What changed in this filing

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Item 1. Financial Statements

2026-05-08 compared with 2025-10-31 · 190 added, 349 removed, 387 unchanged (58% of the section changed)

3 unchanged sentences

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

September 24,

Current assets:

2 unchanged sentences

Prepaid expenses and other current assets

Income tax receivable

Total current assets

1 unchanged sentence

Property and equipment held under finance lease, net

Property and equipment held under operating leases, net ("ROU asset")

Operating lease right-of-use assets

Deferred tax assets

4 unchanged sentences

Accounts payable

Accrued salaries and vacation

Accrued insurance

Accrued income taxes payable

Accrued interest

Other accrued expenses and current liabilities

12 unchanged sentences

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

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

30,455,298 and 29,957,385 shares issued and outstanding as of April 1, 2026 and December 31, 2025, respectively

Additional paid-in-capital

7 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Company-operated restaurant revenue

11 unchanged sentences

Loss on disposal of assets

Gain on recovery of insurance proceeds, net

Loss on disposition of restaurants

Impairment and closed-store reserves

10 unchanged sentences

(Amounts in thousands, except share data)

Thirteen Weeks Ended September 24, 2025

Stockholders’

Balance, June 25, 2025

Stock-based compensation

Issuance of common stock related to restricted shares

Issuance of common stock upon exercise of stock options, net

Shares repurchased for employee tax withholdings

Repurchase of common stock

Repurchase of common stock - excise tax

Forfeiture of common stock related to restricted shares

Balance, September 24, 2025

Thirteen Weeks Ended September 25, 2024

Stockholders’

Balance, June 26, 2024

Stock-based compensation

Issuance of common stock related to restricted shares

Issuance of common stock upon exercise of stock options, net

Shares repurchased for employee tax withholdings

Repurchase of common stock

Repurchase of common stock - excise tax

Forfeiture of common stock related to restricted shares

Balance, September 25, 2024

Thirty-Nine Weeks Ended September 24, 2025

Thirteen Weeks Ended April 1, 2026

Comprehensive

Stockholders’

(Loss) Income

Balance, December 31, 2025

Stock-based compensation

Stock-based compensation expense

Issuance of common stock related to restricted shares

1 unchanged sentence

Shares repurchased for employee tax withholdings

Repurchase of common stock

Repurchase of common stock - excise tax

Forfeiture of common stock related to restricted shares

Balance, September 24, 2025

Thirty-Nine Weeks Ended September 25, 2024

Balance, April 1, 2026

Thirteen Weeks Ended March 26, 2025

Comprehensive

Stockholders’

(Loss) Income

Balance, December 25, 2024

Stock-based compensation

Stock-based compensation expense

Issuance of common stock related to restricted shares

2 unchanged sentences

Repurchase of common stock

( 1,966,229 )

Repurchase of common stock - excise tax

Forfeiture of common stock related to restricted shares

Balance, September 25, 2024

Balance, March 26, 2025

See notes to condensed consolidated financial statements (unaudited).

2 unchanged sentences

(Amounts in thousands)

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

Thirteen Weeks Ended

April 1, 2026

March 26, 2025

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation expense

Loss on disposition of restaurants

Loss on disposal of assets

Gain on recovery of insurance proceeds, net

Amortization of deferred financing costs

6 unchanged sentences

Accounts payable

Accrued salaries and vacation

Accrued insurance

Payment related to tax receivable agreement

Operating lease liabilities

Other accrued expenses and liabilities

Other accrued expenses and current liabilities

Net cash flows provided by operating activities

Cash flows from investing activities:

Proceeds from disposition of restaurants

Proceeds from fire insurance for property and equipment

Purchase of property and equipment

7 unchanged sentences

Repurchases of common stock

Net cash flows used in financing activities

Net cash flows provided by (used in) financing activities

Increase in cash and cash equivalents

1 unchanged sentence

Cash and cash equivalents, end of period

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

Thirteen Weeks Ended

April 1, 2026

March 26, 2025

Supplemental cash flow information

8 unchanged sentences

El Pollo Loco Holdings, Inc.

(“Holdings” or “Company”) is a Delaware corporation headquartered in Costa Mesa, California.

(“Holdings” or the Company) is a Delaware corporation headquartered in Costa Mesa, California.

Holdings and its direct and indirect subsidiaries are collectively referred to herein as the “Company.” The Company’s activities are conducted principally through its indirect wholly-owned subsidiary, El Pollo Loco, Inc.

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

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.

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

The Company’s restaurants, which are located principally in California but also in Arizona, Colorado, Louisiana, Nevada, New Mexico, Texas, Utah, and Washington, specialize in fire-grilling citrus-marinated chicken in a wide variety of contemporary Mexican and LA-inspired entrees, including specialty chicken burritos, chicken quesadillas, chicken tostada salads, chicken tortilla soup, variations on the Company’s Pollo Bowl®, Pollo Salads, and Pollo Fit entrees.

As of April 1, 2026, the Company operated 176 and franchised 329 El Pollo Loco restaurants in the United States.

In addition, as of April 1, 2026, the Company licensed eight restaurants in the Philippines.

Holdings has no material assets or operations.

Holdings and Holdings’ direct subsidiary, EPL Intermediate, Inc.

(“Intermediate”), guarantee EPL’s 2022 Revolver (See Note 5, Long-Term Debt, below) on a full and unconditional basis and Intermediate has no subsidiaries other than EPL.

EPL is a separate and distinct legal entity, and has no obligation to make funds available to Intermediate.

EPL and Intermediate may pay dividends to Intermediate and to Holdings, respectively.

The Company operates as one operating segment.

All significant revenues relate to retail sales of food and beverages through either company-operated or franchised-operated restaurants.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position and results of operations and cash flows for the periods presented.

Interim results of operations are not necessarily indicative of the results that may be achieved for the full year.

The condensed consolidated financial statements and related notes do not include all information and footnotes required by GAAP for annual reports.

The condensed consolidated financial statements and related notes do not include all information and footnotes required by U.S.

GAAP for annual reports.

This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company uses a 52- or 53-week fiscal year ending on the last Wednesday of the calendar year.

The Company uses a 52- or 53-week fiscal year ending on the last Wednesday of each calendar year.

In a 52-week fiscal year, each quarter includes 13 weeks of operations.

In a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations, and the fourth quarter includes 14 weeks of operations.

Every six or seven years, a 53-week fiscal year occurs.

Approximately every five or six years, a 53-week fiscal year occurs.

Fiscal 2026 is a 52-week year ending on December 30, 2026.

Fiscal 2024 was a 52-week year ended on December 25, 2024.

Revenues, expenses, and other financial and operational figures may be elevated in a 53-week year.

Certain prior year amounts in the accompanying condensed consolidated financial statements have been reclassified to conform with the current year presentation.

Holdings has no material assets or operations.

Holdings and Holdings’ direct subsidiary, EPL Intermediate, Inc.

(“Intermediate”), guarantee EPL’s 2022 Revolver (as defined in Note 5 below) on a full and unconditional basis and Intermediate has no subsidiaries other than EPL.

EPL is a separate and distinct legal entity, and has no obligation to make funds available to Intermediate.

EPL and Intermediate may pay dividends to Intermediate and to Holdings, respectively.

Fiscal 2025 was a 53-week year that ended on December 31, 2025.

53-week years may cause revenues, expenses, and other results of operations to be higher due to the additional week of operations.

Principles of Consolidation

2 unchanged sentences

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenue and expenses during the periods reported.

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenue and expenses during the periods reported.

Actual results could materially differ from those estimates.

The Company’s significant estimates include

estimates for impairment of goodwill, intangible assets and property and equipment, insurance reserves, lease accounting matters and contingent liabilities.

Cash and Cash Equivalents

The Company considers all liquid instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.

The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, insurance reserves, lease accounting matters, contingent liabilities, and income tax valuation allowances.

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

As of April 1, 2026, the Company’s total outstanding balance on its Revolver was $ 44.0 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 $ 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.

Based on current operations, the Company believes that its cash flow from operations, available cash of $ 3.9 million at April 1, 2026, 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 $ 6.0 million on its 2022 Revolver resulting in outstanding borrowings of $ 55.0 million as of October 30, 2025.

Subsequent to the quarter-end, the Company borrowed $ 5.0 million and paid down $ 3.0 million on its 2022 Revolver, resulting in outstanding borrowings of $ 46.0 million as of May 7, 2026 .

Concentration of Risk

1 unchanged sentence

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

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 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

The Company’s indefinite-lived intangible assets consist of trademarks.

Goodwill represents the excess of cost over fair value of net identified assets acquired in business combinations accounted for under the purchase method.

The Company does not amortize its goodwill and indefinite-lived intangible assets.

Goodwill resulted from the acquisition of certain franchise locations.

Upon the sale or refranchising of a restaurant, the Company evaluates whether there is a decrement of goodwill.

The amount of goodwill included in the cost basis of the asset sold is determined based on the relative fair value of the portion of the reporting unit disposed of compared to the fair value of the reporting unit retained.

The Company reports as one reporting unit.

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 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.

The Company reviews goodwill for impairment utilizing either a qualitative assessment or a fair value test by comparing the fair value of a reporting unit with its carrying amount.

If the Company decides that it is appropriate to perform a qualitative assessment and concludes that the fair value of a reporting unit more likely than not exceeds its carrying value, no further evaluation is necessary.

If the Company performs the fair value test, the Company will compare the fair value of a reporting unit with its carrying amount, including goodwill.

If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired.

If the carrying amount of a reporting unit exceeds its fair value, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit.

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

An impairment test consists of either a qualitative assessment or a comparison of the fair value of an intangible asset with its carrying amount.

The excess of the carrying amount of an intangible asset over its fair value is recognized as an impairment loss.

The assumptions used in the estimate of fair value are generally consistent with the past performance of the Company’s reporting segment and are also consistent with the projections and assumptions that are used in current operating plans.

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 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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Quoted prices for identical instruments in active markets.

Observable prices for similar instruments in active markets;

quoted prices for identical or similar instruments in markets that are not active;

and model-derived valuations whose inputs or significant value drivers are observable.

Unobservable inputs used when little or no market data is available.

Certain assets and liabilities are measured at fair value on a nonrecurring basis.

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 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.

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.

If the Company concludes that the carrying value of certain property and equipment and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the property and equipment or ROU assets to their estimated fair value.

The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs.

There is uncertainty in the projected undiscounted future cash flows used in the Company’s impairment review analysis, which requires the use of estimates and assumptions.

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 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

When a restaurant is closed, the Company will evaluate the ROU asset for impairment, based on anticipated sublease recoveries.

The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense.

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 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 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.

Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.

On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered.

If, after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by charging to tax expense a reserve for the portion of deferred tax assets which are not expected to be realized.

The Company reviews its filing positions for all open tax years in all U.S.

federal and state jurisdictions where the Company is required to file.

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

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

The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution.

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 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 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 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

In December 2023, the Financial Accounting Standard Board (“FASB”) issued ASU No.

The Company had no suppliers for which amounts due totaled more than 10% of the Company’s accounts payable as of April 1, 2026.

The Company had one supplier to whom amounts due totaled 10.9 % of the Company’s accounts payable as of December 31, 2025.

Purchases from the Company’s largest supplier totaled 29.7 % of total expenses for the thirteen weeks ended April 1, 2026, and 15.1 % of total expenses for the thirteen weeks ended March 26, 2025.

Company-operated and franchise-operated restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.9 % of total revenue for the thirteen weeks ended April 1, 2026, and 71.6 % of total revenue for the thirteen weeks ended March 26, 2025.

Non-financial instruments

The Company’s non-financial instruments, which primarily consist of property and equipment, operating lease right-of-use assets, goodwill and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis.

However, on an annual basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, non-financial instruments are assessed for impairment.

If applicable, the carrying values are written down to fair value.

The Company determined that there were no indicators of potential impairment for its non-financial assets during the thirteen weeks ended April 2, 2026 or during the thirteen weeks ended March 13, 2025.

For the thirteen weeks ended April 1, 2026, the Company recorded an income tax provision of $ 3.3 million, reflecting an estimated effective tax rate of 29.0 %.

For the thirteen weeks ended March 26, 2025, the Company recorded an income tax provision of $ 2.3 million, reflecting an estimated effective tax rate of approximately 29.7 %.

The difference between the 21.0 % statutory rate and the effective tax rate of 29.0 % for the thirteen weeks ended April 1, 2026 is primarily a result of state tax rates based on apportioned income and the impact of non-tax deductible executive compensation, partially offset by the impact of higher stock compensation expense deductible for tax related to vesting of restricted stock awards as compared to the cumulative amount recorded as stock-based compensation expense, and federal targeted job credits.

Summary of Significant Accounting Policies

There have been no changes to our significant accounting policies described in the 2025 Form 10-K filed with the SEC on March 13, 2026 that have had a material impact on our consolidated financial statements and related notes.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied prospectively with the option of retrospective application.

The Company is currently evaluating the impact of adopting ASU 2023-09 on its disclosures.

This ASU amends income tax disclosures primarily related to the rate reconciliation and income taxes paid information, as well as certain other amendments to improve the effectiveness of income tax disclosures.

These changes help investors better:

(1) understand on an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 during the fiscal year ended December 31, 2025 on a retrospective basis.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement Reporting Comprehensive Income/Expense Disaggregation Disclosures” (“ASU 2024-03”).

ASU 2024-03 requires disaggregated disclosure of income statement expenses at interim and annual reporting periods.

In January 2025, the FASB issued ASU No.

2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures:

Clarifying the Effective Date”, which clarifies that the ASU 2024-03 is effective for fiscal year beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 can be adopted prospectively or retrospectively at the option of the Company.

The Company is currently evaluating the impact of adopting ASU 2024-03 on its disclosures.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

This ASU requires new disclosures, in the notes to the financial statements, related to the disaggregation of certain expenses within the income statement.

Additionally, a qualitative description is required of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

Annually, an entity is also required to define and quantify its selling expenses.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is evaluating the potential impact of this guidance on its condensed consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements .

This ASU improves the guidance in Topic 270 by improving the navigability of the required interim disclosures from other topics and clarifying when existing guidance is applicable.

The purpose of this ASU is not to expand or change previous interim reporting guidance;

however, an added principle requires entities to disclose events since the end of the last annual reporting period that have material impact on the entity.

The amendments are effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is evaluating the potential impact of this guidance on its consolidated financial statements.

The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

1 unchanged sentence

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

September 24, 2025

April 1, 2026

December 31, 2025

5 unchanged sentences

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

September 24, 2025

April 1, 2026

December 31, 2025

4 unchanged sentences

Total property and equipment, net

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.

Depreciation and amortization expense was $ 4.3 million for the thirteen weeks ended April 1, 2026 and $ 3.9 million for the thirteen weeks ended March 26, 2025.

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 weeks ended April 1, 2026 and March 26, 2025.

STOCK-BASED COMPENSATION

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 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.

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

As of April 1, 2026, 2,061,677 shares of common stock remained available for issuance under the Incentive Plan.

Total stock-based compensation expense was $ 1.3 million and $ 1.0 million for the thirteen weeks ended April 1, 2026 and March 26, 2025, respectively.

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.

As of April 1, 2026, options to purchase 1,411,481 shares of common stock were outstanding, including 374,653 vested and 1,036,828 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 September 24, 2025 and changes during the thirty-nine weeks ended September 24, 2025 is as follows:

A summary of stock option activity at April 1, 2026 and changes during the thirteen weeks ended April 1, 2026 is as follows:

Weighted-Average

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Forfeited, cancelled or expired

Outstanding – September 24, 2025

Vested and expected to vest at September 24, 2025

Exercisable at September 24, 2025

Outstanding – April 1, 2026

Vested and expected to vest at April 1, 2026

Exercisable at April 1, 2026

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:

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Expected volatility

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Expected dividends

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.

At April 1, 2026, the Company had total unrecognized compensation expense of $ 5.0 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.45 years.

Restricted Shares

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:

A summary of restricted share activity as of April 1, 2026 and changes during the thirteen weeks ended April 1, 2026 is as follows:

Weighted-Average

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Forfeited and cancelled

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.

Unvested shares at April 1, 2026

At April 1, 2026, the Company had unrecognized compensation expense of $ 7.8 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 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

Share Repurchase Program

On November 2, 2023, the Company announced that the Board approved a share repurchase program (“Share Repurchase Program”) under which the Company was authorized to repurchase up to $ 20,000,000 of shares of the Company’s common stock.

Under the Share Repurchase Program, the Company was permitted to repurchase its common stock from time to time, in amounts and at prices that the Company deemed appropriate, subject to market conditions and other considerations.

Pursuant to the Share Repurchase Program, the Company was authorized to effect repurchases using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.

The Share Repurchase Program did not obligate the Company to acquire any particular number of shares.

The Share Repurchase Program expired on March 31, 2025.

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.

A summary of performance share activity as of April 1, 2026 and changes during the thirteen weeks ended April 1, 2026 is as follows:

Weighted-Average

Unvested shares at December 31, 2025

Forfeited and cancelled

Unvested shares at April 1, 2026

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, 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.

Under the 2022 Revolver, Holdings is restricted from making certain payments such as cash dividends or share repurchases, 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.

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Borrowings under the 2022 Revolver may be repaid and reborrowed.

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 interest rate range under the 2022 Revolver was 5.01 % to 7.00 % for the thirteen weeks ended April 1, 2026 , and 5.65 % to 7.75 % for the thirteen weeks ended March 26, 2025 .

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

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.

The Company was in compliance with the financial covenants as of April 1, 2026.

At April 1, 2026, the Company had $ 44.0 million in outstanding borrowing under the 2022 Revolver and one letter of credit in the amount of $ 10.3 million outstanding, and as a result, the Company had $ 95.7 million in borrowing availability.

During the thirteen weeks ended April 1, 2026, the Company had no borrowings, and paid down $ 7.0 million, on the 2022 Revolver.

During the thirteen weeks ended March 26, 2025, the Company borrowed $ 6.0 million and paid down $ 4.0 million, respectively, on the 2022 Revolver.

OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES

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

September 24, 2025

April 1, 2026

December 31, 2025

Accrued insurance

Accrued salaries and vacation

Accrued sales and property taxes

Gift card liability

Loyalty rewards program liability

Accrued advertising

Accrued legal settlements and professional fees

Accrued income taxes payable

Loyalty rewards program liability

Deferred franchise and development fees

Accrued legal settlements and professional fees

Accrued interest

Total other accrued expenses and current liabilities

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

September 24, 2025

April 1, 2026

December 31, 2025

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From time to time, the Company is involved in various claims such as wage and hour and other legal actions that arise in the ordinary course of business.

The outcomes of these actions are not predictable but the Company does not believe that the ultimate resolution of these other actions will have a material adverse effect on its financial position, results of operations, liquidity, or capital resources.

A significant increase in the number of claims, or an increase in amounts owing under successful claims, could materially and adversely affect its business, condensed consolidated financial condition, results of operations, and cash flows.

The outcomes of these actions are not predictable but the Company does not believe that the ultimate resolution of these actions will have a material adverse effect on its financial position, results of operations, liquidity, or capital resources.

A significant increase in the number of claims, or an increase in amounts owing under successful claims, could materially and adversely affect the Company’s business, consolidated financial condition, results of operations, and cash flows.

Purchase Commitments

The Company has long-term beverage supply agreements with certain major beverage vendors.

Pursuant to the terms of these arrangements, marketing rebates are provided to the Company and its franchisees from the beverage vendors based upon the dollar volume of purchases for system-wide restaurants which will vary according to their demand for beverage syrup and fluctuations in the market rates for beverage syrup.

Pursuant to the terms of these arrangements, volume and marketing rebates are provided to the Company and its franchisees from the beverage vendors based upon the dollar volume of purchases for system-wide restaurants which will vary according to their demand for beverage syrup and fluctuations in the market rates for beverage syrup.

These contracts have terms extending through the end of 2032.

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

As of April 1, 2026, the Company’s total estimated commitment to purchase chicken was $ 16.6 million.

Contingent Lease Obligations

As a result of assigning the Company’s interest in obligations under real estate leases in connection with the sale of company-operated restaurants to some of the Company’s franchisees, the Company is contingently liable on three lease agreements.

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

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.

As of April 1, 2026, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessees was $ 10.4 million.

The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at April 1, 2026 was $ 8.1 million.

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

The Company has cross-default provisions with these franchisees that would put them in default of their franchise agreements in the event of non-payment under the leases.

The Company believes that these cross-default provisions reduce the risk that payments will be required to be made under these leases.

The Company has cross-default and indemnification provisions with these franchisees that would put them in default of their franchise agreements and require payment to the Company in the event of non-payment under the leases.

The Company believes that these cross-default and indemnification provisions reduce the risk that payments will be required to be made by the Company under these leases.

Employment Agreements

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

As of April 1, 2026, 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.

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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 thirty-nine weeks ended September 24, 2025 and September 25, 2024.

Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen weeks ended April 1, 2026 and March 26, 2025.

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.

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Weighted-average shares outstanding—basic

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Weighted-average shares outstanding—basic

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Weighted-average shares outstanding—diluted

RELATED PARTY TRANSACTIONS

REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

Nature of products and services

The Company has two revenue streams, company-operated restaurant revenue and franchise-related revenue.

Company-operated restaurant revenue

Revenues from the operation of company-operated restaurants are recognized as food and beverage products are delivered to customers and payment is tendered at the time of sale.

Revenue from company-operated restaurants are recognized as food and beverage products are delivered to customers and payment is tendered at the time of sale.

The Company presents revenue, net of sales-related taxes and promotional allowances.

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

Thirteen Weeks Ended

April 1, 2026

March 26, 2025

Greater Los Angeles area market

Other markets

The Company offers a loyalty rewards program, which awards a customer points for dollars spent.

Customers earn points for each dollar spent and points can be redeemed for multiple redemption options.

If a customer does not earn or use points within a one-year period, their account is deactivated and all points expire.

Points earned prior to January 26, 2026 expire 365 days after a customer completes an eligible transaction to earn them and points earned after January 26, 2026 expire 6 months after a customer completes an eligible transaction to earn them.

When a customer is part of the rewards program, the obligation to provide future discounts related to points earned is considered a separate performance obligation, to which a portion of the transaction price is allocated and recorded as deferred revenue on the balance sheet.

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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 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.

As of April 1, 2026 and December 31, 2025, the revenue allocated to loyalty points that have not been redeemed was $ 1.2 million and $ 1.1 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):

September 24, 2025

September 25, 2024

April 1, 2026

December 31, 2025

Loyalty rewards liability, beginning balance

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Loyalty rewards liability, ending balance

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 expects all loyalty points revenue related to performance obligations that were unsatisfied as of April 1, 2026 to be recognized over a period exceeding six months but less than one year.

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

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The Company recognizes income from gift cards when redeemed by the customer.

Unredeemed gift card balances are deferred and recorded as other accrued expenses on the accompanying condensed consolidated balance sheets.

Unredeemed gift card balances are deferred and recorded within other accrued expenses and current liabilitites on the accompanying condensed consolidated balance sheets.

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

September 24, 2025

April 1, 2026

December 31, 2025

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

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

Franchise and franchise advertising fee revenue

Franchise revenue and franchise advertising fee revenue

Franchise revenue consists of franchise royalties, initial franchise fees, license fees due from franchisees, IT support services, and rental income for subleases to franchisees.

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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 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

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

Greater Los Angeles area market

Other markets

As of April 1, 2026, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.

Contract balances

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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

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

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

The following table 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):

The following table provides information about the change in the franchise contract liability balances during the thirteen weeks ended April 1, 2026 and March 26, 2025 (in thousands):

December 31, 2025

Additional contract liability

Revenue recognized

September 24, 2025

December 27, 2023

Additional contract liability

April 1, 2026

December 25, 2024

Revenue recognized

September 25, 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 September 24, 2025 (in thousands):

Additional contract liability

March 26, 2025

Franchise revenues:

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

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

Significant Assumptions and Judgments

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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.

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however, the Company currently has one facility and 21 equipment leases that are classified as finance leases.

Restaurants are operated under lease arrangements that generally provide for a fixed base rent and, in some instances, contingent rent based on a percentage of gross operating profit or net revenues in excess of a defined amount.

Restaurants are operated under lease arrangements that generally provide for a fixed base rent and, in some instances, contingent rent based on a percentage of restaurant revenue in excess of a defined amount.

Additionally, a number of the Company’s leases have payments that increase at pre-determined dates based on the change in the consumer price index.

For all leases, the Company also reimburses the landlord for non-lease components, or items that are not considered components of a contract, such as CAM, property tax and insurance costs.

While the Company determined not to separate lease and non-lease components, these payments are based on actual costs, making them variable consideration and excluding them from the calculations of the ROU asset and lease liability.

For all leases, the Company also reimburses the landlord for non-lease components, or items that are not considered components of a contract, such as common area maintenance, property tax and insurance costs.

While the Company determined not to separate lease and non-lease components, these payments are based on actual costs, making them variable consideration and therefore excludes them from the calculations of the ROU asset and lease liability.

The initial terms of land and restaurant building leases are generally 20 years , exclusive of options to renew.

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

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.

During the thirteen weeks ended April 1, 2026 and March 26, 2025, the Company reassessed the lease terms on six restaurants and two 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.

As a result of the reassessment, an additional $ 4.6 million and $ 1.4 million, respectively, of ROU asset and lease liabilities were recognized for the thirteen weeks ended April 1, 2026 and March 26, 2025, respectively.

During the thirteen weeks ended April 1, 2026, the Company had one lease commencement resulting in $ 0.8 million of ROU asset and lease liabilities recognized.

For the thirteen weeks ended March 26, 2025, the Company had no lease commencements.

The Company also subleases facilities to certain franchisees and other non-related parties which are also considered operating leases.

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The Company does not have any related party leases.

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.

Leases of equipment primarily consist of restaurant equipment, copiers and vehicles.

The Company did no t record any non-cash impairment charges during either the thirteen weeks ended April 1, 2026 or March 26, 2025.

Leases of equipment primarily consist of restaurant equipment and vehicles.

These leases are fixed payments with no variable component.

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Thirteen Weeks Ended

September 24, 2025

September 25, 2024

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Operating lease cost:

Fixed rent cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Finance lease cost:

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Lease cost – Occupancy and other operating expenses

3 unchanged sentences

Total lease cost

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

During the thirteen weeks ended April 1, 2026 and March 26, 2025, the Company had the following cash and non-cash activities associated with its leases (dollars in thousands):

Thirteen Weeks Ended April 1, 2026

Thirteen Weeks Ended March 26, 2025

Cash paid for amounts included in the measurement of lease liabilities

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Weighted-average discount rate—operating leases

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

Information regarding the Company’s minimum future lease obligations as of April 1, 2026 is as follows (in thousands):

Finance Leases

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The Company has recognized these lease payments in its condensed consolidated statements of income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments was incurred.

The Company is a lessor for certain property, facilities and equipment owned by the Company and leased to others, principally franchisees, under non-cancelable leases with initial terms ranging from three to 20 years .

The Company is a lessor for certain property and facilities owned by the Company and leased to others, principally franchisees, under non-cancelable leases with initial terms ranging from three to 20 years .

These lease agreements generally provide for a fixed base rent and, in some instances, contingent rent based on a percentage of gross operating profit or net revenues.

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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 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

On August 8, 2023, the Board declared a dividend of one preferred share purchase right (a “Right”) for each share of common stock, par value $ 0.01 per share, of the Company (the “Common Shares”) outstanding on August 8, 2023 to the stockholders of record on that date.

In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of August 8, 2023, between the Company and Equiniti Trust Company, LLC, as rights agent.

Each Right entitled the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $ 0.01 per share, of the Company (the “Preferred Shares”) at a price of $ 53.75 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment.

On August 4, 2024, the Board approved and entered into an Amendment to the Rights Agreement (together, the “Amended Rights Agreement”).

Pursuant to the Amended Rights Agreement, the expiration date of the Rights was extended to May 30, 2025 11:59 p.m., Pacific Time, the date that the votes of the stockholders of the Company with respect to the Company’s 2025 annual meeting of stockholders were certified.

The Amended Rights Agreement expired and was terminated by its term on May 30, 2025.

The Company received $ 0.3 million and $ 0.1 million of lease income from company-owned locations for the thirteen weeks ended April 1, 2026 and March 26, 2025.

SEGMENT REPORTING

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(1) company-operated restaurant revenue, (2) franchise revenue, which is comprised primarily of franchise royalties and, to a lesser extent, franchise fees and sublease rental income, and (3) franchise advertising fee revenue.

All significant revenues relate to retail sales of food and beverages through either company-operated or franchised restaurants.

All significant revenues relate to retail sales of food and beverages through either company-operated or franchise-operated restaurants.

The Company determined that it has one operating segment and one reportable segment which is reflected in the Company’s current organizational and management structure.

The accounting policies of the segment are the same as those described in Note 1 “Basis of Presentation and Summary of Accounting Policies”.

The Company’s CODM is the Chief Executive Officer who manages the Company’s operations on a reportable segment basis.

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This approach allows the CODM to assess whether the Company’s operating segment is meeting its financial goals, identify trends and make more informed decisions about resource allocation and performance targets.

When evaluating the Company’s financial performance, the CODM regularly reviews total revenues, segment expenses and consolidated net income as reported on the Consolidated Statements of Operations as well as non-GAAP measures such as restaurant contribution margin and Adjusted EBITDA to allocate Company resources and assess the performance of the Company.

When evaluating the Company’s financial performance, the CODM regularly reviews total revenue, segment expenses and consolidated net income as reported on the Consolidated Statements of Income as well as non-GAAP measures such as restaurant contribution margin and Adjusted EBITDA to allocate Company resources and assess the performance of the Company.

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 September 24, 2025 and September 25, 2024 (in thousands):

The table below is a summary of the segment net income, including significant segment expenses for the thirteen weeks ended April 1, 2026 and March 26, 2025 (in thousands):

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September 24, 2025

September 25, 2024

September 24, 2025

September 25, 2024

April 1, 2026

March 26, 2025

Total revenue

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(1) Other operating expenses are comprised of utilities, repairs and maintenance, advertising, credit card processing fees, delivery service provider fees, restaurant supplies and other restaurant operating costs.

(2) Other segment expenses include loss on disposal of assets, gain on recovery of insurance proceeds, net, loss on disposition of restaurants, and impairment and closed-store reserves.

(2) Other segment expenses include loss on disposal of assets, and impairment and closed-store reserves.

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