What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 286 added, 277 removed, 332 unchanged (63% of the section changed)

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We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa Johns system.

In discussions of our business, “Domestic” is defined as within the contiguous United States, “North America” includes Domestic and Canada, and “International” includes the rest of the world other than North America.

Recent Developments and Trends

In 2024, the Company focused on strategic transformation priorities and building a foundation for long term success, while navigating a challenging macroeconomic environment.

We continue to put our efforts and investments towards initiatives that improve our price/value perception and improve our digital and loyalty experience to increase conversion and reduce friction within the customer experience.

Several key areas of focus include:

In 2025, we remained focused on executing our strategic priorities as we position the business for long-term success amidst a challenging and softer consumer environment in North America and a dynamic market internationally.

We continued to steer our efforts and investments towards initiatives that improve our value perception and enhance the customer journey across our digital platforms to increase conversion and reduce friction within the customer experience.

Our key areas of focus include:

Marketing strategy:

In 2024 we activated a new marketing strategy that increased the PJMF contribution rate and made local marketing optional for franchisees, which became effective in the second quarter.

This strategy shift was intended to increase the productivity of franchisees’ marketing contributions by leveraging the scale that national investments deliver.

Additionally, in the first half of 2024 we launched a new brand campaign “Better Get You Some” that was part of our deepened commitment to, and investment in, our new marketing strategy.

Our 2024 investments focused on improving audience segmentation, building consumer loyalty and driving cultural relevance.

We also evolved our messaging and promotions to showcase our BETTER INGREDIENTS.

BETTER PIZZA.

at appropriately-valued price points to improve our overall value perception.

We believe if we maintain an appropriate balance of value offerings and premium products, it will lead to improving sales trends over time.

In 2025, we anticipate spending up to an additional $25 million in marketing investments, including investments in our customer relationship management platform and our loyalty program, when compared with 2024.

This incremental spend will focus on ensuring a strong presence nationally as well as in key regional and local markets while leveraging our data to create more personalized offers for our customers.

We continued investments in our messaging to showcase our BETTER INGREDIENTS.

BETTER PIZZA ® platform by highlighting our six simple ingredients, fresh, never frozen original dough and the craftsmanship behind the products we serve, which we believe are key differentiators of our brand.

We also sharpened our value perception with limited-time promotional offers while continuing to emphasize our Papa Pairings mix and match platform.

We plan to maintain a compelling value proposition while staying true to our premium positioning and layering in exciting menu innovation to expand our addressable market and strengthen our barbell strategy.

We spent an incremental $21 million in marketing investments throughout 2025 compared with 2024, including investments in our customer relationship management platform and our loyalty program.

This incremental investment aided in ensuring a strong presence nationally as well as in key regional and local markets while leveraging our data to create more personalized offers for our customers.

Digital and loyalty strategy:

Most of our sales occur through digital channels and we are actively identifying opportunities for customers to more quickly access information, streamline the ordering journey and improve the overall user experience.

In 2024, we focused on enhancing our mobile applications and website to improve call to actions and navigation, elevate imagery and more prominently feature our loyalty rewards program.

In the fourth quarter, we also updated our loyalty program to allow members to unlock redeemable rewards in the form of “Papa Dough” faster, activating our members at higher rates to help drive transactions and frequency.

We believe that converting points to Papa Dough in smaller increments to members can unlock rewards faster for more immediate customer gratification.

In 2025, we will continue evolving our loyalty and digital experiences as they must be flexible and easy to understand to create strong, emotionally connected consumer engagement that seamlessly integrates with our creative, paid, earned and owned messaging.

• Domestic commissary growth strategy:

We are evolving our commissary business to drive profitable growth and overall supply chain productivity that provides cost savings and incremental profit for the system.

Effective in the first quarter of 2024, we increased the fixed operating margin that Domestic QC Centers charge by 100 basis points, and we will continue to increase the margin by the same increment in each of the next three years, moving from 4% in 2023 to 8% in 2027.

The increase to the fixed operating margin benefited North America Commissary revenue and operating income in 2024.

To mitigate this cost for franchisees, we have offered new opportunities for franchisees to earn annual incentive-based rebates as they increase volume and open new restaurants.

Franchisees who increase case-volume purchases at the highest volume growth could realize target market rates lower than the prior 4% rate.

Additionally, we expect the incremental volume driven by increased marketing and additional development will reduce the shared supply chain costs across the system over time.

Lastly, we will be focused on driving continued productivity throughout the supply chain through improved operations and supplier relationships.

Most of our sales occur through digital channels, and we are investing in our technology infrastructure to deliver a more seamless experience across our owned channels, better connect with customers, and support greater efficiency across our operations.

In 2025, we introduced our new omnichannel platform, releasing new mobile apps across both Android and iOS platforms as well as our refreshed website and mobile web experience.

We believe that the rollout of our new omnichannel platform will lead to a more streamlined ordering journey and simplify the overall experience for our customers.

We may incur an additional $5 million to $10 million of accelerated depreciation expense related to the potential replacement and retirement of related technology assets currently in service as this project continues.

We also recently announced plans to begin a multi-year initiative to transition to a new point-of-sale system across all U.S.

Company-owned and franchised restaurants that, if successful, could replace our existing point-of-sale system.

At the time we determine that our legacy point-of-sale system will be replaced, these legacy technology assets may require adjustments to their useful lives to best reflect remaining technology utilization and become subject to future accelerated depreciation, which could have a material impact on our depreciation expenses.

Transforming our cost structure:

In 2025, we initiated a comprehensive review of our expense structure.

In connection with this review, in December 2025 our Board of Directors approved the first phase of a new business transformation program (the “Enterprise Transformation Plan”), with the goal of creating capacity to invest in our next phase of growth by reducing non-consumer-facing spending and optimizing our restaurant portfolio to improve unit economics.

The initiation of the first phase, designed to reduce overhead duplication and non-consumer-facing spending, resulted in restructuring charges of $7.7 million incurred during the fourth quarter of 2025 and primarily consisted of employee severance costs related to reducing our corporate workforce as well as professional services fees.

In February 2026, our Board of Directors approved the second phase of the Enterprise Transformation Plan, which focuses on optimizing our restaurant portfolio and improving restaurant-level profitability.

We currently estimate that we will incur restructuring charges of approximately $24 million to $31 million related to actions approved thus far, inclusive of the $7.7 million recognized during 2025 and the remainder of which we expect will be recognized during 2026 and 2027.

We believe that these initiatives will improve systemwide health and facilitate future growth, and we have identified at least $25 million of savings, exclusive of marketing spend, to be captured across fiscal years 2026 and 2027.

The implementation of the Enterprise Transformation Plan remains ongoing and may result in additional restructuring charges, although the amounts and nature of future expenses are currently not estimable as no specific actions necessitating additional expenses have been determined or approved by our Board of Directors.

These actions are expected to include elevated levels of restaurant closures in North America during 2026 and 2027, as we focus on improving the health of our restaurant portfolio by closing underperforming restaurants that lack a path to sustainable financial improvement, allowing our franchisees to invest resources in their remaining restaurants to accelerate growth.

Optimizing our supply chain:

We are also finalizing our previously announced internal review of our North American supply chain and have identified productivity initiatives that we believe will optimize our commissary business in an effort to reduce the overall cost to serve across all of our Domestic Company-owned and franchised restaurants, without impacting our commitment to product quality.

We expect to achieve at least $60 million in North America systemwide supply chain savings over the next two years, equating to meaningful restaurant-level margin improvement with approximately $20 million to $25 million of the savings to be recognized by the end of 2026.

Development strategy:

Development is a key long-term growth driver as we believe there is significant opportunity to offer our quality product to more customers globally and domestically.

In 2024, we expanded our global footprint by 2.1%, with 124 net new units comprised of 81 net unit openings in North America and 43 net unit openings in International markets.

To pursue the opportunities we have identified in the United States and accelerate development, we introduced a new development incentive intended to deliver higher restaurant-level profit margins for new restaurants opened in 2024 through a waiver of PJMF contributions during the first five years of operations.

We are also offering a three-year waiver of PJMF contributions for new restaurants opened in 2025.

This incentive is intended to improve profitability for franchisees, add scale in key markets and attract growth-driven franchisees.

Development is a key long-term growth driver as we believe there is significant opportunity to offer our quality products to more customers globally and domestically.

Our near-term development plan in North America includes focused development within our priority markets and on improving the quality and profitability of our restaurant portfolio, with fewer new restaurant openings expected in 2026.

To aid our franchisees in pursuing profitable growth in conjunction with the supply chain and restaurant optimization initiatives described above, we are offering royalty incentives for new restaurants opening in 2026, which we believe will add scale in key markets and attract growth-driven franchisees.

Accelerating our refranchising program:

We also achieved a key milestone in the acceleration of our Domestic refranchising program, completing the refranchising of 85 restaurants during the fourth quarter of 2025.

Refranchising is a strategic action that we plan to continue to pursue across our Company-owned restaurants as it provides developing franchisees opportunities to expand their businesses and strengthens the long-term health of Papa Johns while providing additional means to reinvest into our transformation initiatives.

International Transformation Plan

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position certain international markets, including the United Kingdom, for long-term profitable growth and brand strength.

Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $30 million to $35 million (inclusive of the $29.5 million incurred through December 29, 2024), the remainder of which we expect to be recognized in 2025.

We completed our previously announced international transformation initiatives (the “International Transformation Plan”) during the fourth quarter of 2025 and incurred total restructuring related costs of $34.4 million over the entire duration of the program, approximately $20 million of which were cash expenditures.

Comparable sales for our International business increased by 5.0% during the year ended December 28, 2025, which we believe is attributable to the International Transformation Plan and the operational improvement resulting from its implementation.

Announced in December 2023, the International Transformation Plan was designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position certain international markets, including the United Kingdom, for long-term profitable growth and brand strength.

See “Note 16.

Restructuring” of “Notes to Consolidated Financial Statements” for additional details.

During 2024, the Company made significant progress in executing the International Transformation Plan:

• We evaluated and optimized our restaurant portfolio in the UK, which resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations.

We also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees and continue to operate 13 Company-owned restaurants in the UK.

We have completed substantially all of the strategic restaurant closures in the UK market and the Company’s efforts have turned towards growth opportunities and mitigating closure-related costs as we complete the optimization of the portfolio.

We expect to complete the remaining aspects of the UK optimization plan during 2025.

• As a result of these actions, we saw year-over-year improvement in the profitability of the UK market in the third and fourth quarters, and we continue to optimize the region through exiting leases and other contracts as well as transforming our operations to increase efficiency and effectiveness.

• We established hubs for our key regions – APAC (Asia Pacific), EMEA (Europe, Middle East and Africa), and Latin America.

These regional hubs are led by experienced General Managers and their teams that partner with franchisees to drive franchisee performance in their markets.

These teams help align global best practices in operations, marketing and technology with local preferences to accomplish our long-term objective of increasing market share in key markets around the world.

Presentation of Financial Results

Financial Statement Updates

The Company has implemented several financial statement changes in this Annual Report on Form 10-K, concurrent with the adoption of Accounting Standard Update (“ASU”) 2023-07, “ Improvements to Reportable Segment Disclosure s.” These changes evolve and modernize our financial statements and footnotes to increase transparency and better reflect management’s key performance metrics.

The Consolidated Statements of Operations have been reconfigured to classify revenues and expenses based on the nature of the underlying activities without regard to operating segment.

This reconfiguration and the resulting reclassifications did not change previously reported Total revenues, Total costs and expenses, Operating income or Net income for any period.

The Consolidated Statements of Cash Flows include reclassifications to a new line item that include the net operating cash flows of the consolidated advertising funds.

The reclassifications did not change Net cash provided by operating activities, Net cash used in investing activities or Net cash used in financing activities for any period.

Presentation changes to the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows have been applied retrospectively, and as such, the results from the years ended December 31, 2023 and December 25, 2022 have been reclassified for consistency with the current year presentation.

Additionally, during the year ended December 29, 2024, the Company updated its internal cost allocation methodology to better reflect current levels of time and effort spent managing our different segments.

These updates resulted in a higher allocation of previously unallocated corporate expenses to primarily the North America franchising and International segments.

This update in methodology does not impact total reported expenses, and has been implemented prospectively beginning with the year ended December 29, 2024.

The comparative information has not been restated.

Critical Accounting Policies and Estimates

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We record property and equipment at its historical cost, which includes all costs necessarily incurred to bring the asset to the condition and location necessary for its intended use.

Purchases of property and equipment were $72.5 million in 2024, $76.6 million in 2023, and $78.4 million in 2022.

Purchases of property and equipment were $74.4 million in 2025 and $72.5 million in 2024.

Purchase of property and equipment for 2025 included $9.7 million of capital expenditures related to damages from natural disasters.

Property and equipment are depreciated on a straight-line basis over their useful lives, which are based on management’s estimates of the period over which the assets provide a benefit to the Company.

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Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective lease, including the first renewal period (generally five to ten years).

Depreciation expense was $59.6 million in 2024, $54.3 million in 2023 and $45.6 million in 2022.

We will re-assess our useful life estimate for an asset when facts and circumstances indicate the period over which the asset is expected to provide economic benefits has changed, which can occur for various reasons including technological advancements, a demonstrable change in usage patterns, market demand, or legal or regulatory changes.

Depreciation expense was $80.8 million in 2025 and $59.6 million in 2024.

The increase in 2025 was due mainly to $18.4 million of accelerated depreciation expense related to investments in technology platforms, primarily our new omnichannel experience.

We evaluate property and equipment and other long-lived assets (primarily right-of-use operating lease assets) for potential indicators of impairment at least annually, or as facts and circumstances indicate that the carrying value of the asset may not be recoverable.

We perform these assessments at the operating market level for Domestic restaurants and at the restaurant level for our UK Company-owned restaurants, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

We perform these assessments at the operating market level for Domestic restaurants and at the restaurant level for our Company-owned restaurants in the United Kingdom (“UK”), as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

If we determine there are indicators of impairment, we compare the net carrying value of the asset group to the projected undiscounted cash flows to be generated from the use of the asset group.

If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, then we estimate the fair value of the asset group and record an impairment loss if the carrying value exceeds fair value.

If the carrying amount of the long-lived asset group exceeds the amount of

estimated future undiscounted cash flows, then we estimate the fair value of the asset group and record an impairment loss if the carrying value exceeds fair value.

If indicators of impairment are present, calculating projected undiscounted cash flows requires management to make assumptions and estimates for factors that include future comparable sales growth and gross margin based on internal projections as well as the historical performance of the market or individual restaurant and whether that is an indicator of future performance.

These assumptions for future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions.

We recorded total impairment losses of $8.6 million in 2025, consisting of property and equipment and lease asset impairment, related primarily to damages to our QC Centers in Grand Prairie, Texas and Louisville, Kentucky caused by tornadoes as well as restructuring activities under our International Transformation Plan and Enterprise Transformation Plan.

Of these amounts, we recorded an anticipated insurance recovery for $6.4 million as we believe such losses are probable of recovery under our insurance policy.

We recorded impairment losses of $11.7 million in 2024, primarily consisting of property and equipment and lease asset impairment, related to the closure of 43 UK Company-owned restaurants and 30 UK franchised restaurants as well as five UK Company-owned restaurants where the carrying value of the asset group was not deemed to be recoverable.

We also incurred impairment losses of $5.5 million during 2024 in connection with the refranchising of 15 Domestic Company-owned restaurants.

During 2022, we recognized lease impairment charges of $0.9 million related to the termination of a specific and significant franchisee in the UK.

We did not record any impairment losses on property and equipment during 2023.

Allowance for Credit Losses on Franchisee Notes Receivable

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Papa John’s is subject to income taxes in the United States and several foreign jurisdictions.

Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities.

Judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities.

The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are

measured using enacted tax rates and laws that are expected to be in effect when the differences reverse.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse.

Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits).

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Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand.

the impact of new unit growth without being impacted by swings in the external factor of foreign currency.

Management believes the presentation of Global system-wide restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency.

Franchise restaurant sales are not included in the Company’s revenues.

Amounts below exclude the impact of foreign currency December 28, 2025 December 29, 2024

Comparable sales growth (decline) (a) :

Comparable sales growth (decline):

Domestic Company-owned restaurants (3.3) % (4.9) %

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Total comparable sales growth (decline) (0.6) % (3.1) %

System-wide restaurant sales growth (decline) (b) :

System-wide restaurant sales growth (decline):

Domestic Company-owned restaurants (1.2) % (4.7) %

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Total global system-wide restaurant sales growth (decline) 1.1 % (3.1) %

______________________________

(a) Comparable sales growth (decline) includes a 52 week comparison for fiscal year 2024 to fiscal year 2023.

(b) System-wide restaurant sales growth (decline) includes 53 weeks in fiscal year 2023.

Restaurant Progression Year Ended

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Beginning of period 539 531

Acquired 1 10

Refranchised (85) (15)

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Closed (86) (31)

Sold (1) (10)

Refranchised 85 15

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Beginning of period 13 117

Acquired — 118

Closed — (43)

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Results of Operations

Financial Statement Updates

As noted above in “Presentation of Financial Results,” the Company has implemented changes to the presentation and classification of its financial statements in this Form 10-K.

Please see the “Presentation of Financial Results” section for details on the changes.

The following table sets forth the various components of Revenues from the Consolidated Statements of Operations.

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Total revenues $ 2,053,808 $ 2,059,387 (0.3) %

The comparability of 2024 results and 2023 results is impacted by the following:

• Results for the year ended December 29, 2024 are not directly comparable with the results for the year ended December 31, 2023, as year-over-year comparisons are affected by an additional week of operations in the fourth quarter of 2023 due to the 53-week fiscal year in 2023.

The estimated impact of the Company’s 53rd week on 2023 results has been highlighted in the discussion below to enhance comparability between the periods.

• The acquisition of 118 formerly franchised restaurants in the UK in the second and third quarters of 2023 (the “UK franchisee acquisitions”), and the subsequent closure of 43 and refranchising of 60 of these restaurants during the second and third quarters of 2024 impacts the comparability of revenues and expenses from the International segment for 2023 and 2024.

After prior disposals of two mobile restaurants, the Company operated 13 UK Company-owned restaurants subsequent to July 1, 2024.

The comparability of 2025 and 2024 results is impacted by the following transactions that have changed the composition of our Domestic and UK restaurants:

• On November 24, 2025, the Company completed the refranchising of 85 Domestic Company-owned restaurants previously owned and operated by Colonel’s Limited, LLC, a consolidated joint venture (the “2025 refranchising transaction”).

Additionally, the Company refranchised 15 Domestic Company-owned restaurants on September 30, 2024 (collectively referred to with the 2025 refranchising transaction as the “Domestic refranchising transactions”).

See “Note 21.

Acquisitions” and “Note 16.

Divestitures” of the “Notes to Consolidated Financial Statements” for additional information on these transactions.

• At the beginning of 2024, the Company operated 117 UK Company-owned restaurants.

In the second and third quarters of 2024, the Company closed 43 Company-owned restaurants in the UK and refranchised 60 formerly Company-owned restaurants in the UK.

After prior disposal of one mobile restaurant, the Company operated 13 UK Company-owned restaurants subsequent to July 1, 2024.

See “Note 16.

Restructuring” of the “Notes to Consolidated Financial Statements” for additional information on these transactions.

Total revenues decreased $5.6 million, or 0.3%, to $2.05 billion for the year ended December 28, 2025, as compared to the prior year.

Revenues for the 53rd week of operations in 2023 contributed approximately $41 million to prior year total revenues.

Excluding the impact of the additional week in 2023, Total revenues decreased approximately $35 million, or 1.7%.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $36.2 million, or 4.8% for the year ended December 29, 2024 compared to the prior year.

The benefit of the 53rd week of operations in 2023 was approximately $15 million.

Excluding the impact of the additional week in 2023, Company-owned restaurant sales would have decreased approximately $21 million.

This decrease was primarily due to a decrease in comparable sales of 4.9% for our Domestic Company-owned restaurants that was partially offset by approximately $5 million of additional deferred revenue recognized during 2024 related to lowering the redemption thresholds for our Papa Rewards program, which allowed consumers to redeem rewards more quickly.

Additionally, Domestic equivalent units grew 3.4% for the year ended December 29, 2024.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreased $8.0 million, or 4.1% for the year ended December 29, 2024 compared to the prior year.

The benefit of the 53rd week of operations in 2023 was approximately $3 million.

Excluding the additional week, Franchise royalties and fees would have decreased approximately $5 million.

The decrease was primarily due to declines in North America franchised and International comparable sales of 3.5% and 0.8%, respectively.

This was partially offset by North America equivalent unit growth of 4.6% and fewer royalty waivers in 2024 as compared to 2023.

North America franchise restaurant sales, excluding the impact of foreign currency fluctuations, decreased 4.1% to $2.97 billion for the year ended December 29, 2024 compared to the prior year.

The benefit of the 53rd week of operations in 2023 was approximately $65 million.

Excluding the impact of the additional week in 2023 and foreign currency fluctuations, North America franchise restaurant sales decreased 2.0%.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $49.0 million, or 6.8% for the year ended December 28, 2025 compared to the prior year, primarily due to the transactions discussed above.

Company-owned restaurant sales in the UK declined by approximately $18.8 million compared to 2024 due to the UK Company-owned restaurant closures and refranchising transactions in 2024, and the Domestic refranchising transactions discussed above resulted in a decrease of approximately $18.5 million as compared to the prior year.

Additionally, the 2024 period included approximately $5 million of additional deferred revenue related to lowering the redemption thresholds for our Papa Rewards program in 2024, which allowed consumers to redeem rewards more quickly.

The remaining decline was a result of a decline in Domestic company-owned restaurant comparable sales of 3.3% driven by lower transaction volumes, partially offset by increases in International comparable sales of 5.0% compared to the prior year.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, increased $3.9 million, or 2.1%, for the year ended December 28, 2025 compared to the prior year.

The increase was primarily due to a $4.0 million increase from our International franchisees due to growth in International comparable sales of 5.0%.

Royalties and fees from our North America franchisees were flat for the year ended December 28, 2025 compared to the prior year, as an increase in franchise equivalent units of 2.6% and fewer royalty waivers in 2025 as compared to 2024 were offset by declines in comparable sales for our North America franchised restaurants of 2.3%.

North America franchise restaurant sales are not included in Company revenues;

however, our franchise royalties and fees are derived from these sales.

International franchise restaurant sales decreased $22.7 million to $1.16 billion for the year ended December 29, 2024 compared to $1.19 billion for the prior year.

The benefit of the 53rd week of operations in 2023 was approximately $25 million.

As mentioned above, the UK franchisee acquisitions in 2023 and the UK restaurant closures and refranchising transactions in the second and third quarters of 2024 impacted the comparability of International franchise sales earned in each period.

Excluding the impact of the UK franchisee acquisitions, the additional week, and foreign currency fluctuations, International franchise restaurant sales increased $41.4 million or 3.6% for the year ended December 29, 2024.

International franchise restaurant sales are not included in Company revenues;

however, our franchise royalties and fees are derived from these sales.

Commissary revenues, which includes sales from our North American and International QC Centers, decreased $25.0 million or 2.7% for the year ended December 29, 2024 compared to the prior year.

The benefit from the 53rd week of operations in 2023 was approximately $20 million.

Excluding the impact of the additional week in 2023, Commissary revenues decreased approximately $5 million for the year ended December 29, 2024.

The decline in Commissary revenues was primarily a result of lower volumes.

This was partially offset by the previously-disclosed increase to the fixed operating margin charged by Domestic QC Centers that took effect during the first quarter of 2024.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business and our previously wholly-owned print and promotions subsidiary, decreased $14.4 million, or 14.6% in 2024.

The benefit of the 53rd week of operations in 2023 was approximately $1 million.

Excluding the impact of the additional week in 2023, Other revenues would have decreased by approximately $13 million, as our 2023 results included $16.1 million of revenues from Preferred Marketing, our previously wholly-owned print and promotions subsidiary which was sold in the fourth quarter of 2023.

See “Note 22.

Divestitures” of “Notes to Consolidated Financial Statements” for additional information.

This was partially offset by higher revenues generated from technology services due to an increase in the technology fee charged to franchisees during the second half of 2024.

however, our North America franchise royalties are derived from these sales.

