassessed the lease terms on 10 and 19 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew or exercise an option.

This reassessment resulted in an additional $ 6.9 million and $ 14.0 million of ROU asset and lease liabilities for the thirteen and thirty-nine weeks ended September 24, 2025, respectively, which were recognized and will be amortized over the new lease term.

During the thirteen and thirty-nine weeks ended September 25, 2024, the Company reassessed the lease terms on seven and 19 restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements with useful lives that extend past the current lease expiration, the decision to terminate a lease, or the decision to renew or exercise an option.

This reassessment resulted in an additional $ 4.6 million and $ 12.7 million of ROU asset and lease liabilities for the thirteen and thirty-nine weeks ended September 25, 2024, respectively, which were recognized and will be amortized over the new lease term.

Additionally, as the Company adopted all practical expedients available under Topic 842, no reallocation between lease and non-lease components was necessary.

4 unchanged sentences

The Company does not have any related party leases.

During both the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024, the Company did no t record any non-cash impairment charges.

During both the thirteen and thirty-nine weeks ended September 24, 2025 and September 25, 2024, the Company did no t record any non-cash impairment charges.

See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies – Impairment of Property and Equipment and ROU Assets” for additional information.

5 unchanged sentences

Thirteen Weeks Ended

June 25, 2025

June 26, 2024

September 24, 2025

September 25, 2024

Finance lease cost:

7 unchanged sentences

Total lease cost

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

Finance lease cost:

9 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Lease cost – Occupancy and other operating expenses

3 unchanged sentences

Total lease cost

During the twenty-six weeks ended June 25, 2025 and June 26, 2024, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):

Twenty-Six Weeks Ended June 25, 2025

Twenty-Six Weeks Ended June 26, 2024

During the thirty-nine weeks ended September 24, 2025 and September 25, 2024, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):

Thirty-Nine Weeks Ended September 24, 2025

Thirty-Nine Weeks Ended September 25, 2024

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Finance lease ROU assets

Derecognition of ROU assets due to terminations, impairment or modifications

Other Information

3 unchanged sentences

Weighted-average discount rate—operating leases

Information regarding the Company’s minimum future lease obligations as of June 25, 2025 is as follows (in thousands):

Information regarding the Company’s minimum future lease obligations as of September 24, 2025 is as follows (in thousands):

Finance Leases

19 unchanged sentences

Additionally, there are no related party leases.

The Company received $ 0.1 million of lease income from company-owned locations for both the thirteen weeks ended June 25, 2025 and June 26, 2024.

The Company received $ 0.2 million of lease income from company-owned locations for both the twenty-six weeks ended June 25, 2025 and June 26, 2024.

The Company received $ 0.1 million of lease income from company-owned locations for both the thirteen weeks ended September 24, 2025 and September 25, 2024.

The Company received $ 0.3 million of lease income from company-owned locations for both the thirty-nine weeks ended September 24, 2025 and September 25, 2024.

SHAREHOLDER RIGHTS AGREEMENT

17 unchanged sentences

Segment asset information is not used by the CODM to assess performance and allocate resources.

The table below is a summary of the segment net income, including significant segment expenses for the thirteen and twenty-six weeks ended June 25, 2025 and June 26, 2024 (in thousands):

The table below is a summary of the segment net income, including significant segment expenses for the thirteen and twenty-six weeks ended September 24, 2025 and September 25, 2024 (in thousands):

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 25, 2025

June 26, 2024

June 25, 2025

June 26, 2024

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Total revenue

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements