PAPA JOHNS INTERNATIONAL INC 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) Consolidated Financial Statements: • Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 • Consolidated Statements of Operations for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 • Consolidated Statements of Comprehensive Income for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 • Consolidated Statements of Stockholders’ Deficit for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 • Consolidated Statements of Cash Flows for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 • Notes to Consolidated Financial Statements 53 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Papa John’s International, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Papa John’s International, Inc. and subsidiaries (the Company) as of December 28, 2025 and December 29, 2024, the related consolidated statements of operations, comprehensive income, stockholders' deficit and cash flows for each of the three years in the period ended December 28, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates. 54 Insurance Reserves Description of the Matter As described in Note 2 to the consolidated financial statements, the Company maintains insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage. As of December 28, 2025, the Company’s insurance reserve was $61.8 million. The insurance reserves are accrued based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and the Company’s claim loss experience. Auditing the insurance reserve was complex and judgmental due to the actuarial valuation methods and assumptions related to the loss development factors and loss trends. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the valuation of the insurance reserve. This included management’s review of the actuarial valuation methods and the assumptions related to the loss development factors and loss trends. To test the valuation of the Company’s insurance reserve, we performed audit procedures that included, among others, assessing the appropriateness of the actuarial valuation methods and testing the significant assumptions discussed above. We also developed an independent range of reserves for comparison to the Company’s recorded amounts, using standard actuarial methods. We involved our actuarial specialists to assist with our audit procedures. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2019. Louisville, Kentucky February 26, 2026 55 Papa John’s International, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except per share amounts) December 28, 2025 December 29, 2024 Assets Current assets: Cash, cash equivalents, and restricted cash $ 36,950 $ 37,955 Accounts receivable (less allowance for credit losses of $ 12,129 in 2025 and $ 8,468 in 2024) 103,068 101,677 Notes receivable, current portion 3,387 4,928 Income tax receivable 6,189 2,214 Inventories 34,336 35,245 Prepaid expenses and other current assets 48,895 48,586 Assets held for sale 4,607 — Total current assets 237,432 230,605 Property and equipment, net 251,312 273,272 Finance lease right-of-use assets, net 39,039 28,761 Operating lease right-of-use assets 161,606 184,425 Notes receivable, less current portion (less allowance for credit losses of $ 17,777 in 2025 and $ 15,238 in 2024) 3,262 8,867 Goodwill 67,576 75,460 Other assets 77,281 87,562 Total assets $ 837,508 $ 888,952 Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit Current liabilities: Accounts payable $ 61,218 $ 61,842 Income and other taxes payable 8,941 11,987 Accrued expenses and other current liabilities 169,015 155,579 Current deferred revenue 13,096 15,519 Current finance lease liabilities 9,999 7,280 Current operating lease liabilities 23,725 25,756 Current portion of long-term debt 4,997 — Total current liabilities 290,991 277,963 Deferred revenue 19,294 21,287 Long-term finance lease liabilities 30,804 22,885 Long-term operating lease liabilities 156,405 173,557 Long-term debt, net 710,436 741,650 Other long-term liabilities 62,264 64,923 Total liabilities 1,270,194 1,302,265 Commitments and contingencies (Note 18) Redeemable noncontrolling interests 980 903 Stockholders’ deficit: Common stock ($ 0.01 par value per share; issued 49,303 at December 28, 2025 and 49,283 at December 29, 2024) 493 493 Additional paid-in capital 457,112 452,449 Accumulated other comprehensive loss ( 6,452 ) ( 8,456 ) Retained earnings 210,763 241,717 Treasury stock ( 16,502 shares at December 28, 2025 and 16,637 shares at December 29, 2024, at cost) ( 1,106,666 ) ( 1,115,729 ) Total stockholders’ deficit ( 444,750 ) ( 429,526 ) Noncontrolling interests in subsidiaries 11,084 15,310 Total Stockholders’ deficit ( 433,666 ) ( 414,216 ) Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit $ 837,508 $ 888,952 See accompanying notes. 56 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Operations Year ended (In thousands, except per share amounts) December 28, 2025 December 29, 2024 December 31, 2023 Revenues: Company-owned restaurant sales $ 675,657 $ 724,666 $ 760,825 Franchise royalties and fees 190,952 187,032 194,987 Commissary revenues 929,944 899,664 924,648 Other revenues 90,526 83,682 98,037 Advertising funds revenue 166,729 164,343 157,216 Total revenues 2,053,808 2,059,387 2,135,713 Costs and expenses: Cost of sales 1,460,492 1,478,426 1,558,438 General and administrative expenses 244,282 190,515 208,083 Depreciation and amortization 92,245 69,407 64,090 Advertising funds expense 167,642 164,335 157,960 Total costs and expenses 1,964,661 1,902,683 1,988,571 Operating income 89,147 156,704 147,142 Net interest expense ( 40,769 ) ( 42,578 ) ( 43,469 ) Income before income taxes 48,378 114,126 103,673 Income tax expense (a) ( 16,261 ) ( 29,929 ) ( 20,874 ) Net income 32,117 84,197 82,799 Net income attributable to noncontrolling interests ( 1,586 ) ( 711 ) ( 701 ) Net income attributable to the Company $ 30,531 $ 83,486 $ 82,098 Net income attributable to common shareholders $ 29,569 $ 83,320 $ 82,098 Basic earnings per common share $ 0.90 $ 2.55 $ 2.49 Diluted earnings per common share $ 0.90 $ 2.54 $ 2.48 Basic weighted average common shares outstanding 32,851 32,717 32,931 Diluted weighted average common shares outstanding 32,945 32,819 33,159 (a) The signage of Income tax expense has been changed from the historic presentation for purposes of signage consistency with other expense items. See accompanying notes. 57 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Year Ended (In thousands) December 28, 2025 December 29, 2024 December 31, 2023 Net income $ 32,117 $ 84,197 $ 82,799 Other comprehensive income (loss), before tax: Foreign currency translation adjustments 3,269 ( 1,094 ) 1,560 Interest rate swaps (1) ( 646 ) 215 1,453 Other comprehensive income (loss), before tax 2,623 ( 879 ) 3,013 Income tax effect: Foreign currency translation adjustments ( 765 ) 274 ( 353 ) Interest rate swaps (2) 146 ( 48 ) ( 328 ) Income tax effect ( 619 ) 226 ( 681 ) Other comprehensive income (loss), net of tax 2,004 ( 653 ) 2,332 Comprehensive income before attribution to noncontrolling interests 34,121 83,544 85,131 Less: comprehensive income, redeemable noncontrolling interests ( 140 ) ( 274 ) ( 198 ) Less: comprehensive income, nonredeemable noncontrolling interests ( 1,446 ) ( 437 ) ( 503 ) Comprehensive income attributable to the Company $ 32,535 $ 82,833 $ 84,430 ___________________________________ (1) Amounts reclassified out of accumulated other comprehensive loss into net interest expense include $ 223 , $ 632 and $ 173 for the years ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively. (2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $( 52 ), $( 143 ) and $( 39 ) for the years ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively. See accompanying notes. 58 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Deficit Papa John’s International, Inc. (In thousands) Common Stock Shares Outstanding Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss (2) Retained Earnings Treasury Stock Non-redeemable Noncontrolling Interests in Subsidiaries Total Stockholders’ Deficit Balance at December 29, 2024 32,646 $ 493 $ 452,449 $ ( 8,456 ) $ 241,717 $ ( 1,115,729 ) $ 15,310 $ ( 414,216 ) Net income (1) — — — — 30,531 — 1,446 31,977 Other comprehensive income, net of tax — — — 2,004 — — — 2,004 Dividends on common stock ($ 1.84 per share) — — 98 — ( 61,485 ) — — ( 61,387 ) Exercise of stock options 9 — 414 — — — — 414 Stock-based compensation expense — — 14,980 — — — — 14,980 Issuance of restricted stock 170 — ( 7,726 ) — — 7,710 — ( 16 ) Tax effect of restricted stock awards ( 45 ) — ( 2,003 ) — — — — ( 2,003 ) Distributions to noncontrolling interests — — — — — — ( 5,672 ) ( 5,672 ) Other 21 — ( 1,100 ) — — 1,353 — 253 Balance at December 28, 2025 32,801 $ 493 $ 457,112 $ ( 6,452 ) $ 210,763 $ ( 1,106,666 ) $ 11,084 $ ( 433,666 ) ___________________________________ (1) Net income for the year ended December 28, 2025 excludes $ 140 allocable to the redeemable noncontrolling interests for our joint venture arrangements. (2) At December 28, 2025, the accumulated other comprehensive loss of $ 6,452 was comprised of net unrealized foreign currency translation loss of $ 5,828 and a net unrealized loss on the interest rate swap agreements of $ 624 . See accompanying notes. 59 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Deficit Papa John’s International, Inc. (In thousands) Common Stock Shares Outstanding Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss (2) Retained Earnings Treasury Stock Non-redeemable Noncontrolling Interests in Subsidiaries Total Stockholders’ Deficit Balance at December 31, 2023 32,488 $ 492 $ 452,290 $ ( 7,803 ) $ 219,027 $ ( 1,123,098 ) $ 15,476 $ ( 443,616 ) Net income (1) — — — — 83,486 — 437 83,923 Other comprehensive income, net of tax — — — ( 653 ) — — — ( 653 ) Dividends on common stock ($ 1.84 per share) — — 124 — ( 60,796 ) — — ( 60,672 ) Exercise of stock options 23 1 1,054 — — — — 1,055 Stock-based compensation expense — — 9,590 — — — — 9,590 Issuance of restricted stock 177 — ( 6,539 ) — — 6,539 — — Tax effect of restricted stock awards ( 54 ) — ( 3,619 ) — — — — ( 3,619 ) Distributions to noncontrolling interests — — — — — — ( 603 ) ( 603 ) Other 12 — ( 451 ) — — 830 — 379 Balance at December 29, 2024 32,646 $ 493 $ 452,449 $ ( 8,456 ) $ 241,717 $ ( 1,115,729 ) $ 15,310 $ ( 414,216 ) ___________________________________ (1) Net income for the year ended December 29, 2024 excludes $ 274 allocable to the redeemable noncontrolling interests for our joint venture arrangements. (2) At December 29, 2024, the accumulated other comprehensive loss of $ 8,456 was comprised of net unrealized foreign currency translation loss of $ 8,332 and a net unrealized loss on the interest rate swap agreements of $ 124 . See accompanying notes. 60 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Deficit Papa John’s International, Inc. (In thousands) Common Stock Shares Outstanding Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss (2) Retained Earnings Treasury Stock Non-redeemable Noncontrolling Interests in Subsidiaries Total Stockholders’ Deficit Balance at December 25, 2022 34,736 $ 491 $ 449,829 $ ( 10,135 ) $ 195,856 $ ( 922,434 ) $ 15,729 $ ( 270,664 ) Net income (1) — — — — 82,098 — 503 82,601 Other comprehensive loss, net of tax — — — 2,332 — — — 2,332 Dividends on common stock ($ 1.76 per share) — — 121 — ( 58,927 ) — — ( 58,806 ) Exercise of stock options 43 1 2,251 — — — — 2,252 Acquisition of Company common stock (3) ( 2,523 ) — — — — ( 212,444 ) — ( 212,444 ) Stock-based compensation expense — — 17,924 — — — — 17,924 Issuance of restricted stock 240 — ( 7,149 ) — — 7,149 — — Tax effect of restricted stock awards ( 77 ) — ( 6,416 ) — — — — ( 6,416 ) Distributions to noncontrolling interests — — — — — — ( 756 ) ( 756 ) Other 69 — ( 4,270 ) — — 4,631 — 361 Balance at December 31, 2023 32,488 $ 492 $ 452,290 $ ( 7,803 ) $ 219,027 $ ( 1,123,098 ) $ 15,476 $ ( 443,616 ) ___________________________________ (1) Net income for the year ended December 31, 2023 excludes $ 198 allocable to the redeemable noncontrolling interests for our joint venture arrangements. (2) At December 31, 2023, the accumulated other comprehensive loss of $ 7,803 was comprised of net unrealized foreign currency translation loss of $ 7,490 and a net unrealized loss on the interest rate swap agreements of $ 314 . (3) Acquisition of Company common stock for the year ended December 31, 2023, includes $ 2,804 of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022. See accompanying notes. 61 Papa John’s International, Inc. and Subsidiaries Consolidated Statements of Cash Flows Year ended (In thousands) December 28, 2025 December 29, 2024 December 31, 2023 Operating activities Net income $ 32,117 $ 84,197 $ 82,799 Adjustments to reconcile net income to net cash provided by operating activities: Provision for allowance for credit losses on accounts and notes receivable 8,396 2,737 5,393 Depreciation and amortization 92,245 69,407 64,090 Refranchising (gain)/loss and impairment loss ( 15,768 ) 18,340 — Deferred income taxes 6,739 ( 3,037 ) ( 5,991 ) Stock-based compensation expense 14,980 9,590 17,924 Loss/(gain) on disposal of property and equipment 2,800 ( 41,953 ) — Other 1,407 1,711 146 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable ( 7,562 ) ( 465 ) ( 4,920 ) Income tax receivable ( 3,908 ) 345 6,212 Inventories 17 851 5,441 Prepaid expenses and other current assets 816 319 1,212 Other assets and liabilities ( 8,269 ) ( 8,774 ) ( 11,803 ) Accounts payable ( 620 ) ( 10,043 ) 22,031 Income and other taxes payable ( 3,098 ) ( 5,678 ) 9,087 Accrued expenses and other current liabilities 6,960 ( 2,035 ) 18,313 Deferred revenue ( 3,635 ) ( 6,245 ) ( 3,704 ) Advertising fund assets and liabilities 2,383 ( 2,635 ) ( 13,175 ) Net cash provided by operating activities 126,000 106,632 193,055 Investing activities Purchases of property and equipment ( 64,695 ) ( 72,484 ) ( 76,620 ) Purchases of property and equipment related to damages from natural disasters ( 9,740 ) — — Insurance proceeds related to damages from natural disasters 6,300 — — Notes issued — ( 154 ) ( 4,338 ) Repayments of notes issued 6,447 4,152 4,655 Acquisitions, net of cash acquired — ( 125 ) ( 5,613 ) Proceeds from dispositions and refranchising, net of cash transferred 34,500 49,016 3,457 Proceeds from investments 4,739 2,275 4,405 Proceeds from the sale of property and equipment 963 — — Other — ( 28 ) ( 1,069 ) Net cash used in investing activities ( 21,486 ) ( 17,348 ) ( 75,123 ) Financing activities Net (repayments) proceeds from revolving credit facilities ( 224,471 ) ( 17,268 ) 159,000 Proceeds from term loan 200,000 — — Debt issuance costs ( 3,223 ) — — Proceeds from exercise of stock options 414 1,055 2,252 Acquisition of Company common stock (including excise tax payment) — ( 2,080 ) ( 210,348 ) Dividends paid to common stockholders ( 61,141 ) ( 60,559 ) ( 58,451 ) Tax payments for equity award issuances ( 2,003 ) ( 3,619 ) ( 6,416 ) Distributions to noncontrolling interests ( 5,735 ) ( 825 ) ( 1,320 ) Principal payments on finance leases ( 10,079 ) ( 8,529 ) ( 8,821 ) Other ( 19 ) 153 28 Net cash used in financing activities ( 106,257 ) ( 91,672 ) ( 124,076 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 738 ( 244 ) ( 642 ) Change in cash, cash equivalents, and restricted cash ( 1,005 ) ( 2,632 ) ( 6,786 ) Cash, cash equivalents, and restricted cash at beginning of period 37,955 40,587 47,373 Cash, cash equivalents, and restricted cash at end of period $ 36,950 $ 37,955 $ 40,587 See accompanying notes. 62 Papa John’s International, Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Description of Business Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first person notations of “we,” “us” and “our”), operates and franchises pizza delivery and carryout restaurants under the trademark “Papa Johns,” in 50 countries and territories as of December 28, 2025. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties and sales of franchise and development rights, information systems equipment, and software and related services. We generate revenues from the operation of our Quality Control Centers (“QC Centers”) which supply pizza sauce, dough, food products, paper products, smallwares and cleaning supplies to restaurants. We also derive revenue from contributions received into our national marketing fund. 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. 2. Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of Papa John’s International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. Certain prior year amounts herein have been reclassified to conform to the current year presentation. Variable Interest Entity Papa Johns Domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a consolidated nonstock corporation designed to operate at break-even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the Domestic restaurants, of which approximately 86 percent are franchised, and does not have sufficient equity to fund its operations without these ongoing financial contributions. Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary. Fiscal Year Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2023 fiscal year, which consists of 53 weeks. Use of Estimates The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Significant items that are subject to such estimates and assumptions include the allowance for credit losses on accounts and notes receivable, property and equipment, net and impairment of long-lived assets, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates. Revenue Recognition Revenue is measured based on consideration received from customers and excludes waivers or incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Delivery costs, including freight associated with our Domestic commissaries and other sales, are accounted for as fulfillment costs and are included in operating costs. 63 The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Restaurant Sales Our Company-owned restaurants principally generate revenues from retail sales of pizza and other food and beverage products. Revenues from Company-owned restaurants are recognized when the products are delivered to or carried out by customers, which is the point in time the performance obligation is satisfied. Our North American customer loyalty program, Papa Rewards, is a spend-based program that rewards customers with points for each purchase. Papa Rewards points are accumulated and redeemed for dollar off discounts (“Papa Dough”), and points expire after a year of inactivity. Once points are redeemed, Papa Dough may be used on future purchases within a six-month expiration window. Effective in January 2026, Papa Dough earned on new orders may be used on future purchases within a 60-day expiration window. The accrued liability in the Consolidated Balance Sheets, and corresponding reduction of Company-owned restaurant sales in the Consolidated Statements of Operations, is for the estimated reward redemptions at Domestic Company-owned restaurants based upon estimated redemption patterns. The liability related to Papa Rewards is calculated using the estimated redemption value for which the points and accumulated rewards are expected to be redeemed. Revenue is recognized when the customer redeems the Papa Dough reward and when the points or Papa Dough reward expires. Franchise Royalties and Fees Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as those restaurant sales occur. Franchise royalties are contractually based and require the franchisee to remit continuing fees to the Company as a percentage of the applicable restaurant’s sales in exchange for the right to use certain intellectual property. Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5 % of sales for franchised units and 3 % of sales for sub-franchised units, with the majority of our existing franchised restaurants having a 5 % contractual royalty rate in effect. Franchise royalties are billed on a monthly basis. Incentives offered from time to time, including new restaurant incentives, will reduce the contractual royalty rate paid. Any royalty reductions, including waivers or those offered as part of a new restaurant development incentive or as incentive for other behaviors, including acceleration of restaurant remodels or equipment upgrades, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. The majority of initial franchise license fees and area development exclusivity fees are from International locations. Initial franchise license fees are billed at the restaurant opening date. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be deferred and amortized on a straight-line basis beginning at the restaurant opening date through the term of the franchise agreement, which is typically 10 years. Franchise license renewal fees for both Domestic and International locations, which generally occur every 10 years, are billed before the renewal date. Fees received for future license renewal periods are deferred and amortized over the life of the renewal period. Area development exclusivity fees are billed upon execution of the development agreements which grant the right to develop franchised restaurants in future periods in specific geographic areas. Area development exclusivity fees are allocated on a pro rata basis to all restaurants opened under that specific development agreement. These fees are deferred and amortized over the term of the related franchise agreements, which is typically 10 years. Commissary Revenues Commissary revenues are comprised of food and supplies sold to franchised restaurants at a fixed markup and are recognized as revenue upon shipment of the related products to the franchisees, which is the point in time the performance obligation is satisfied. Payments are generally due within 30 days. Franchisees have the opportunity to earn incentive-based rebates as they increase volume and open new restaurants, which are recorded as a reduction to Commissary revenues. Other incentive programs are offered to franchisees related to new restaurant openings, such as new restaurant equipment incentives. New restaurant equipment incentives are recorded as a reduction of Commissary revenues over the term of the related incentive agreement, which is generally three to five years . Other Revenues Other revenues primarily includes revenues derived from our online and mobile ordering business and fees for information services. Fees for information services, including software maintenance fees, help desk fees, centralized call center fees, and online ordering fees are recognized as revenue as such services are provided and are included in Other revenues. 64 Our gift cards do not have expiration dates and we do not deduct non-usage fees. While the Company and the franchisees continue to honor all gift cards presented for payment, the likelihood of redemption may be determined to be remote for certain cards due to long periods of inactivity. In these circumstances, the Company recognizes breakage revenue for amounts not subject to unclaimed property laws. Based upon our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote. Breakage revenue is recognized over time in proportion to estimated redemption patterns as Other revenues. Commissions on gift cards sold by third parties are recorded as a reduction to Deferred revenue and a reduction to Other revenues based upon estimated redemption patterns. Rental income, primarily derived from properties leased by the Company and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms. Advertising Funds Revenue Advertising funds revenue primarily represents contributions made to PJMF, our national marketing fund, via a required established percentage of monthly restaurant sales (subject, in certain instances, to lower rates based on certain incentives). Advertising funds revenue also contains contributions made to a marketing fund designated for Canada, Alaska, and Hawaii, other Domestic local marketing funds (“Co-op” or “Co-operative” funds), and our international marketing funds. When we are determined to be the principal in these arrangements, advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations. Our obligation related to these funds is to develop and conduct advertising activities in a specific country, region, or market, including the placement of electronic and print materials. Advertising Funds Expense Advertising funds expense includes the costs of developing and administering our advertising and promotional activities, which are administered through PJMF, our marketing fund for Canada, Alaska, and Hawaii, various local market Co-operative advertising funds for the Domestic Papa Johns system, and through our international marketing funds to support our International business. This includes the cost of advertising via television, print, digital, mobile marketing and social media channels as well as local restaurant activities such as mail coupons, door hangers and promotional items. The Co-op funds are responsible for developing and conducting advertising activities in a specific market, including the placement of electronic and print materials developed by PJMF. Marketing expenses incurred by PJMF are accrued and expensed when the franchise advertising revenues are recognized, as PJMF is designed to operate at break-even. Leases Lease expense is recognized on a straight-line basis over the expected life of the lease term for operating leases, whereas lease expense follows an accelerated expense recognition for finance leases. A lease term often includes option periods, available at the inception of the lease. Lease expense is comprised of operating and finance lease costs, short-term lease costs, and variable lease costs, which primarily include common area maintenance, real estate taxes, and insurance for the Company’s real estate leases. Lease costs also include variable rent, which is primarily related to the Company’s supply chain tractor and trailer leases that are based on a rate per mile. Stock-Based Compensation Compensation expense for equity grants is estimated at fair value on the grant date, net of projected forfeitures, and is recognized over the requisite service period. We have elected a policy to estimate forfeitures in determining the amount of stock-based employee compensation expense. Management evaluates its award grants and modifications and will adjust the fair value if any are determined to be spring-loaded. See “Note 19. Equity Compensation” for additional information. Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with maturity of three months or less at date of purchase. These investments are carried at cost, which approximates fair value. As further described in “Note 21. Divestitures,” restricted cash as of December 28, 2025 includes amount held in escrow in connection with the refranchising of 85 Domestic Company-owned restaurants to a third party. The escrowed funds are contractually restricted pending the final settlement of certain post-closing adjustments and the assignment of certain remaining lease assignments to the buyer, which we expect to take place in early 2026. Because the Company does not have the ability to access these funds for general corporate purposes until the specified conditions are satisfied, the amounts are classified as restricted cash on the Consolidated Balance Sheets. Below is a reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets: 65 (In thousands) December 28, 2025 December 29, 2024 Cash and cash equivalents $ 34,591 $ 37,955 Restricted cash 2,359 — Total cash, cash equivalents, and restricted cash $ 36,950 $ 37,955 Accounts Receivable Substantially all accounts receivable is due from franchisees for purchases of food, paper products, point of sale equipment, information systems and related services, marketing and royalties. Credit is extended based on an evaluation of the franchisee’s financial condition and collateral is generally not required. An allowance for credit losses is an estimate of lifetime losses, even if remote, based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics and macroeconomic factors. Account balances are charged off against the allowance after recovery efforts have ceased. Notes Receivable The Company has provided financing to select Domestic and International franchisees principally for use in the construction and development of their restaurants and for the purchase of restaurants from the Company or other franchisees. Most notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchise. We establish an allowance for credit losses for franchisee notes receivables to reduce the outstanding notes receivable to their net realizable values based on estimated lifetime losses derived from a review of each franchisee’s economic performance and market conditions after consideration of the fair value of our underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees. Note balances are charged off against the allowance after recovery efforts have ceased. Interest income recorded on franchisee loans was approximately $ 0.6 million in 2025 and $ 1.1 million in each of 2024 and 2023 and is reported in Net interest expense in the accompanying Consolidated Statements of Operations. Inventories Inventories, which consist of food products, paper goods, supplies and smallwares are stated at the lower of cost, determined under the first-in, first-out (FIFO) method, or net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets (generally five to ten years for restaurant, commissary and other equipment, twenty to forty years for buildings and improvements, and five years for technology and communication assets). The useful life estimate for an asset is re-assessed when facts and circumstances indicate the period over which the asset is expected to provide economic benefit has changed, which can occur for various reasons including technological advancements, a demonstrable change in usage patterns, market demand, or legal or regulatory changes. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including the first renewal period (generally five to ten years ). Depreciation expense was $ 80.8 million in 2025, $ 59.6 million in 2024 and $ 54.3 million in 2023. 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. Deferred Costs We capitalize certain information systems development and related costs that meet established criteria. Amounts capitalized, which are included in property and equipment, are amortized principally over periods not exceeding five years upon completion of the related information systems project. Total costs capitalized were approximately $ 5.2 million in 2025 and $ 4.4 million in 2024 and $ 4.1 million 2023. The unamortized information systems development costs approximated $ 10.4 million and $ 10.3 million as of December 28, 2025 and December 29, 2024, respectively. 66 Acquisitions During 2023, as part of our investment to reposition our UK business, the Company acquired a portfolio of 118 previously franchised Papa Johns restaurants in the UK market. During the year ended December 31, 2023, the Company incurred $ 2.1 million of acquisition and transition costs related to these acquisitions, which were recorded within General and administrative expenses and within the International segment in the Consolidated Statements of Operations. Total consideration was approximately $ 15.2 million, of which $ 13.7 million was pre-existing accounts receivable and notes receivable and is classified as a noncash investing transaction within the Consolidated Statements of Cash Flows for the year ended December 31, 2023. The effect of the acquisitions was not material to the Company’s Consolidated Financial Statements. We also acquired one Domestic restaurant during the year ended December 29, 2024 and ten Domestic restaurants during the year ended December 31, 2023. Cash payments, net of cash acquired related to these acquisitions were $ 0.1 million and $ 4.1 million during the years ended December 29, 2024 and December 31, 2023, respectively, which were classified as cash used in investing activities within the Consolidated Statements of Cash Flows. The effect of the acquisitions was not material to the Company’s Consolidated Financial Statements. Intangible Assets — Goodwill We evaluate goodwill annually as of the first day of the fourth quarter or whenever we identify certain triggering events or circumstances that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Such tests are completed separately with respect to the goodwill of each of our reporting units, which includes our Domestic Company-owned restaurants, United Kingdom, and China operations. We may perform a qualitative assessment or move directly to the quantitative assessment for any reporting unit in any period if we believe that it is more efficient or if impairment indicators exist. We performed our annual goodwill impairment testing as of the first day of the fourth quarter of 2025. We elected to perform a quantitative assessment for our Domestic Company-owned restaurants, United Kingdom, and China reporting units with the assistance of a third-party valuation specialist. Our fair value calculations for each reporting unit considered both an income approach and a market approach. The income approach used discounted projected net cash flows, for which the most sensitive inputs requiring management estimation are future revenue growth rates and operating margins. In determining a weighted-average cost of capital for the income approach, the selected discount rate considered the risk and nature of each reporting unit’s cash flow and the rates of return market participants would require to invest their capital in the reporting unit. Our market approach, which includes the guideline public company method, utilized pricing multiples derived from an analysis of comparable publicly traded companies. We believe the comparable companies we evaluate as market participants serve as an appropriate reference because those companies have similar risks, participate in similar markets, provide similar products and services for their customers and compete with us directly. Based on our quantitative assessment, the fair value of the three reporting units substantially exceeded their respective carrying values, and thus there was no impairment to goodwill. Subsequent to completing our goodwill impairment tests and through the year ended December 28, 2025, no indicators of impairment were identified. See “Note 11. Goodwill” for additional information. Deferred Income Tax Accounts and Tax Reserves We are subject to income taxes in the United States and several foreign jurisdictions. Management judgment is required in determining the 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. The effective income tax rate includes the estimated domestic state effective income tax rate and applicable foreign income tax rates. The effective income tax rate is also impacted by various permanent items and credits, net of any related valuation allowances, and can vary based on changes in estimated annual income. Our effective income tax rates were 33.6 % and 26.2 % for the years ended December 28, 2025 and December 29, 2024, respectively. The higher effective tax rates during 2025 were primarily due to lower pretax book income and larger tax shortfall generated by vesting of restricted shares. 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 netted by tax jurisdiction. 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). The effect on deferred taxes due to changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts 67 we expect to realize. Deferred tax assets and liabilities are recorded within Other assets and Other long-term liabilities on the Consolidated Balance Sheets. Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues and adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures. See “Note 17. Income Taxes” for additional information. Insurance Reserves Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage provided to our employees are funded by the Company up to certain retention limits which range up to $ 0.8 million. Losses are accrued based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our claims loss experience. The determination of the recorded insurance reserves is complex due to the actuarial valuation methods utilized in determining the reserve and the assumptions related to the loss development factors and loss trends. The estimated insurance claims losses could be significantly affected should the frequency or ultimate cost of claims differ significantly from historical trends used to estimate the insurance reserves recorded by the Company. The Company records estimated losses above retention within its reserve with a corresponding receivable for expected amounts due from insurance carriers. As of December 28, 2025, our insurance reserve was $ 61.8 million as compared to $ 65.7 million as of December 29, 2024 and was primarily related to auto liability and workers’ compensation claims. Of these amounts, approximately $ 30.7 million and $ 32.0 million were recorded in Accrued expenses and other current liabilities and $ 31.1 million and $ 33.7 million were recorded in Other long-term liabilities on the Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024, respectively. Our reserves include claim costs above our retention that have a corresponding receivable. Our insurance receivable for claims above retention totaled $ 42.8 million and $ 45.2 million as of December 28, 2025 and December 29, 2024, respectively. Of these amounts, approximately $ 21.4 million and $ 22.3 million were recorded in Prepaid expenses and other current assets, and $ 21.3 million and $ 22.9 million were recorded in Other assets on the Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024, respectively. Derivative Financial Instruments We recognize all derivatives on the balance sheet at fair value. At inception and on an ongoing basis, we assess whether each derivative that qualifies for hedge accounting continues to be highly effective in offsetting changes in the cash flows of the hedged item. If the derivative meets the hedge criteria as defined by certain accounting standards, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of assets, liabilities or firm commitments through earnings or recognized in Accumulated other comprehensive loss (“AOCL”) until the hedged item is recognized in earnings. Refer to “Note 12. Debt” for additional details related to derivative financial instruments. Noncontrolling Interests Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that included 13 and 98 restaurants at December 28, 2025 and December 29, 2024, respectively. As further described in “Note 21. Divestitures,” 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 70 % owned consolidated joint venture. Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests held by third parties. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Consolidated Statements of Operations of income attributable to the noncontrolling interest holder. 68 The following summarizes the redemption feature, location and related accounting within the Consolidated Balance Sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Consolidated Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint venture with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value See “Note 9. Noncontrolling Interests” for additional information regarding noncontrolling interests. Foreign Currency Translation The local currency is the functional currency for each of our foreign subsidiaries. Revenues and expenses are translated into United States (“U.S.”) dollars using monthly average exchange rates, while assets and liabilities are translated using year-end exchange rates. The resulting translation adjustments are included as a component of AOCL, net of income taxes. Foreign currency remeasurement gains and losses are included in determining net income. Impairment of Long-lived Assets The Company evaluates its property and equipment and other long-lived assets for potential indicators of impairment at least annually, or as facts and circumstances arise that indicate the carrying value of the asset group may not be recoverable. For Domestic Company-owned restaurants, the evaluation is performed at the operating market level while International Company-owned restaurants are evaluated at the restaurant level as these respective levels represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, the fair value of the asset group is estimated and an impairment loss is recorded if the carrying value exceeds the estimated fair value. The assumptions used in the undiscounted cash flow calculation related to future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions. Tornado Impact During the year ended December 28, 2025, a tornado caused real and personal property damage to the Company’s leased QC Center in Grand Prairie, Texas. The Company recorded pre-tax expenses of $ 0.9 million during the year related to these damages, which primarily reflect operating lease right-of-use asset impairment charges related to the leased property offset by expected property-related insurance proceeds. Expenses incurred and the related anticipated insurance proceeds were recorded within General and administrative expenses in the Consolidated Statements of Operations. Also during the year ended December 28, 2025, a tornado caused real and personal property damage to the Company’s restaurant support center and QC Center in Louisville, Kentucky. The Company recorded asset impairment charges of $ 2.7 million and incurred additional operating expenses of $ 1.7 million during the year ended December 28, 2025, for which we recorded an anticipated insurance recovery as we believe such losses are probable of recovery under our insurance policy. The Company received $ 7.8 million of insurance proceeds related to the two incidents during the year ended December 28, 2025, of which $ 6.3 million were classified as cash inflows from investing activities and $ 1.5 million were classified as cash inflows from operating activities based on the nature of the underlying losses and expected usage of the proceeds. As of December 28, 2025, the remaining amount receivable from our insurer to recover losses recognized in the financial statements was approximately $ 1.5 million, which is within Accounts receivable on the Consolidated Balance Sheets. To the extent that proceeds received from our insurer in future periods exceed losses recognized in the financial statements, the Company may record income within our Consolidated Statements of Operations once such insurance proceeds are realized 69 or realizable. Neither tornado had a significant impact on the Company’s operations, as other QC Centers were able to ensure that restaurants were adequately supplied. Recent Accounting Pronouncements Recently Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU provides for additional levels of details within the required rate reconciliation table to include additional categories of information about federal, state, and foreign income taxes and requires entities to further disaggregate information about income taxes paid, net of refunds. The ASU is effective for fiscal years beginning after December 15, 2024 and shall be applied prospectively. The Company has expanded its annual tax disclosures in compliance with ASU 2023-09; see “Note 17. Income Taxes”. Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, “ Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The ASU includes required disclosures in the notes to the consolidated financial statements of specific information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the standard may be applied either prospectively or retrospectively. The Company is in the process of assessing the impact of the new standard, including an evaluation of the Company’s financial systems and availability of data to meet the requirements. In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. The ASU modernizes the accounting guidance for costs incurred to develop software for internal use by removing references to project stages of a software development project, which better aligns with current software development methods. Under the new standard, entities will commence capitalizing eligible costs when management has authorized and committed to funding the software project, and when it is probable that the project will be completed and the software will be used to perform the function intended. The amendments are effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. The guidance can be applied using a prospective, retrospective, or modified transition approach. The Company is currently evaluating the impact of this accounting standard to its consolidated financial statements. 3. Leases The Company has significant leases that include most Domestic Company-owned restaurant and commissary locations as well as our restaurant support center located in Atlanta, Georgia. Other Domestic leases include tractor and trailer leases used by our distribution subsidiary as well as commissary equipment. Additionally, the Company leases a significant number of restaurants within the UK, many of which contain early termination rights exercisable by the Company; these restaurants are then subleased to franchisees or operated as Company-owned restaurants. The Company’s leases generally have terms as follows: Average lease term Domestic Company-owned restaurants Five years , plus at least one renewal UK Company-owned and franchise-owned restaurants 15 years Domestic commissary locations 10 years, plus at least one renewal Domestic and International tractors and trailers Five to seven years Domestic and International commissary and office equipment Three to five years The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date. For all of its leases in which it is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes. The lease liability is measured at the present value of future lease payments as of the lease commencement date. The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. An operating lease right-of-use asset is amortized on a straight-line basis over the lease term and is recognized as a single lease cost against the operating lease liability. A finance lease right-of-use asset is amortized on a straight-line basis, with 70 interest costs reported separately, over the lesser of the useful life of the leased asset or lease term. Operating lease expense is recognized on a straight-line basis over the lease term and is included in Cost of sales or General and administrative expenses. Variable lease payments are expensed as incurred. The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by Company options to extend the leases that the Company is reasonably certain to exercise. Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index. Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability. The following schedule details the total right-of-use assets and lease liabilities on the Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 (in thousands): Leases Classification December 28, 2025 December 29, 2024 Assets Finance lease assets, net Finance lease right-of-use assets, net $ 39,039 $ 28,761 Operating lease assets, net Operating lease right-of-use assets 161,606 184,425 Total lease assets $ 200,645 $ 213,186 Liabilities Current finance lease liabilities Current finance lease liabilities $ 9,999 $ 7,280 Current operating lease liabilities Current operating lease liabilities 23,725 25,756 Noncurrent finance lease liabilities Long-term finance lease liabilities 30,804 22,885 Noncurrent operating lease liabilities Long-term operating lease liabilities 156,405 173,557 Total lease liabilities $ 220,933 $ 229,478 Lease costs for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 were as follows: (Dollars in thousands) Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Finance lease: Amortization of right-of-use assets $ 10,565 $ 8,831 $ 8,949 Interest on lease liabilities 2,160 1,420 1,542 Operating lease: Operating lease cost 41,686 43,345 41,514 Short-term lease cost 4,463 4,237 4,239 Variable lease cost 12,372 11,096 10,005 Total lease costs 71,246 68,929 66,249 Sublease income ( 10,480 ) ( 9,748 ) ( 9,842 ) Total lease costs, net of sublease income $ 60,766 $ 59,181 $ 56,407 71 Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 28, 2025 were as follows (in thousands): Fiscal Year Finance Lease Costs Operating Lease Costs Expected Sublease Income 2026 $ 11,979 $ 31,406 $ 7,997 2027 10,874 33,109 6,971 2028 8,373 28,297 5,813 2029 7,244 24,308 4,760 2030 4,541 20,062 3,825 Thereafter 2,977 100,640 11,783 Total future minimum lease payments 45,988 237,822 41,149 Less imputed interest ( 5,185 ) ( 57,692 ) Total present value of lease liabilities $ 40,803 $ 180,130 Lessor Operating Leases The Company subleases certain retail space to our franchisees in the UK which are primarily operating leases. At December 28, 2025, we leased and subleased approximately 330 Papa Johns restaurants to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years . Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms. The Company recognized total sublease income of $ 10.5 million, $ 9.7 million and $ 9.8 million for the years ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively, within Other revenues in the Consolidated Statements of Operations. Lease Guarantees As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 80 Domestic leases. These leases have varying terms, the latest of which expires in 2036. As of December 28, 2025, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $ 12.1 million. This contingent liability is not included in the Consolidated Balance Sheets or future minimum lease obligation. The fair value of the guarantee is not material. There were no leases recorded between related parties. 72 Supplemental Cash Flow & Other Information The following table presents supplemental cash flow information related to leases for the years ended December 28, 2025, December 29, 2024 and December 31, 2023: (Dollars in thousands) Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 2,160 $ 1,416 $ 1,542 Financing cash flows from finance leases $ 10,079 $ 8,529 $ 8,821 Operating cash flows from operating leases (a) $ 41,709 $ 40,488 $ 37,814 Right-of-use assets obtained in exchange for new finance lease liabilities $ 21,455 $ 9,076 $ 16,734 Right-of-use assets obtained in exchange for new operating lease liabilities $ 25,911 $ 65,134 $ 24,380 Cash received from sublease income $ 10,527 $ 7,442 $ 8,855 Weighted-average remaining lease term (in years): Finance leases 4.6 4.2 4.3 Operating leases 9.1 9.2 7.8 Weighted-average discount rate: Finance leases 5.4 % 5.0 % 4.9 % Operating leases 5.9 % 5.8 % 5.6 % ______________________________ (a) Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion. 4. Papa John’s Marketing Fund, Inc. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States, for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants. Contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations within Advertising funds revenue and Advertising funds expense, respectively. PJMF also has a wholly-owned subsidiary, Papa Card, Inc., which administers the Company’s gift card programs. 73 The assets and liabilities of PJMF, which are utilized solely for the Company’s advertising and promotional programs, were as follows in the Consolidated Balance Sheets: (In thousands) December 28, 2025 December 29, 2024 Assets Current assets: Cash and cash equivalents $ 7,759 $ 12,038 Accounts receivable, net 15,077 17,854 Income tax receivable 275 — Prepaid expenses and other current assets 3,278 2,683 Total current assets 26,389 32,575 Deferred income taxes 570 1,019 Other assets 106 122 Total assets $ 27,065 $ 33,716 Liabilities Current liabilities: Income and other taxes payable $ 3 $ 298 Accrued expenses and other current liabilities 31,079 30,324 Current deferred revenue 5,000 4,911 Total current liabilities 36,082 35,533 Deferred revenue 2,742 2,783 Total liabilities $ 38,824 $ 38,316 5. Revenue Recognition Contract Balances Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify within Current deferred revenue and Deferred revenue on the Consolidated Balance Sheets. During the years ended December 28, 2025 and December 29, 2024, the Company recognized $ 32.9 million and $ 36.9 million in revenue, respectively, related to deferred revenue. The following table includes a breakout of contract liability balances: (In thousands) December 28, 2025 December 29, 2024 Change Unearned franchise fees and royalties $ 19,678 $ 21,860 $ ( 2,182 ) Unredeemed gift card liabilities 7,742 7,694 48 Customer loyalty program obligations 4,970 7,252 ( 2,282 ) Total contract liabilities $ 32,390 $ 36,806 $ ( 4,416 ) Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement. As of December 28, 2025 and December 29, 2024, the contract assets were approximately $ 19.1 million and $ 16.6 million, respectively. For the years ended December 28, 2025 and December 29, 2024, revenue was reduced approximately $ 7.3 million and $ 5.9 million, respectively, for the amortization of contract assets over the applicable contract terms. Contract assets are included in Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets. 74 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. (In thousands) Performance Obligations by Period Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total Unearned franchise fees and royalties $ 3,169 $ 2,848 $ 2,604 $ 2,389 $ 2,175 $ 3,981 $ 17,166 Approximately $ 2.5 million of area development fees related to unopened restaurants and International unearned franchise fees are included in Deferred revenue. Timing of revenue recognition is dependent upon the timing of restaurant openings and franchisees’ revenues. Unredeemed gift card liabilities, which are included in Deferred revenue, will be recognized in Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations. 6. Stockholders’ Deficit Shares Authorized and Outstanding The Company has 100.0 million shares of common stock authorized as of December 28, 2025 and December 29, 2024, respectively. The Company’s outstanding shares of common stock, net of repurchased common stock held as treasury stock, were 32.8 million shares at December 28, 2025 and 32.6 million shares at December 29, 2024, respectively. Share Repurchase Program 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 28, 2025, December 29, 2024 and December 31, 2023, respectively: (In thousands, except average price per share) Year Ended Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost of Shares Purchased (a) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs December 28, 2025 — $ — $ — $ 90,160 December 29, 2024 — $ — $ — $ 90,160 December 31, 2023 2,523 $ 83.10 $ 209,640 $ 90,160 (a) Aggregate cost of shares purchased for year ended December 31, 2023 excludes $ 2.8 million of transaction costs directly attributable to share repurchases, including $ 2.1 million related to a 1% excise tax incurred under the Inflation Reduction Act of 2022. These excise taxes were paid during the year ended December 29, 2024 and are classified as a financing cash outflow within the Consolidated Statements of Cash Flows. We did no t 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. The shares repurchased during the year ended December 31, 2023 included 2,176,928 shares repurchased on March 1, 2023 from certain funds affiliated with, or managed by, Starboard Value LP (collectively, “Starboard”), at a price of $ 82.52 per share, for aggregate consideration of $ 179.6 million. Starboard’s Chief Executive Officer is Jeffrey Smith, who previously served as the Company’s Chairman of the Board until his resignation on March 1, 2023. The timing and volume of share repurchases under the Company’s share repurchase programs may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements. Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate. Repurchases under the Company’s share repurchase programs may be commenced or suspended from time to time at the Company’s discretion without prior notice. Funding for the share repurchase programs will be provided through our credit facility, operating cash flow and cash and cash equivalents. 75 Dividends on Common Stock The Company paid aggregate cash dividends of approximately $ 61.1 million ($ 1.84 per share), $ 60.6 million ($ 1.84 per share) and $ 58.5 million ($ 1.76 per share) to common stockholders for the years 2025, 2024 and 2023, respectively. On January 26, 2026, our Board of Directors declared a first quarter 2026 dividend of $ 0.46 per common share, representing a $ 15.3 million aggregate dividend that was paid on February 20, 2026 to stockholders of record as of the close of business on February 9, 2026. The declaration and payment of any future dividends will be at the discretion of our Board of Directors. 7. Earnings per Share We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. Time-based restricted stock awards are participating securities because holders of such unvested shares have rights to receive non-forfeitable dividends. Under the two-class method, total dividends provided to the holders of participating securities are subtracted from net income attributable to the Company to determine net income attributable to common shareholders. The Company may, at its sole discretion, require any dividends paid on the unvested restricted stock awards to be paid in shares rather than in cash, which could then be forfeited if the employee forfeits the underlying awards. Basic earnings per common share are computed by dividing net income attributable to common shareholders by the weighted-average common shares outstanding. Diluted earnings per common share are computed by dividing the net income attributable to common shareholders by the diluted weighted average common shares outstanding. Diluted weighted average common shares outstanding consist of basic weighted average common shares outstanding plus weighted average awards outstanding under our equity compensation plans, which are dilutive securities. The calculations of basic earnings per common share and diluted earnings per common share for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 are as follows (in thousands, except per share data): 2025 2024 2023 Calculation of net income attributable to common shareholders Net income attributable to the Company $ 30,531 $ 83,486 $ 82,098 Dividends paid to participating securities ( 962 ) ( 166 ) — Net income attributable to common shareholders $ 29,569 $ 83,320 $ 82,098 Basic earnings per common share Basic weighted average common shares outstanding 32,851 32,717 32,931 Basic earnings per common share $ 0.90 $ 2.55 $ 2.49 Diluted earnings per common share Weighted average common shares outstanding 32,851 32,717 32,931 Dilutive effect of outstanding equity awards (a) 94 102 228 Diluted weighted average common shares outstanding 32,945 32,819 33,159 Diluted earnings per common share $ 0.90 $ 2.54 $ 2.48 ______________________________ (a) Excludes 268,712 , 342,440 , and 194,846 shares underlying equity awards for the year ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, as the effect of including such awards would have been anti-dilutive. See “Note 19. Equity Compensation” for additional information regarding our equity awards, including restricted stock. 76 8. Fair Value Measurements and Disclosures The Company determines the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following three categories: • Level 1: Quoted market prices in active markets for identical assets or liabilities. • Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3: Unobservable inputs that are not corroborated by market data. Fair value is a market-based measurement, not an entity specific measurement. Considerable judgment is required to interpret market data to estimate fair value; accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange. Our financial assets and liabilities that were measured at fair value on a recurring basis as of December 28, 2025 and December 29, 2024 are as follows: Carrying Value Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 December 28, 2025 Financial assets: Cash surrender value of life insurance policies (a) $ 29,432 $ 29,432 $ — $ — Financial liabilities: Interest rate swaps (b) $ 807 $ — $ 807 $ — December 29, 2024 Financial assets: Cash surrender value of life insurance policies (a) $ 30,775 $ 30,775 $ — $ — Interest rate swaps (b) $ — $ — $ — $ — Financial liabilities: Interest rate swaps (b) $ 161 $ — $ 161 $ — ______________________________ (a) Represents life insurance policies held in our non-qualified deferred compensation plan. See “Note 20. Employee Benefit Plans” for additional information. (b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected Secured Overnight Financing Rates (“SOFR”). See “Note 12. Debt” for further discussion. As of December 28, 2025, a building occupied by our former print and promotions business in Louisville, Kentucky met the criteria for held-for-sale classification. The remaining book value, which is measured at fair value less cost to sell, was $ 3.8 million and was classified as Assets held for sale in the Consolidated Balance Sheets as of December 28, 2025. The fair value measurement was based on observable market data (Level 2 of the fair value hierarchy) and is considered a nonrecurring fair value measurement. The sale of this building was finalized on February 18, 2026. There were no transfers among levels within the fair value hierarchy during fiscal 2025 or 2024. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of notes receivable, net of allowances, also approximates fair value. The Company’s revolving credit facilities and term loan borrowings under the Company’s credit agreement approximate carrying value due to their variable market-based interest rate. See “Note 12. Debt” for further discussion on the amendment to our credit agreement executed during 2025. The Company’s 3.875 % senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair 77 value by using recent trading transactions, and have the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of December 28, 2025 and December 29, 2024: December 28, 2025 December 29, 2024 (in thousands) Carrying Value Fair Value Carrying Value Fair Value 3.875 % Senior Notes $ 400,000 $ 380,000 $ 400,000 $ 356,000 9. Noncontrolling Interests As of December 28, 2025 and December 29, 2024 the Company had two and three joint venture arrangements, respectively, comprising 13 and 98 restaurants, respectively. As further described in “Note 21. Divestitures,” 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, which is inclusive of the Company’s 70 % ownership in the joint venture. Net income attributable to these joint ventures for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 was as follows: (In thousands) 2025 2024 2023 Papa John’s International, Inc. $ 3,696 $ 1,658 $ 1,672 Redeemable noncontrolling interests 140 274 198 Nonredeemable noncontrolling interests 1,446 437 503 Total net income $ 5,282 $ 2,369 $ 2,373 The following summarizes changes in our redeemable noncontrolling interests in 2025 and 2024 (in thousands): Balance at December 31, 2023 $ 851 Net income 274 Distributions ( 222 ) Balance at December 29, 2024 $ 903 Net income 140 Distributions ( 63 ) Balance at December 28, 2025 $ 980 10. Allowance for Credit Losses Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Account and note balances are charged off against the allowance after recovery efforts have ceased. 78 The following table summarizes changes in our allowances for credit losses for accounts receivable and notes receivable: (In thousands) Accounts Receivable Notes Receivable Balance at December 31, 2023 $ 8,353 $ 16,092 Current period provision for expected credit losses, net (a) 1,613 1,124 Write-offs charged against the allowance ( 1,498 ) ( 1,978 ) Balance at December 29, 2024 $ 8,468 $ 15,238 Current period provision for expected credit losses, net (a) 5,806 2,590 Write-offs charged against the allowance ( 2,145 ) ( 51 ) Balance at December 28, 2025 $ 12,129 $ 17,777 ______________________________ (a) During the year ended December 28, 2025 and December 29, 2024, the Company recorded $ 2.2 million and $ 1.7 million, respectively, of reserves for certain notes receivable associated with the termination of specific franchisees in the United Kingdom as part of our International Transformation Plan. See “Note 16. Restructuring” for further information. 11. Goodwill The following summarizes changes in the Company’s goodwill, by reportable segment: (In thousands) Domestic Company- owned Restaurants International Total Balance at December 31, 2023 $ 56,609 $ 19,597 $ 76,206 Divestitures (a) — ( 453 ) ( 453 ) Acquisition accounting adjustments — ( 95 ) ( 95 ) Foreign currency adjustments — ( 198 ) ( 198 ) Balance at December 29, 2024 $ 56,609 $ 18,851 $ 75,460 Divestitures (b) ( 9,036 ) — ( 9,036 ) Foreign currency adjustments — 1,152 1,152 Balance at December 28, 2025 $ 47,573 $ 20,003 $ 67,576 ______________________________ (a) During the year ended December 29, 2024, the Company disposed of $ 0.5 million of goodwill in connection with the refranchising of 60 formerly Company-owned restaurants in the United Kingdom. See “Note 16. Restructuring” for further information. (b) During the year ended December 28, 2025, the Company disposed of $ 9.0 million of goodwill in connection with the refranchising of 85 Domestic Company-owned restaurants. See “Note 21. Divestitures” for further information. 12. Debt Long-term debt, net consists of the following: (In thousands) December 28, 2025 December 29, 2024 Senior notes $ 400,000 $ 400,000 Term Loan 200,000 — Revolving facilities 122,257 346,732 Outstanding debt $ 722,257 $ 746,732 Unamortized debt issuance costs ( 6,824 ) ( 5,082 ) Current portion of long-term debt ( 4,997 ) — Total long-term debt, net $ 710,436 $ 741,650 79 Senior Notes On September 14, 2021, the Company issued $ 400.0 million of 3.875 % senior notes (the “Notes”) which will mature on September 15, 2029. The Notes are guaranteed by each of the Company’s existing and future Domestic restricted subsidiaries that are guarantors or borrowers under the Credit Agreement (as defined below) or other certain indebtedness. The Notes were offered and sold either to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or to persons outside the United States under Regulation S of the Securities Act. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year at a fixed interest rate of 3.875 % per annum. In connection with the Notes, the Company recorded $ 7.1 million of debt issuance costs, which are being amortized into Net interest expense over the term of the Notes. The Company may redeem the Notes, in whole or in part, at any time on or after September 15, 2024 at established redemption prices ranging from 97 to 194 basis points depending on when the Notes are redeemed. The Notes also contain customary redemption provisions related to asset sales and certain change of control transactions. The Indenture governing the Notes contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the Indenture or the Notes and certain provisions related to bankruptcy events. The Indenture also contains customary negative covenants. Term Loan and Revolving Facilities 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”) pursuant to the Second Amended and Restated Credit Agreement dated as of March 26, 2025 (the “Credit Agreement”). The Credit Agreement provides for a senior secured term loan in a principal amount of $ 200.0 million (the “Term Loan”) and a senior secured revolving credit facility in an aggregate available principal amount of $ 600.0 million (the “PJI Revolving Facility” 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 Credit Agreement and the unpaid balance maturing on the Maturity Date. The remaining availability under the PJI Revolving Facility was approximately $ 477.7 million as of December 28, 2025. The Term Loan was advanced in full at the closing of the Credit Agreement, with the proceeds used to repay borrowings outstanding under the senior secured revolving credit facility under the Previous Credit Agreement. The Company incurred $ 3.2 million of lender and third-party fees, which are being amortized into Net interest expense over the term of the Credit Agreement. Up to $ 50.0 million of the PJI Revolving Facility may be advanced in certain agreed foreign currencies, including Euros, Pounds Sterling, Canadian Dollars, Japanese Yen, and Mexican Pesos. Additionally, the Credit Agreement includes an accordion feature allowing for a future increase of the PJI Revolving Facility and/or incremental term loans in an aggregate amount of up to $ 500.0 million, subject to certain conditions, including obtaining commitments from one or more new or existing lenders to provide such increased amounts and ongoing compliance with financial covenants. Loans under the PJI Revolving Facility accrue interest at a per annum rate equal to, at the Company’s election, either a SOFR rate plus a margin ranging from 1.25 % to 2.00 % or a base rate (generally determined according to the greater of a prime rate, federal funds rate plus 0.50 %, or a SOFR rate plus 1.00 %) plus a margin ranging from 0.25 % to 1.00 %. In each case, the actual margin is determined according to a ratio of the Company’s total indebtedness to an earnings calculation, Consolidated EBITDA (as defined in the Credit Agreement), for the then most recently ended four quarter period (the “Leverage Ratio”). An unused commitment fee ranging from 18 to 30 basis points per annum, determined according to the Leverage Ratio, applies to the underutilized commitments under the PJI Revolving Facility. Loans outstanding under the PJI Revolving Facility may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings for which a SOFR rate election is in effect. The Credit Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, and restrict, subject to certain exceptions, the incurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates. The Company is subject to the following financial covenants: (1) a maximum Leverage Ratio of 5.25 to 1.00, subject to the Company’s election to increase the maximum Leverage Ratio by 0.50 to 1.00 in connection with material acquisitions if the Company satisfies certain 80 requirements, and (2) a minimum interest coverage ratio defined as Consolidated EBITDA (as defined in the Credit Agreement) plus consolidated rental expense to consolidated interest expense plus consolidated rental expense of 2.00 to 1.00. We were in compliance with these financial covenants at December 28, 2025. Obligations under the Credit Agreement are guaranteed by certain direct and indirect material Domestic subsidiaries of the Company (the “Guarantors”) and are secured by a security interest in substantially all of the capital stock and equity interests of the Company’s and the Guarantors’ Domestic and first tier material foreign subsidiaries. The Credit Agreement contains customary events of default including, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default may result in the termination of the PJI Revolving Facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the Guarantors. Future principal maturities under the Notes and PJI Credit Facilities by fiscal year are as follows (in thousands): Fiscal Year 2026 $ 5,000 2027 12,500 2028 18,750 2029 413,750 2030 272,257 Total future payments $ 722,257 PJMF Revolving Facility PJMF has a $ 30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, and most recently amended on September 30, 2025. 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. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of a one month SOFR plu s 1.975 % . There was no debt outstanding under the PJMF Revolving Facility as of December 28, 2025 or December 29, 2024. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement. Derivative Financial Instruments The Company has historically entered into interest rate swaps with the objective of mitigating the Company’s exposure to the impact of interest rate changes associated with our variable rate debt under the PJI Revolving Facility. During the year ended December 28, 2025, the Company executed two new interest rate swaps, each with notional values of $ 50.0 million, to replace the Company’s interest rate swaps that matured on June 30, 2025. As of December 28, 2025, we have the following interest rate swap agreements with a total notional value of $ 100.0 million: Effective Dates Floating Rate Debt Fixed Rates April 29, 2025 through April 25, 2028 $ 50 million 3.49 % June 30, 2025 through June 30, 2028 $ 50 million 3.72 % We have designated the interest rate swaps as cash flow hedges and assess hedge effectiveness on a quarterly basis. The interest rate swaps are recorded at fair value at each reporting date, and any unrealized gains or losses are included in Accumulated other comprehensive loss in the Consolidated Balance Sheets and reclassified to Net interest expense in the Consolidated Statements of Operations in the same period or periods during which the hedged transaction affect earnings. We recognized a loss of $ 0.6 million ($ 0.5 million after tax) in 2025 and income of $ 0.2 million ($ 0.2 million after tax) 81 and $ 1.5 million ($ 1.1 million after tax) in 2024 and 2023, respectively, in other comprehensive income for the net change in the fair value of our interest rate swaps. The following table provides information on the location and amounts of our swaps in the accompanying Consolidated Balance Sheets: (In thousands) Interest Rate Swap Derivatives Balance Sheet Location Fair Value December 28, 2025 Fair Value December 29, 2024 Prepaid expenses and other current assets $ — $ — Accrued expense and other current liabilities $ 193 $ 161 Other long-term liabilities $ 614 $ — As of December 28, 2025, the portion of the aggregate $ 0.8 million interest rate swap liability that would be reclassified into interest expense during the next twelve months is a liability of approximately $ 0.2 million. The effect of derivative instruments on the accompanying Consolidated Financial Statements is as follows (in thousands): Derivatives - Cash Flow Hedging Relationships Amount of Gain or (Loss) Recognized in AOCL on Derivative Location of (Loss) or Gain Reclassified from AOCL into Income Amount of (Loss) or Gain Reclassified from AOCL into Income Net Interest Expense on Consolidated Statements of Operations Interest rate swaps: 2025 $ ( 500 ) Net interest expense $ 223 $ ( 40,769 ) 2024 $ 167 Net interest expense $ 632 $ ( 42,578 ) 2023 $ 1,125 Net interest expense $ 173 $ ( 43,469 ) Net interest paid, including payments made or received under the swaps, was $ 39.9 million , $ 41.1 million and $ 37.3 million in fiscal 2025, 2024 and 2023, respectively. 13. Property and Equipment, Net Property and equipment, net consists of the following: (In thousands) December 28, 2025 December 29, 2024 Land $ 26,353 $ 26,744 Buildings and improvements 79,923 88,245 Leasehold improvements 145,945 149,249 Equipment and other 551,156 572,978 Construction in progress 15,340 10,868 Total property and equipment 818,717 848,084 Accumulated depreciation and amortization ( 567,405 ) ( 574,812 ) Property and equipment, net $ 251,312 $ 273,272 82 14. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: (In thousands) December 28, 2025 December 29, 2024 Marketing $ 35,808 $ 35,751 Salaries, benefits and bonuses 41,439 33,208 Insurance reserves, current 32,743 32,004 Purchases 16,586 19,386 Interest accrual 6,442 8,777 Professional fees 6,884 2,707 Litigation accrual (a) 2,500 5,000 Other 26,613 18,746 Total $ 169,015 $ 155,579 ______________________________ (a) See “Note 18. Litigation, Commitments and Contingencies” for additional information. 15. Other Long-term Liabilities Other long-term liabilities consist of the following: (In thousands) December 28, 2025 December 29, 2024 Insurance reserves $ 31,123 $ 33,677 Deferred compensation plan (a) 28,140 28,236 Other 3,001 3,010 Total $ 62,264 $ 64,923 ______________________________ (a) See “Note 20. Employee Benefit Plans” for additional information on our non-qualified deferred compensation plan. 16. Restructuring Enterprise Transformation Plan In December 2025, the Company’s Board of Directors approved the first phase of a new business transformation program (the “Enterprise Transformation Plan”) designed to improve organizational effectiveness, reduce overhead duplication and non-consumer-facing spending, and improve Domestic market and franchisee health. The first phase commenced in December 2025 and resulted in costs of $ 7.7 million for the year ended December 28, 2025. Restructuring costs associated with the approved initiatives included employee severance costs incurred under the Company’s severance pay plan related to reducing our corporate workforce , professional services, and remeasurement charges for long-lived assets related to the expected sale of the building occupied by our former print and promotions business in Louisville, Kentucky, which does not support our core operations. These costs were included in General and administrative expenses in the Consolidated Statements of Operations within Unallocated corporate expenses. The following table summarizes restructuring costs related to the Enterprise Transformation Plan recorded for the year ended December 28, 2025: 83 (In thousands) December 28, 2025 Employee termination costs $ 5,610 Professional services and other related costs 2,761 Long-lived asset impairment charges 486 Total enterprise transformation plan costs $ 8,857 Stock-based compensation expense (forfeitures on unvested awards) ( 1,166 ) Total enterprise transformation plan costs, net of stock-based award expense/forfeitures $ 7,691 The following table presents changes in the balance of accrued expenses relating to approved initiatives, which are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets: (In thousands) Employee termination costs Professional services and other related costs Total Balance as of December 29, 2024 $ — $ — $ — Charges 5,610 2,761 8,371 Payments ( 221 ) ( 1,381 ) ( 1,602 ) Balance as of December 28, 2025 $ 5,389 $ 1,380 $ 6,769 In February 2026, the Company’s Board of Directors approved the second phase of the Enterprise Transformation Plan, which focuses on