North America franchise restaurant sales decreased 1.0% to $2.93 billion for the year ended December 28, 2025 compared to the prior year, excluding the impact of foreign currency fluctuations.

The decrease in franchise restaurant sales was due to the 2.3% decline in comparable sales, partially offset by North America equivalent unit growth noted above.

International franchise restaurant sales are also not included in Company revenues;

however, our International franchise royalty revenue is derived from these sales.

International franchise restaurant sales increased $123.7 million to $1.29 billion for the year ended December 28, 2025 compared to the prior year.

The UK restaurant closures and refranchising transactions in 2024 impacted the comparability of International franchise restaurant sales earned as compared to the prior year period.

Excluding the impact of the UK restaurant changes and excluding foreign currency fluctuations, International franchise restaurant sales would have increased 7.6% to $1.27 billion for the year ended December 28, 2025 compared to the prior year.

The increase is due to growth in International comparable sales of 5.0% noted above as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, increased $30.3 million or 3.4%, for the year ended December 28, 2025 compared to the prior year.

The increase in Commissary revenues was primarily a result of higher prices and higher transaction volumes, partially offset by changes in product mix as compared to the prior year comparable period.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business, increased $6.8 million, or 8.2% in 2025.

This was primarily due to higher revenues generated from technology services as a result of an increase in the technology fee charged to franchisees that began in the second half of 2024 and continued through the first half of 2025.

Advertising funds revenue, which includes the operations of PJMF, local marketing funds, and International marketing funds, increased $2.4 million, or 1.5%, in 2025.

Beginning with the second quarter of 2024, PJMF increased its contribution percentage, while local marketing was made optional.

The change in mix to our marketing contributions, along with more franchised locations during 2024, increased Advertising funds revenue in 2024 by approximately $10.1 million.

This was partially offset by a 3.5% decline in North America franchised comparable sales.

The increase was primarily due to global system-wide restaurant sales growth of 1.1% as well as increases in the PJMF contribution percentage that took effect in the second quarter of 2024 and increases to contribution percentages in certain International markets.

This was partially offset by national marketing fund rebates offered to franchisees and a decrease in local marketing spend in 2025.

Costs and Expenses

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(Dollars in thousands) Year Ended

December 29, 2024 December 31, 2023

December 28, 2025 December 29, 2024 Increase

Costs and expenses:

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Total costs and expenses $ 1,964,661 $ 1,902,683 3.3 %

Operating income $ 156,704 $ 147,142

Total costs and expenses were approximately $1.96 billion, or 95.7% of total revenues in 2025, as compared to $1.90 billion, or 92.4% of total revenues for the prior year.

This decrease in total costs and expenses, as a percentage of revenues, was primarily due to the following:

Cost of sales consists primarily of Company-owned store and supply chain costs incurred to generate related revenues.

Components of cost of sales primarily include food and paper products, labor, freight and delivery, occupancy costs,

advertising costs related to Company-owned restaurants, and insurance expense.

Components of cost of sales primarily include food and paper products, labor, freight and delivery, occupancy costs, local advertising costs, and insurance expense.

Cost of sales was $1.46 billion in 2025, a decrease of $17.9 million, or 1.2%, from the prior year.

The impact of the 53rd week of operations in 2023 was approximately $31 million.

Excluding the impact of the additional week, Cost of sales would have decreased by approximately $49 million.

The decrease in cost of sales primarily relates to lower volumes within our North America commissary segment as year-over-year comparable transactions were down approximately 3% for our franchisees.

In addition, Cost of sales were lower in our Domestic Company-owned restaurants segment primarily relating to lower food and labor costs as comparable transactions were down approximately 4.5% year-over-year and advertising expense decreased as reduced local marketing reserves and lower spend in the first half of 2024 more than offset incremental marketing spend in the second half of 2024.

Cost of sales by segment for the years ended December 28, 2025 and December 29, 2024 were as follows:

(Dollars in thousands) December 28, 2025 December 29, 2024 Increase

Domestic Company-Owned Restaurants $ 611,685 $ 637,994 (4.1) %

International 104,138 115,499 (9.8) %

NA Commissaries 934,980 966,653 (3.3) %

Total segment cost of sales 1,650,803 1,720,146 (4.0) %

All other (a)

Domestic Company-owned restaurants (a)

$ 594,434 $ 611,685 (2.8) %

North America commissaries (a)

944,940 934,980 1.1 %

International (a)

90,808 104,138 (12.8) %

Total cost of sales by segment (b)

1,630,182 1,650,803 (1.2) %

All other (c)

55,972 51,347 9.0 %

Intersegment cost of sales (225,662) (223,724) 0.9 %

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______________________________

(a) “ All other” refers to all other business units that do not meet the quantitative thresholds for determining reportable segments, which primarily includes our online and mobile ordering business and our marketing funds and are not operating segments.

(a) Segment cost of sales include stock-based compensation expenses and other adjustments that are excluded from our segment results, which are presented on an adjusted basis (see “Note 22.

Segment Information” of the “Notes to Consolidated Financial Statements”).

(b) The North America franchising segment does not incur costs of sales, and therefore is not included in total cost of sales by segment.

The North America franchising segment consists of our franchise sales and support activities for our franchisees located in the United States and Canada.

(c) “ All other” refers to all other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, and primarily includes our online and mobile ordering business and our marketing funds and are not operating segments.

The decrease in cost of sales primarily relates to lower volumes for our Domestic Company-owned restaurants and International Company-owned restaurants as a result of the Domestic refranchising transactions and the 2024 UK restaurant closures and refranchising transactions.

The decreases were also due to lower local advertising costs for our Domestic Company-owned restaurants, partially offset by higher food costs for our Domestic Company-owned restaurants and higher volumes for our Domestic QC Centers compared to the prior year.

General and administrative expenses (“G&A expenses”) were $244.3 million, or 11.9%, of total revenues for 2025 compared to $190.5 million, or 9.3%, of total revenues for the prior year.

G&A expenses consisted of the following (in thousands):

G&A expenses consisted of the following components (in thousands):

(Dollars in thousands) Year Ended

December 28, 2025 December 29, 2024

Administrative and other general expenses, net $ 199,036 $ 198,200

Gain on sale of QC Center properties (a)

International restructuring costs (b)

Other costs (c)

UK re-positioning and acquisition-related costs (d)

Administrative and other general expenses (a)

$ 240,935 $ 199,036

Gain on refranchising transaction, net and sale of QC Center properties (b)

(17,053) (41,289)

Restructuring costs (c)

12,593 27,273

Other costs (d)

General and administrative expenses $ 244,282 $ 190,515

______________________________

(a) Represents pre-tax gain on sale of Texas and Florida QC Center properties, net of transaction costs.

(a) Administrative and other general expenses, net increased by $41.9 million to $240.9 million for the year ended December 28, 2025 compared to the prior year.

The increase was primarily due to incremental marketing investments of $21.2 million, an increase in management incentive compensation of $13.8 million, and expenses resulting from our biannual franchise operating conference held in the first quarter of 2025.

(b) For the year ended December 28, 2025, represents pre-tax gain on sale, net of transaction costs, realized upon the completion of the refranchising of 85 restaurants on November 24, 2025.

Net gain attributable to noncontrolling interests for the transaction was approximately $1.0 million.

See “Note 21.

Divestitures”.

(b) Represents costs associated with the International Transformation Plan.

Divestitures” for additional details.

For the year ended December 29, 2024, represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.

See “Note 21.

Restructuring”.

(c) Represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants for the year ended December 29, 2024.

Refer to “Note 22.

Divestitures” for further details.

For the year ended December 31, 2023, $2.0 million of severance and related costs associated with the transition of certain executives, $0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East, and $0.6 million accrual related to certain legal settlements are included.

(d) Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

Depreciation and amortization expense was $69.4 million, or 3.4% of revenues in 2024, as compared to $64.1 million, or 3.0% of revenues for the prior year, primarily due to higher depreciation expense related to our investments in technology platforms.

Divestitures” for additional details.

See “Note 16.

Restructuring” for additional details.

(d) For the year ended December 28, 2025, other costs is comprised of the following:

Losses on disposal of equipment incurred in connection with the termination of a COVID-era program that pre-purchased store equipment due to supply chain challenges;

Costs associated with project-based strategic initiatives that are not related to our ongoing operations.

Costs incurred, net of anticipated insurance recoveries, arising from tornadoes that damaged the Texas QC Center as well as the restaurant support center and QC Center in Louisville, Kentucky.

For the year ended December 29, 2024, other costs represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants.

Depreciation and amortization expense was $92.2 million, or 4.5% of revenues in 2025, as compared to $69.4 million, or 3.4% of revenues for the prior year, due mainly to accelerated depreciation expense related to the rollout of our new omnichannel experience and the corresponding retirement of certain assets within our legacy technology platforms.

We began accelerating depreciation of legacy omnichannel and other technology assets during the third quarter of 2025 following the completion of the initial development and release of our new omnichannel platform, with the retirement of certain technology assets beginning shortly thereafter.

We recognized $18.4 million in additional depreciation expense during the year ended December 28, 2025 related to the accelerated depreciation of these assets.

We currently estimate that we may incur an additional $5 million to $10 million of accelerated depreciation expense by the end of 2026 related to the potential replacement and retirement of related legacy technology assets currently in service.

Advertising funds expense was $167.6 million, or 100.5% of advertising revenues in 2025, as compared to $164.3 million, or 100.0% of advertising revenues for the prior year.

Advertising funds expense is comprised primarily of expenses incurred by PJMF, which is designed to operate at break-even as it spends all annual contributions received from the

The increase was primarily due to higher advertising spend resulting from the previously discussed increase in contributions to the national marketing fund during 2024.

Operating Income by Segment

Operating income and Adjusted operating income are summarized in the following table on a reporting segment basis.

Adjusted operating income is a non-GAAP measure.

See “Non-GAAP Measures” for a reconciliation to the most comparable U.S.

GAAP measure.

We believe this non-GAAP measure is important for comparability purposes.

(In thousands)

Year Ended December 29, 2024 Year Ended December 31, 2023

Adjusted US GAAP (a)

Adjusted US GAAP

(Decrease) Adjusted

Advertising funds expense is comprised primarily of expenses incurred by PJMF, which is designed to operate at break-even as it spends all annual contributions received from the system.

The increase was primarily due to higher advertising spend resulting from the previously discussed increase in contributions to the national marketing fund during the second quarter of 2024.

Segment Financial Performance

We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, and other adjustments, referred to as Segment adjusted EBITDA.

See “Note 22.

Segment Information” of “Notes to Consolidated Financial Statements,” for further information regarding the Company’s segments.

Segment adjusted EBITDA for each of our reportable segments is summarized in the table below.

(Dollars in thousands) December 28, 2025 December 29, 2024 Increase

Segment adjusted EBITDA:

Domestic Company-owned restaurants $ 28,371 $ 43,659 $ (15,288)

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International 22,581 18,297 4,284

All other 4,065 — 4,065 10,116 — 10,116 (6,051) (6,051)

Unallocated corporate expenses (51,054) — (51,054) (85,353) 2,594 (82,759) 34,299 31,705

Elimination of intersegment loss/(profit) — — — 27 — 27 (27) (27)

Total $ 156,704 $ (8,521) $ 148,183 $ 147,142 $ 9,883 $ 157,025 $ 9,562 $ (8,842)

Domestic Company-owned restaurants decreased $15.3 million as compared to the prior year, primarily due to a 3.3% decrease in comparable sales, higher food costs, and the prior period benefit of approximately $5 million related to changes in our Papa Rewards program, as discussed above.

The decrease was partially offset by lower local advertising costs in 2025 and the impact of refranchising 15 restaurants during the third quarter of 2024.

North America franchising decreased $4.8 million as compared to the prior year, primarily due to higher management incentive compensation allocated to the segment compared to the prior year period.

Royalties and fees revenue from our North America franchisees were flat compared to the prior year, as discussed above.

North America commissaries increased $13.1 million as compared to the prior year, primarily due to higher prices and transaction volumes previously mentioned, partially offset by changes in product mix, higher salaries and benefits, and increases in rent due to the sale and subsequent leaseback of two Domestic QC Centers in Texas and Florida in the third quarter of 2024.

International increased $4.3 million as compared to the prior year.

The increase was primarily to system-wide sales growth of 7.7%, comparable sales growth of 5.0%, and prior period operating losses attributable to the UK Company-owned restaurants.

These increases were partially offset by increases in advertising spend in 2025.

4-wall EBITDA

4-wall EBITDA and 4-wall EBITDA margin are non-GAAP measures used to evaluate the performance of our Domestic Company-owned restaurants.

See “Non-GAAP Measures” for the definition of 4-wall EBITDA and 4-wall EBITDA margin as well as a reconciliation to the most comparable U.S.

GAAP measures.

4-wall EBITDA and 4-wall EBITDA margin are presented in the table below (in thousands).

Segment revenue and segment cost of sales for our Domestic Company-owned restaurants in the table below are presented in the segment footnote to our Consolidated Financial Statements in accordance with Accounting Standards Codification 280.

See “Note 22.

Segment Information” of “Notes to Consolidated Financial Statements,” for further information on our segments.

Domestic Company-owned restaurants Year Ended

December 28, 2025 % of Related Revenues December 29, 2024 % of Related Revenues

Segment Revenue $ 662,523 $ 692,736

COS - Product Costs (203,443) 30.7 % (207,704) 30.0 %

COS - Salaries & Benefits (221,033) 33.4 % (225,269) 32.5 %

COS - Other (168,971) 25.5 % (177,656) 25.6 %

Training Costs (a)

— — % 3,194 (0.5) %

(a) See “Non-GAAP Measures” below for a detail of the adjustments in each year and for a reconciliation to the most comparable U.S.

GAAP measure.

Operating income was $156.7 million for the year ended December 29, 2024 compared to $147.1 million for the prior year, an increase of $9.6 million.

Adjusted operating income was $148.2 million for the year ended December 29, 2024 compared to $157.0 million for the prior year, a decrease of $8.8 million.

The 53rd week contributed approximately $8 million to operating and adjusted operating income in 2023.

The changes in operating income and adjusted operating income compared to the prior year were primarily due to the following:

• Domestic Company-owned restaurants operating income decreased $14.3 million for the year ended December 29, 2024.

The 53rd week of operations contributed approximately $4 million to operating income in 2023.

Excluding the impact of the additional week, Domestic Company-owned restaurants would have decreased approximately $11 million due to $5.5 million of non-cash impairment and remeasurement charges incurred during 2024 related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants and an approximate 60 basis point decrease in operating margin resulting from the lower sales in 2024, somewhat offset by lower advertising expenses due to lower spending in the first half of 2024.

• Adjusted operating income for Domestic Company-owned restaurants decreased by $8.8 million due to the factors discussed above, excluding the non-cash impairment and remeasurement charges related to the refranchising of 15 Domestic Company-owned restaurants.

• Operating income and Adjusted operating income from North America franchising decreased $25.6 million for the year ended December 29, 2024.

The 53rd week of operations contributed approximately $3 million to operating income in 2023.

Excluding the impact of the additional week, operating income would have decreased approximately $23 million.

The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a reduction of $22.9 million in Operating income in the North America franchising segment during 2024, with an offsetting decrease in unallocated corporate expenses.

Other drivers include a 3.5% decline in comparable sales, partially offset by higher equivalent units of 4.6% and fewer royalty waivers in 2024.

• Operating income from North America commissaries increased $46.5 million for the year ended December 29, 2024 primarily due to a $41.3 million pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 sale of our Texas and Florida QC Center properties.

The 53rd week of operations contributed approximately

$1 million to operating income in 2023.

Operating income in 2024 also benefited from the increase in the commissary fixed operating margin, which became effective in 2024, partially offset by rebates to franchisees and lower volumes.

• Adjusted operating income from North America commissaries increased by $5.2 million compared to 2023, which is due to the drivers mentioned above, excluding the gain on sale of the QC Center properties.

• Operating income from our International segment decreased by $25.3 million for the year ended December 29, 2024 primarily due to expenses of $27.3 million associated with the Company’s International Transformation Plan during 2024, while 2023 results included restructuring expenses of $2.2 million as well as $4.2 million of UK acquisition and repositioning costs.

International operating income also decreased due to comparable sales declines of 0.8% and an update to our internal cost allocation methodology implemented during 2024, resulting in a reduction of $3.3 million in Operating income in the International segment during 2024, with an offsetting decrease in unallocated corporate expenses.

As mentioned above, we have closed 43 of the UK Company-owned restaurants and refranchised an additional 60 restaurants under the International Transformation Plan during 2024.

The 53rd week of operations also contributed approximately $1 million to operating income during 2023.

• Adjusted operating income from International decreased $5.3 million for the year ended December 29, 2024, which is due to the drivers mentioned above and excludes expenses associated with the Company’s International Transformation Plan.

• Operating income and adjusted operating income related to All Other, which is not a reportable segment and primarily includes our online and mobile ordering business and our marketing funds, decreased $6.1 million for the year ended December 29, 2024.

The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a net reduction of $8.6 million in Operating income related to All Other during 2024, with an offsetting decrease in unallocated corporate expenses.

• Unallocated corporate expenses decreased $34.3 million for the year ended December 29, 2024 and $31.7 million on an adjusted basis.

The primary driver was an update to our internal cost allocation methodology implemented during 2024, resulting in a decrease of $34.6 million in unallocated corporate expenses, with offsetting reductions in operating income primarily in the North America franchising and International segments.

4-wall EBITDA $ 69,076 $ 85,301

4-wall EBITDA margin 10.4% 12.3%

(a) Training costs for our Domestic Company-owned restaurants were reclassified from Cost of sales to General & administrative expenses prospectively beginning with the year ended December 28, 2025.

We have excluded these training costs from Cost of sales in the historical period when calculating 4-wall EBITDA to ensure comparability.

4-wall EBITDA decreased $16.2 million as compared to the prior year, resulting in a 1.9% decrease in 4-wall EBITDA margin.

The decrease was primarily due to an increase in COS - Product Costs and COS - Salaries & Benefits as a percentage of segment revenue of 0.7% and 0.9%, respectively.

Domestic Company-owned restaurant cost of sales as a percentage of segment revenue increased due to higher food costs and a 3.3% decline in comparable sales as well as the prior period benefit of approximately $5 million related to changes in our Papa Rewards program.

These increases in cost of sales were offset by lower local advertising costs in 2025 and the impact of refranchising 15 restaurants during the third quarter of 2024, as discussed above.

Items Below Operating Income

1 unchanged sentence

(In thousands, except per share amounts) Year Ended

December 29, 2024 December 31, 2023 Change

December 28, 2025 December 29, 2024 Increase

Operating income $ 89,147 $ 156,704 $ (67,557)

1 unchanged sentence

Income before income taxes 48,378 114,126 (65,748)

Income tax expense 29,929 20,874 9,055

Income tax expense (a)

(16,261) (29,929) (13,668)

Net income 32,117 84,197 (52,080)

4 unchanged sentences

Diluted earnings per common share $ 0.90 $ 2.54 $ (1.64)

(a) The signage of Income tax expense has been changed from the historic presentation for purposes of signage consistency with other expense items.

Net Interest Expense

Interest expense decreased approximately $0.9 million for the year ended December 29, 2024 compared to the prior year primarily due to lower average outstanding debt on our senior secured revolving credit facility (the “PJI Revolving Facility”), primarily offset by slightly higher rates during 2024.

The 53rd week of operations in 2023 also increased prior year interest expense by approximately $0.5 million.

Net interest expense decreased approximately $1.8 million for the year ended December 28, 2025 compared to the prior year primarily due to lower average interest rates during 2025.

Income Tax Expense

The effective income tax rate was 33.6% for 2025 and 26.2% for 2024.

The higher effective rate in 2024 was primarily due to impairment charges related to the International Transformation Plan, which resulted in unrecognized tax losses and prevented the Company from generating foreign tax credits.

Additionally, higher foreign withholding taxes and a tax shortfall from stock option exercises and the vesting of restricted shares in 2024 contributed to the higher rate.

The higher effective rate in 2025 was primarily due to lower pretax book income and larger tax shortfall generated by vesting of restricted shares during 2025.

(Dollars in thousands) Year Ended

5 unchanged sentences

Income Taxes” of “Notes to Consolidated Financial Statements” for additional information.

Net Income Attributable to Noncontrolling Interests - see “Note 9.

Noncontrolling Interests” of “Notes to Consolidated Financial Statements,” for information.

Net Income Attributable to Noncontrolling Interests

Net income included income attributable to noncontrolling interests of $1.6 million during 2025 and $0.7 million for the prior year.

The increase was due primarily to the refranchising of 85 Domestic Company-owned restaurants previously owned and operated by Colonel’s Limited, LLC, a consolidated joint venture.

The 2025 refranchising transaction resulted in the recognition of a $17.1 million gain during the year ended December 28, 2025, a portion of which was attributable to noncontrolling interests.

See “Note 21.

Divestitures” of “Notes to Consolidated Financial Statements” for further information.

Diluted Earnings Per Share

Diluted earnings per common share was $2.54 for the year ended December 29, 2024 compared to $2.48 for the year ended December 31, 2023, representing an increase of $0.06.

Diluted earnings per common share was $0.90 for the year ended December 28, 2025 compared to $2.54 for the year ended December 29, 2024, representing a decrease of $1.64.

Adjusted diluted earnings per common share, a non-GAAP measure, was $1.43 for the year ended December 28, 2025 compared to $2.34 for the year ended December 29, 2024, representing a decrease of $0.91.

See “Non-GAAP Measures” for additional information.

These changes were driven by the same factors impacting operating income, adjusted operating income, and income tax expense as discussed above.

In addition, diluted earnings per share and adjusted diluted earnings per share reflect higher income tax expense compared with 2023 due to the factors driving a higher effective tax rate in 2024 discussed above.

These changes were driven by the same factors impacting operating income and income tax expense as discussed above.

Non-GAAP Measures

3 unchanged sentences

GAAP and include the following:

adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share.

adjusted EBITDA, 4-wall EBITDA, 4-wall EBITDA margin, adjusted net income attributable to common shareholders, and adjusted diluted earnings per common share.

We believe that our non-GAAP financial measures enable investors to assess the operating performance of our business relative to our performance based on U.S.

GAAP results and relative to other companies.

We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board of Directors utilize to evaluate our operating performance, allocate resources and administer employee incentive plans.

We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board utilize to evaluate our operating performance, allocate resources and administer employee incentive plans.

The most directly comparable U.S.

GAAP measures to adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share are operating income, net income attributable to common shareholders and diluted earnings per common share, respectively.

These non-GAAP measures should not be construed as a substitute for or a better indicator of the

Company’s performance than the Company’s U.S.

GAAP measures to adjusted EBITDA, 4-wall EBITDA, adjusted net income attributable to common shareholders, and adjusted diluted earnings per common share, are net income, segment adjusted EBITDA, net income attributable to common shareholders, and diluted earnings per common share, respectively.

These non-GAAP measures should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s U.S.

GAAP results.

1 unchanged sentence

(In thousands, except per share amounts) December 28, 2025 December 29, 2024

Operating income $ 156,704 $ 147,142

Gain on sale of QC Center properties (a)

International restructuring costs (b)

UK repositioning and acquisition-related costs (c)

Other costs (d)

Adjusted operating income 148,183 157,025

Net Income $ 32,117 $ 84,197

Income tax expense 16,261 29,929

Net interest expense 40,769 42,578

Depreciation and amortization 92,245 69,407

Stock-based compensation expense 14,980 9,590

Gain on refranchising transaction, net and sale of QC Center properties (a)

(17,053) (41,289)

Restructuring costs (b)

13,780 27,363

Other costs (c)

Adjusted EBITDA $ 201,111 $ 227,270

Segment adjusted EBITDA - Domestic Company-owned restaurants $ 28,371 $ 43,659

General & Administrative - Domestic Company-owned restaurants 40,705 38,448

Training Costs - Domestic Company-owned restaurants (f)

4-wall EBITDA (g)

$ 69,076 $ 85,301

Segment revenue - Domestic Company-owned restaurants $ 662,523 $ 692,736

4-wall EBITDA margin (g)

10.4 % 12.3 %

Net income attributable to common shareholders $ 29,569 $ 83,320

Gain on sale of QC Center properties (a)

International restructuring costs (b)

UK repositioning and acquisition-related costs (c)

Other costs (d)

Gain on refranchising transaction, net and sale of QC Center properties (a)

(16,028) (41,289)

Restructuring costs (b)

12,593 27,273

Accelerated software depreciation (d)

Other costs (c)

Tax effect of adjustments (e)

(5,326) 1,934

Adjusted net income attributable to common shareholders (f)

Adjusted net income attributable to common shareholders

$ 47,200 $ 76,733

Diluted earnings per common share $ 0.90 $ 2.54

Gain on sale of QC Center properties (a)

International restructuring costs (b)

UK repositioning and acquisition-related costs (c)

Other costs (d)

Gain on refranchising transaction, net and QC Center properties (a)

(0.49) (1.25)

Restructuring costs (b)

Accelerated software depreciation (d)

Other costs (c)

Tax effect of adjustments (e)

Adjusted diluted earnings per common share (f)

Adjusted diluted earnings per common share

$ 1.43 $ 2.34

(a) Represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.

__________________________________

(a) For the year ended December 28, 2025, represents pre-tax gain on sale, net of transaction costs, realized upon the completion of the refranchising of 85 restaurants on November 24, 2025.

Net gain attributable to noncontrolling interests for the transaction was approximately $1.0 million.

See “Note 21.

Divestitures for additional details.

(b) Represents costs associated with the Company’s International Restructuring Plan.

For the year ended December 29, 2024, represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.

See “Note 21.

Divestitures” for additional details.

(b) Represents costs associated with the Company’s Enterprise Transformation Plan and International Transformation Plan.

Includes non-cash reversal of $1.2 million and $0.1 million related to the forfeiture of unvested stock-based compensation awards during the years ending December 28, 2025 and December 29, 2024, respectively.

See “Note 16.

Restructuring” for additional details.

(c) Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

(d) Represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants for the year ended December 29, 2024.

Refer to “Note 22.

Divestitures” for further details.

The year ended December 31, 2023 includes $2.0 million of severance and related costs associated with the transition of certain executives, $0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East, and $0.6 million accrual related to certain legal settlements.

Losses on disposal of equipment incurred in connection with the termination of a COVID-era program that pre-purchased store equipment due to supply chain challenges;

Costs associated with project-based strategic initiatives that are not related to our ongoing operations.

Costs incurred, net of anticipated insurance recoveries, arising from tornadoes that damaged the Texas QC Center as well as the restaurant support center and QC Center in Louisville, Kentucky.

(d) Represents incremental depreciation expense related to the shortened useful life of legacy capitalized software assets due to the ongoing development and deployment of our new omnichannel platforms and other technology improvements.

(e) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rate of 23.2% and 22.7% for the years ended December 28, 2025 and December 29, 2024, respectively.

(f) Amounts shown include the impact of dividends paid to participating securities.

(f) Training costs for our Domestic Company-owned restaurants were reclassified from Cost of sales to General & administrative expenses prospectively beginning with the year ended December 28, 2025.

We have included these training costs along with general & administrative expenses in the historical period when reconciling Segment adjusted EBITDA to 4-wall EBITDA to ensure comparability.

(g) 4-wall EBITDA is defined as Domestic Company-owned restaurants segment revenue less total Domestic Company-owned restaurants segment cost of sales.

Domestic Company-owned restaurants cost of sales include expenses incurred by our Domestic Company-owned restaurants in generating revenue, including cost of food, paper, and cleaning products (‘COS – Product Costs’), cost of restaurant-level labor (‘COS – Salaries & Benefits’), and costs of delivery expenses, Company-owned restaurant advertising costs, insurance, rent, aggregator fees, and other costs (‘COS – Other’).

4-wall EBITDA margin is defined as 4-wall EBITDA divided by segment revenue for our Domestic Company-owned restaurants segment.

We use 4-wall EBITDA for the purposes of internally evaluating the performance of our Domestic Company-owned restaurants, and we believe 4-wall EBITDA provides additional information to investors as to the unit economics and restaurant-level profitability of our Domestic Company-owned restaurants.

The most directly comparable U.S.

GAAP measure to 4-wall EBITDA is segment adjusted EBITDA, which is our segment performance measure as presented in the segment footnote to our Consolidated Financial Statements in accordance with Accounting Standards Codification 280.

See “Note 22.

Segment Information” of “Notes to Consolidated Financial Statements,” for further information regarding the Company’s segments.

In addition, we present free cash flow in this report, which is a non-GAAP measure.

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Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the PJI Revolving Facility.

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the revolving credit facility (the “PJI Revolving Facility”) that forms a part of our Second Amended and Restated Credit Agreement dated as of March 26, 2025 (the “Credit Agreement”).

Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases.

13 unchanged sentences

Total cash provided by operating activities was $126.0 million for the year ended December 28, 2025 compared to $106.6 million for the prior year.

The decrease of $86.4 million primarily reflects lower net income after considering the gain on sale of QC Center properties as well as unfavorable working capital changes in 2024, principally related to the following:

• Higher tax payments in 2024 due to higher income before income taxes, compared to lower prior year tax payments stemming from the application of 2022 overpayments towards 2023 tax payments;

• Higher accrual and accounts payable balances at December 31, 2023 related to the 53rd week of our 2023 fiscal year, which resulted in higher cash outflows in 2024.

The increase of $19.4 million primarily reflects favorable changes in working capital accounts related to higher accrued expenses and lower accounts payable cash outflows, as well as a favorable impact from timing of marketing spend within our advertising fund and a reduction in cash taxes paid compared to the prior period.

Investing Activities

Total cash used in investing activities was $17.3 million in 2024 compared to $75.1 million in 2023, a decrease of $57.8 million.

The decrease in cash used in investing activities was primarily due to cash proceeds of $46.7 million from the sale of two Domestic QC Centers, lower capital expenditures, and a $3.7 million increase in net repayments received on notes to franchisees.

We also received a $2.3 million investment distribution related to our deferred compensation plan during the year ended December 29, 2024.

Total cash used in investing activities was $21.5 million in 2025 compared to $17.3 million in 2024.

Net cash used in investing activities during 2025 primarily reflects $74.4 million of capital expenditures, which includes $9.7 million of additional capital expenditures related to natural disasters, partially offset by $6.3 million of related insurance proceeds.

These were partially offset by $34.5 million of proceeds received in the 2025 refranchising transaction and $6.4 million of repayments received on notes issued to franchisees.

Net cash used in investing activities during 2024 primarily reflects $72.5 million of capital expenditures, partially offset by net proceeds of $46.7 million from the sale of two Domestic QC Centers and $4.2 million of repayments received on notes issued to franchisees.

Financing Activities

Total cash used in financing activities was $91.7 million in 2024 compared to $124.1 million in 2023, a decrease of $32.4 million.

In 2024, the principal financing outflows were related to dividend payments of $60.6 million, net repayments of $17.3 million to the PJI Revolving Facility, $8.5 million in payments related to finance leases, and $3.6 million in tax payments on equity compensation award issuances.

In 2023, the principal financing outflows included $210.3 million in share repurchases as well as dividend payments of $58.5 million, partially offset by $159.0 million in net borrowings from the PJI Revolving Facility.

Total cash used in financing activities was $106.3 million in 2025 compared to $91.7 million in 2024.

In 2025, the principal financing outflows were related to dividend payments of $61.1 million, payments related to finance leases of $10.1 million, and distributions to noncontrolling interests of $5.7 million which were primarily to distribute proceeds from the 2025 refranchising transaction to our noncontrolling interest.

Cash used in financing activities also reflects the impact of net repayments of $27.7 million under the PJI Revolving Facility throughout the year, which includes the refinancing of our debt via the Credit Agreement during the first quarter of 2025.

This refinancing resulted in borrowings of $200.0 million under the new $200.0 million senior secured term loan (the “Term Loan”) that forms part of the Credit Agreement, from which the proceeds were used to repay $196.8 million to the PJI Revolving Facility as well as $3.2 million in related issuance costs.

In 2024, the principal financing outflows included dividend payments of $60.6 million, net repayments of $17.3 million under the PJI Revolving Facility, and payments related to finance leases of $8.5 million.

On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029.

Concurrent with the issuance of the Notes, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) replacing the Company’s previous credit agreement.

The Credit Agreement provides for the PJI Revolving Facility, a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million, of which up to $40.0 million is available as swingline loans and up to $80.0 million is available as letters of credit.

The PJI Revolving Facility will mature on September 14, 2026.

Our outstanding debt as of December 29, 2024 was $746.7 million, which was comprised of $400.0 million outstanding under the Notes and $346.7 million outstanding under the PJI Revolving Facility.

On March 26, 2025, the Company amended and restated the Amended and Restated Credit Agreement, dated as of September 14, 2021 and amended May 30, 2023 (together, the “Previous Credit Agreement”) with the Credit Agreement.

The Credit Agreement contains the Term Loan with a principal amount of $200.0 million and the PJI Revolving Facility, a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million (together with the Term Loan, the “PJI Credit Facilities”), of which up to $40.0 million is available as swingline loans and up to $80.0 million as letters of credit.

The PJI Credit Facilities will mature on March 26, 2030 (the “Maturity Date”) with term loans amortizing in quarterly installments commencing on June 30, 2026 in amounts as set forth in the Second Amended and Restated Credit Agreement and the unpaid balance maturing on the Maturity Date.

Our outstanding debt as of December 28, 2025 was $722.3 million, which was comprised of $400.0 million outstanding under the Notes, $200.0 million outstanding under the Term Loan, and $122.3 million outstanding under the PJI Revolving Facility.

Remaining availability under the PJI Revolving Facility was $477.7 million as of December 28, 2025.

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PJMF, our national marketing fund, has a $30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, that was most recently amended on September 30, 2025.

The PJMF Revolving Facility is secured by substantially all assets of PJMF.

The PJMF Revolving Facility is secured by substantially all the assets of PJMF.

The PJMF Revolving Facility matures on September 30, 2026, but is subject to annual renewals.

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Share Repurchases

As part of our long-term growth and capital allocation strategy, we are committed to investing in share repurchases to provide ongoing value and enhanced returns to our shareholders.

Share repurchases are part of our long-term growth and capital allocation strategy.

On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock.

The following table summarizes our repurchase activity for the years ended December 29, 2024 and December 31, 2023:

(In thousands, except average price per share)

Purchased Average

Share Aggregate

Purchased Maximum Dollar

Value of Shares

that May Yet Be

Purchased Under the

Plans or Programs

December 29, 2024 — $ — $ — $ 90,160

December 31, 2023 2,523 $ 83.10 $ 209,640 $ 90,160

We did not repurchase any shares subsequent to December 29, 2024.

There was no share repurchase activity during the years ended December 28, 2025 and December 29, 2024, and we did not repurchase any shares subsequent to December 28, 2025.

Approximately $90.2 million remained available under the Company’s share repurchase program as of February 20, 2026.

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Free Cash Flow

Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment.

Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment, excluding purchases of property and equipment related to damages from natural disasters.

We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment.

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We estimate that our capital expenditures during 2026 will be approximately $70 million to $80 million.

This estimate includes development of Company-owned restaurants and technology enhancements.

We intend to fund our capital expenditures with cash generated by operations and borrowings under the PJI Revolving Facility, as necessary.

This estimate includes capital outlays for development for existing Company-owned restaurants and for development of new restaurants as well as investments in technology platforms and our supply chain.

We intend to fund our capital expenditures with cash generated by operations and borrowings under our PJI Revolving Facility, as necessary.

We guarantee leases for certain Papa Johns North American franchisees who have purchased restaurants that were previously Company-owned.

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Litigation, Commitments and Contingencies” of “Notes to Consolidated Financial Statements” for additional information related to contractual and other commitments.

Impact of Inflation

In recent years, we have experienced price increases in food items and other commodities, labor and benefits, and fuel and other energy costs.

Inflationary pressures affect our profitability both directly, in our Company-owned restaurants and delivery mechanisms and through gross margins experienced by sales of food and supply items via our QC Centers, as well as indirectly, through higher food ingredient and paper and supply costs, rising fees from delivery aggregators driven by higher wage demands and increases in the cost of gasoline that, once reflected in upward price adjustments on their fees, can exert downward pressure on unit sales, reducing royalty fees we realize from our Domestic and International franchisees.

International and Enterprise Transformation Plans

We have incurred and expect to continue to incur certain corporate reorganization costs as a result of the ongoing restructuring and transformation of our business.

In December 2023, we announced the International Transformation Plan, which was completed during the fourth quarter of 2025.

We incurred total restructuring related costs of $34.4 million in connection with the International Transformation Plan.

As previously discussed, in December 2025, our Board of Directors approved the first phase of the Enterprise Transformation Plan.

The initiation of these actions resulted in costs of $7.7 million incurred during the fourth quarter of 2025.

In February 2026, our Board of Directors approved the second phase of the Enterprise Transformation Plan.

We currently estimate that we will incur restructuring charges between approximately $24 million and $31 million related to actions approved to date, inclusive of the $7.7 million recognized during 2025, and the remainder we expect will be recognized during 2026 and 2027.

Impact of Inflation and Macroeconomic Trends

Inflationary pressures affect our profitability both directly, in our Company-owned restaurants and delivery mechanisms and through gross margins experienced by sales of food and supply items via our QC Centers, as well as indirectly, through higher food ingredient and paper and supply costs, rising fees from delivery aggregators driven by higher wage demands and increases in delivery costs that, once reflected in upward price adjustments on their fees, can exert downward pressure on unit sales, reducing royalty fees we realize from our Domestic and International franchisees.

Compensating menu price increases are subject to competitive pressure in the markets in which we operate.

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Quantitative and Qualitative Disclosures About Market Risk.”

While we continue to monitor the impact of current and potential tariffs and assess our ability to manage any impacts, we currently do not believe that tariffs in the form currently proposed or enacted by the United States government would have a significant negative impact to our Domestic business, as a substantial proportion of our ingredients and supply items are sourced domestically.

However, the extent to which tariffs may increase the price of other goods and services and how they may alter discretionary spending patterns by our customers or impact our franchisees’ profitability is currently unknown.

Forward-Looking Statements

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Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “outlook”, “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws.

Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, depreciation and amortization, interest expenses, tax rates, system-wide sales, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product and digital innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, repositioning of the UK market, International restructuring plans, including timing of completion, expected benefits and costs, International consumer demand, adoption of new accounting standards, and other financial and operational measures.

Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, depreciation and amortization, interest expenses, tax rates, system-wide sales, transformation plans, adjusted EBITDA, 4-wall EBITDA, the current economic environment, industry trends, consumer behavior and preferences, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product, investments in digital and technology innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, impacts of tariffs, insurance recoveries for damages related to natural disasters, adoption of new accounting standards, and other financial and operational measures.

Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control.

Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.

Therefore, actual outcomes and results may differ materially from those matters expressed or implied

in such forward-looking statements.

The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:

• the ability of the Company to manage challenging macroeconomic conditions in the United States and internationally;

• economic conditions in the United States and international markets;

• changes in pricing or other marketing or promotional strategies by competitors, which has adversely affected, and may continue to adversely affect, sales and profitability;

and new product and concept developments by food industry competitors;

• changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending, including higher unemployment;

• increased risks associated with our International operations, including economic and political conditions, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets, regulatory changes, increased tariffs and other trade barriers, and new restaurant growth;

• the adverse impact on the Company or our results caused by global health concerns, product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our Company-owned or franchised restaurants or others in the restaurant industry;

• the ability of the Company to retain key management and manage staffing and labor shortages at Company and/or franchised restaurants and our Quality Control Centers;

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• the increased risk of phishing, ransomware and other cyber-attacks;

• risks to the global economy and our business related to geopolitical conflicts, including those in Ukraine and the Middle East;

• risks to the global economy and our business related to geopolitical conflicts in areas in which we or our franchisees operate;

• increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective;

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• risks related to social media, including publicity adversely and rapidly impacting our brand and reputation;

• aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability;

and new product and concept developments by food industry competitors;

• the effectiveness of our technology investments and changes in unit-level operations;

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• disruption of our supply chain or commissary operations which could be caused by our sole source of supply of mozzarella cheese, desserts, garlic cups or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control;

• the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business;

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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-K

Item 7. Management’s Discussion and Analysis