optimizing our restaurant portfolio and improving restaurant-level profitability. The Company expects to incur restructuring charges of approximately $ 16 million to $ 23 million related to approved actions, which we estimate will be recognized during 2026 and 2027 within Unallocated corporate expenses. These charges are expected to primarily consist of professional services fees and retention awards for key personnel. We currently expect to record restructuring charges of approximately $ 24 million to $ 31 million for all approved actions under the Enterprise Transformation Plan. Actual charges incurred may differ from the estimates above due to various factors. International Transformation Plan In December 2023, the Company announced international transformation initiatives (the “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 our largest markets, including the UK, for long-term profitable growth and brand strength. During fiscal 2023 and 2024, the Company implemented approved initiatives under the International Transformation Plan related to establishing new regional hubs across APAC (Asia Pacific), the UK/Europe, MEA (Middle East and Africa), and Latin America. During 2024, the Company commenced the next phase of the International Transformation Plan, which involved strategic restaurant closures and divestitures in the UK. The Company closed 43 underperforming Company-owned restaurants and 32 franchised locations in the UK during 2024 and 2025. We recognized impairment charges of $ 11.7 million during the year ended December 29, 2024 for the amount by which the carrying value exceeded the estimated fair value of the asset groups. During 2024, the Company also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees. We completed all of the strategic restaurant closures in the UK market during 2025 as the Company’s efforts turned towards growth opportunities and mitigating closure-related costs as we completed optimization of the portfolio. The following table summarizes restructuring related costs related to the International Transformation Plan recorded for the years ended December 28, 2025, December 29, 2024, and December 31, 2023 , respectively: 84 (In thousands) 2025 2024 2023 Professional services and other related costs $ 2,748 $ 8,599 $ 677 Loss on franchisee notes receivable 2,162 1,744 — Long-lived asset impairment charges 834 11,664 — Lease terminations and other lease related costs ( 844 ) 3,131 — Employee termination costs 22 480 1,501 Loss on refranchising Company-owned restaurants — 1,745 — Total International Transformation Plan costs, net $ 4,923 $ 27,363 $ 2,178 Stock-based compensation expense (forfeitures on unvested awards) ( 21 ) ( 90 ) — Total International Transformation Plan Costs, inclusive of stock-based award expense/forfeitures $ 4,902 $ 27,273 $ 2,178 The following table presents changes in the balance of accrued expenses relating to approved initiatives, which are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets: (In thousands) Employee severance Professional services and other related costs Lease terminations and other lease related costs Total Balance as of December 29, 2024 $ 133 $ 2,335 $ 2,073 $ 4,541 Charges 22 2,748 — 2,770 Payments ( 140 ) ( 4,811 ) ( 1,252 ) ( 6,203 ) Balance as of December 28, 2025 $ 15 $ 272 $ 821 $ 1,108 The Company completed its International Transformation Plan during the fourth quarter of 2025 and incurred total restructuring related costs of $ 34.4 million since commencement of the program, all of which was recognized within General and administrative expenses in the Consolidated Statements of Operations within our International segment . 17. Income Taxes The following table presents the domestic and foreign components of income before income taxes for 2025, 2024 and 2023: (In thousands) 2025 2024 2023 Domestic income $ 35,505 $ 126,681 $ 91,218 Foreign income 12,873 ( 12,555 ) 12,455 Total income $ 48,378 $ 114,126 $ 103,673 Included within the foreign income before income taxes above is $ 18.1 million, $ 19.4 million, and $ 24.1 million of foreign sourced income subject to foreign withholding taxes in 2025, 2024, and 2023, respectively. 85 A summary of the expense (benefit) for income tax follows: (In thousands) 2025 2024 2023 Current: Federal $ 853 $ 22,443 $ 20,742 Foreign 6,422 6,844 3,916 State and local 2,247 3,679 2,207 Deferred: Federal 5,415 ( 3,848 ) ( 4,115 ) Foreign ( 8 ) 2,181 ( 558 ) State and local 1,332 ( 1,370 ) ( 1,318 ) Total income tax expense $ 16,261 $ 29,929 $ 20,874 86 The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 is as follows in both dollars and as a percentage of income before income taxes: 2025 2024 2023 (dollars in thousands) Income Tax Expense (Benefit) Income Tax Rate Income Tax Expense (Benefit) Income Tax Rate Income Tax Expense (Benefit) Income Tax Rate Tax at U.S. federal statutory rate $ 10,160 21.0 % $ 23,965 21.0 % $ 21,771 21.0 % State and local income taxes, net of federal income tax effect 2,792 5.8 % 1,609 1.4 % 737 0.7 % Foreign income tax effects United Kingdom Valuation allowance 686 1.4 % 6,571 5.8 % 1,519 1.5 % Statutory rate difference between United Kingdom and United States ( 205 ) ( 0.4 ) % ( 1,254 ) ( 1.1 ) % ( 443 ) ( 0.4 ) % Nondeductible lease surrender expenses 600 1.2 % 1,805 1.6 % — — % Other ( 16 ) — % 823 0.7 % 103 0.1 % Chili taxes withheld 1,940 4.0 % 3,605 3.2 % 867 0.8 % Peru taxes withheld 1,101 2.3 % 406 0.3 % 614 0.6 % Korea taxes withheld 679 1.4 % 698 0.6 % 682 0.7 % Other foreign income tax and taxes withheld at source 2,580 5.3 % 2,786 2.4 % 2,219 2.1 % Tax credits Research & development credits ( 490 ) ( 1.0 ) % ( 1,794 ) ( 1.6 ) % ( 2,650 ) ( 2.6 ) % FICA tax on tips credits ( 2,363 ) ( 4.9 ) % ( 2,517 ) ( 2.2 ) % ( 3,008 ) ( 2.9 ) % Foreign tax credit — — % 995 0.9 % ( 3,566 ) ( 3.5 ) % Other federal tax credits ( 521 ) ( 1.1 ) % ( 8 ) — % ( 560 ) ( 0.6 ) % Nontaxable and nondeductible items, net Non-qualified deferred compensation plan expense (income) ( 616 ) ( 1.3 ) % ( 750 ) ( 0.7 ) % ( 752 ) ( 0.7 ) % Excess tax (benefits) on equity awards 1,822 3.8 % 913 0.8 % ( 697 ) ( 0.7 ) % Non-deductible executive compensation 1,257 2.6 % ( 178 ) ( 0.2 ) % 1,427 1.4 % Deduction disallowed due to credit taken 564 1.2 % 575 0.5 % 810 0.8 % Other nontaxable and nondeductible items, net ( 502 ) ( 1.0 ) % ( 261 ) ( 0.2 ) % 11 — % Effects of cross-border tax laws Foreign-derived intangible income 102 0.2 % ( 918 ) ( 0.8 ) % ( 1,190 ) ( 1.2 ) % Foreign tax deduction ( 1,329 ) ( 2.8 ) % ( 1,657 ) ( 1.4 ) % — — % Sec.987 Pre-Transition gain/loss ( 1,753 ) ( 3.6 ) % — — % — — % US tax impact as a result of entity classification election ( 594 ) ( 1.2 ) % ( 4,734 ) ( 4.2 ) % ( 88 ) — % Other adjustments 331 0.7 % ( 150 ) ( 0.1 ) % ( 520 ) ( 0.5 ) % Valuation allowance — — % ( 817 ) ( 0.7 ) % 3,690 3.6 % Changes to unrecognized benefits 36 — % 216 0.2 % ( 102 ) ( 0.1 ) % Total $ 16,261 33.6 % $ 29,929 26.2 % $ 20,874 20.1 % State and local income taxes in Kentucky and Georgia for 2025; Kentucky, Florida, Georgia, California, Louisville Kentucky, New York, Texas, North Carolina, Indiana, Pennsylvania, New Jersey, Kansas and Tennessee for 2024; and Kentucky, Louisville Kentucky, California, Florida, Georgia, Texas, New York, Indiana, New Jersey, Kansas, Arizona, Minnesota, Tennessee, South Carolina and Illinois for 2023 comprise the majority of the state and local income taxes, net of federal effect category. 87 Significant deferred tax assets (liabilities) follow: (In thousands) December 28, 2025 December 29, 2024 Accrued liabilities $ 12,512 $ 12,660 Accrued bonuses 4,737 3,148 Other liabilities and asset reserves 17,632 15,536 Equity awards 6,391 7,542 Lease liabilities 51,717 50,500 Other 5,786 5,616 Net operating losses 19,133 18,028 Foreign tax credit carryforwards 23,071 23,071 Total deferred tax assets 140,979 136,101 Valuation allowances ( 48,167 ) ( 44,463 ) Total deferred tax assets, net of valuation allowances 92,812 91,638 Deferred expenses ( 1,196 ) ( 6,470 ) Accelerated depreciation ( 29,088 ) ( 19,144 ) Goodwill ( 11,489 ) ( 8,090 ) Right-of-use assets ( 46,283 ) ( 45,803 ) Other ( 1,367 ) ( 1,384 ) Total deferred tax liabilities ( 89,423 ) ( 80,891 ) Net deferred tax assets $ 3,389 $ 10,747 The following table summarizes changes in the Company’s valuation allowances on deferred tax (in thousands): Balance at December 31, 2023 $ 37,609 Charged to costs and expenses 6,642 Other 212 Balance at December 29, 2024 $ 44,463 Charged to costs and expenses 3,163 Other 541 Balance at December 28, 2025 $ 48,167 The Company had approximately $ 12.3 million and $ 11.7 million of state deferred tax assets in separate company jurisdictions primarily related to state net operating loss carryforwards as of December 28, 2025 and December 29, 2024, respectively. Our ability to utilize these state deferred tax assets is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a full valuation allowance for these state deferred tax assets as we believe realization based on the more-likely-than-not criteria has not been met as of December 28, 2025 and December 29, 2024, respectively. The Company had approximately $ 4.3 million and $ 3.8 million of state deferred tax assets related to state income tax credit carryforwards as of December 28, 2025 and December 29, 2024, respectively. Our ability to fully utilize these deferred tax assets related to state income tax credit carryforwards is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a partial valuation allowance of $ 2.1 million and $ 0.5 million against these state deferred tax assets at December 28, 2025 and December 29, 2024, respectively. We believe that a portion of these state income tax credit carryforwards would not be realizable before expiration. The Company had approximately $ 10.5 million and $ 9.2 million of foreign net operating loss, capital loss carryovers and foreign deferred tax assets as of December 28, 2025 and December 29, 2024, respectively. The Company had approximately $ 10.5 million and $ 9.2 million of valuation allowances primarily related to the foreign net operating losses, 88 foreign capital losses and foreign deferred tax assets at both December 28, 2025 and December 29, 2024. A substantial majority of our foreign net operating losses do not have an expiration date. In addition, the Company had approximately $ 23.1 million and $ 23.1 million in foreign tax credit carryforwards as of December 28, 2025 and December 29, 2024, respectively, that expire ten years from inception in years 2029 through 2035. Our ability to utilize these foreign tax credit carryforwards is dependent on our ability to generate foreign earnings in future years sufficient to claim foreign tax credits in excess of foreign taxes paid in those years. The Company provided a full valuation allowance for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 28, 2025 and December 29, 2024, respectively. The following table summarizes cash for income taxes paid: (In thousands) 2025 2024 2023 Current: Federal $ 10,272 $ 26,175 $ 5,405 Foreign 4,949 7,014 4,405 State and local 1,536 3,107 2,727 $ 16,757 $ 36,296 $ 12,537 Income taxes paid (net of refunds) did not exceed 5% of total income taxes paid (net of refunds) for any separate State or local jurisdiction during the periods presented. Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions: (In thousands) 2025 2024 2023 Foreign: Chile $ 1,940 $ 3,605 $ 867 Peru 1,101 406 (a) 614 (a) Korea 679 (a) 698 (a) 683 United Kingdom ( 1,568 ) ( 775 ) (a) — (a) ______________________________ (a) Jurisdiction below threshold for period presented. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for years before 2021. The Company is currently undergoing examinations by various tax authorities. The Company had $ 1.3 million of unrecognized tax benefits at December 28, 2025 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded in Other long-term liabilities in the Consolidated Balance Sheets (in thousands): Balance at December 31, 2023 $ 1,058 Additions for tax positions of prior years 276 Reductions for tax positions of prior years ( 45 ) Balance at December 29, 2024 $ 1,289 Additions for tax positions of prior years 65 Reductions for tax positions of prior years ( 44 ) Balance at December 28, 2025 $ 1,310 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company has accrued approximately $ 0.2 million for the payment of interest and penalties as of December 28, 2025 and December 29, 2024. 89 18. Litigation, Commitments and Contingencies Litigation The Company is involved in a number of lawsuits, claims, investigations and proceedings, including those specifically identified below, consisting of intellectual property, employment, consumer, commercial and other matters arising in the ordinary course of business. The Company has made accruals with respect to those matters for which a loss is determined to be probable and reasonably estimable. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. In re Papa John’s Employee & Franchise Employee Antitrust Litigation is a putative class action filed in December 2018 in the United States District Court for the Western District of Kentucky. The suit alleges that the “no-poaching” provision previously contained in the Company’s franchise agreement constituted an unlawful agreement or conspiracy in restraint of trade and commerce in violation of Section 1 of the Sherman Antitrust Act. On April 14, 2022, the parties reached a settlement in principle to resolve the case. Pursuant to the terms of the proposed settlement, in exchange for the Company’s payment of a total aggregate settlement amount of $ 5.0 million and other non-monetary consideration, all claims in the action will be dismissed, the litigation will be terminated, and the Company will receive a release. The settlement amount was recorded in General and administrative expenses in the Consolidated Statements of Operations in 2022. The District Court granted preliminary approval of the proposed settlement on August 2, 2025, and the Company made an initial payment of $ 2.5 million on September 5, 2025 towards the settlement with $ 2.5 million remaining accrued within Accrued expenses and other current liabilities in the Consolidated Balance Sheets as of December 28, 2025. The proposed settlement contains certain customary contingencies and is subject to final approval by the District Court. The Company continues to deny any liability or wrongdoing in this matter. Commitments We have certain other commercial commitments where payment is contingent upon the occurrence of certain events. With our insurance programs, we are party to surety bonds with off-balance sheet risk for a total of $ 17.1 million as of December 28, 2025. The surety bond arrangements expire within one year but have automatic renewal clauses. These arrangements have not had, and are unlikely to have in the future, a material impact on our Consolidated Balance Sheets or Consolidated Statements of Operations. We guarantee leases for certain Papa Johns North American franchisees who have purchased restaurants that were previously Company-owned and are contingently liable on these leases. The leases have varying terms, the latest of which expires in 2036. As of December 28, 2025, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $ 12.1 million. This contingent liability is not included in the Consolidated Balance Sheets or our future minimum lease obligations. The fair value of the guarantee is not material. 19. Equity Compensation We award time-based restricted stock, performance-based restricted stock units, and stock options from time to time under the Papa John’s International, Inc. 2018 Omnibus Incentive Plan. There were approximately 6.0 million shares of common stock authorized for issuance and remaining available under the 2018 Omnibus Incentive Plan as of December 28, 2025. We recorded stock-based employee compensation expense of $ 15.0 million in 2025, $ 9.6 million in 2024 and $ 17.9 million in 2023. At December 28, 2025, there was $ 17.5 million of unrecognized compensation cost related to unvested awards, of which the Company expects to recognize $ 11.1 million in 2026, $ 5.5 million in 2027, $ 0.9 million in 2028. Stock Options Options exercised, which were issued from authorized shares, included 9,000 shares in 2025, 23,000 shares in 2024 and 43,000 shares in 2023. The total intrinsic value of the options exercised during 2025, 2024 and 2023 was $ 0.1 million, $ 0.5 million and $ 1.2 million, respectively. 90 There were no options granted in 2025, 2024 or 2023. Information pertaining to option activity during 2025 is as follows (number of options and aggregate intrinsic value in thousands): Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Outstanding at December 29, 2024 163 $ 58.70 Exercised ( 9 ) 43.71 Cancelled ( 40 ) 63.20 Outstanding at December 28, 2025 114 $ 58.41 1.8 $ — Exercisable at December 28, 2025 114 $ 58.41 1.8 $ — Restricted Stock We granted shares of restricted stock that are time-based and generally vest in equal installments over three years ( 383,000 in 2025, 301,000 in 2024 and 190,000 in 2023). Upon vesting, the shares are issued from treasury stock. These restricted shares are intended to focus participants on our long-range objectives, while at the same time serving as a retention mechanism. We consider time-based restricted stock awards to be participating securities because holders of such nonvested awards receive non-forfeitable dividends. We declared dividends totaling $ 0.9 million ($ 1.84 per share) in 2025, $ 0.6 million ($ 1.84 per share) in 2024 and $ 0.5 million ($ 1.76 per share) in 2023 to holders of time-based restricted stock. We also granted 25,000 , 22,000 and 14,000 restricted stock units that are time-based and vest over a period of one year in 2025, 2024 and 2023, respectively. The units are issued from treasury stock. Total dividends declared for these awards were insignificant to the results of our operations. The fair value of time-based restricted stock units is based on the market price of the Company’s shares on the grant date. Additionally, we granted stock-settled performance-based restricted stock units to executive management ( 119,000 units in 2025, 250,000 units in 2024, and 80,000 units in 2023). Historically, the performance-based restricted stock units required the achievement of certain performance and market factors, which consist of the Company’s Total Shareholder Return (“TSR”) relative to a predetermined peer group. Starting in 2024, awards granted include a cumulative system-wide sales metric as measured over the performance period in addition to the TSR metric. Therefore, these awards are comprised of two distinct components each representing 50 % of the total award, with each having a separate grant date fair value. The grant-date fair value of the TSR metric was determined using the Monte Carlo simulation model and compensation expense is recognized over the requisite service period regardless of the metric being achieved. The grant-date fair value of the cumulative system-wide sales metric was set at the grant date stock price and compensation expense is recognized over the requisite service period based on the Company’s current expectation of achieving the performance metric. Additional one-time performance-based restricted stock units with a four year cliff vesting period were also granted in 2024, which require the satisfaction of applicable stock price hurdles. The grant-date fair value of these one-time awards were determined through the use of a Monte Carlo simulation model. The following is a summary of the significant assumptions used in estimating the fair value of the performance-based restricted stock units granted in 2025, 2024 and 2023: Assumptions: 2025 2024 2023 Risk-free interest rate 3.5 - 3.9 % 3.6 - 4.4 % 4.5 % Expected volatility 37.7 - 44.5 % 34.0 - 34.8 % 38.6 % The risk-free interest rate for the periods within the contractual life of the performance-based restricted stock unit is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility was estimated using the Company’s historical share price volatility for a period similar to the expected life of the performance-based restricted stock unit. 91 The performance-based restricted stock units granted generally vest over three years (cliff vest) and are expensed over the requisite service period if the performance measure is probable to be achieved. The weighted average grant-date fair value of performance-based restricted stock units granted during 2025, 2024 and 2023 was $ 52.88 , $ 37.87 and $ 88.43 , respectively. Information pertaining to time-based restricted stock and performance-based restricted stock units during 2025 is as follows: (shares in thousands) Shares Weighted Average Grant-Date Fair Value Total as of December 29, 2024 647 $ 58.05 Granted 527 46.12 Forfeited ( 137 ) 54.06 Vested ( 240 ) 61.21 Total as of December 28, 2025 797 $ 49.08 20. Employee Benefit Plans The Papa John’s International, Inc. 401(k) Plan (the “401(k) Plan”), is a defined contribution benefit plan in accordance with Section 401(k) of the Internal Revenue Code. The 401(k) Plan is open to employees who meet certain eligibility requirements and allows participating employees to defer receipt of a portion of their compensation and contribute such amount to one or more investment funds. In addition, we maintain a non-qualified deferred compensation plan available to certain employees and directors. Under this plan, the participants may defer a certain amount of their compensation, which is credited to the participants’ accounts. The participant-directed investments associated with this plan are included in Other assets ($ 29.4 million and $ 30.8 million at December 28, 2025 and December 29, 2024, respectively) and the associated liabilities ($ 28.1 million and $ 28.2 million at December 28, 2025 and December 29, 2024, respectively) are included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. We contributed a matching payment of 4 % of a participating employee’s earnings deferred into the 401(k) Plan in 2025, 2024 and 2023. Such costs were $ 5.2 million in 2025, $ 4.8 million in 2024 and $ 4.3 million in 2023. 21. Divestitures 2025 Refranchising Transaction 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, to Pie Investments, an existing third-party franchisee (“Buyer”), for total proceeds of $ 35.7 million. Colonel’s Limited, LLC also entered into a Master Service Agreement effective November 24, 2025 with the Buyer for the performance by the Buyer of certain management, supervisory, and administrative services with respect to any identified remaining restaurants for which the parties have not yet obtained landlord consent to transfer the leases pursuant to the Purchase Agreement (the “Retained Restaurants”). As of December 28, 2025, there were four remaining Retained Restaurants. In connection with the divestiture, the Company recorded a pre-tax gain on sale of $ 17.1 million, net of transaction costs of $ 1.2 million, during the year ended December 28, 2025. These amounts were recorded within General and administrative expenses in the Consolidated Statements of Operations and are subject to change based on the future settlement of certain post-closing adjustments. Net gain attributable to noncontrolling interests for the transaction was approximately $ 1.0 million for the year ended December 28, 2025. Goodwill of $ 9.0 million was allocated to the disposal group based on the relative fair value of the disposal group to the Domestic Company-owned restaurants reporting unit. Proceeds received from refranchising during the year ended December 28, 2025 related to the sale were $ 34.5 million, and the Company paid related distributions of $ 5.3 million to its noncontrolling interest; these amounts were reflected within investing activities and financing activities, respectively, in the Consolidated Statements of Cash Flows. The remaining $ 1.2 million of proceeds from the sale will be received upon the satisfactory assignment of leases to the Buyer for the remaining Retained Restaurants. 92 As of December 28, 2025, approximately $ 2.4 million of the purchase price remained within escrowed funds under the terms of the Purchase Agreement and related Master Service Agreement and is contractually restricted pending the final settlement of certain post-closing adjustments and the assignment of certain remaining lease assignments to the buyer, which we expect to take place in early 2026. 2024 Refranchising Transactions On September 30, 2024, the Company refranchised 15 Domestic Company-owned restaurants to an existing franchisee for a purchase price of approximately $ 2.6 million. In connection with the divestiture, the Company recorded non-cash impairment and remeasurement charges of $ 5.5 million for the year ended December 29, 2024 to remeasure the net assets within the disposal group to fair value, less estimated costs to sell. The remeasurement charges were recorded within General and administrative expenses in the Consolidated Statements of Operations. The Company recorded a note receivable of $ 2.6 million as consideration received, which was repaid during the year ended December 28, 2025 and recorded within investing activities in our Consolidated Statements of Cash Flows. The Company also completed the refranchising of 60 formerly Company-owned restaurants in the UK to primarily existing franchisees, which is described in more detail in “Note 16. Restructuring.” Sale-Leaseback of Texas and Florida Quality Control Centers On August 2, 2024, the Company finalized the sale and subsequent leaseback of two Domestic Quality Control Center properties (“QC Centers”) in Texas and Florida for an aggregate purchase price of $ 46.7 million. Under the terms of the leases, each of which commenced on August 2, 2024, the Company will lease the QC Centers for 17 years with two five-year renewal options. The Company will pay annual rents under the operating leases of the Texas and Florida QC Centers of $ 2.0 million and $ 1.0 million, respectively, for the first year with annual rents increasing by 2.75 % thereafter. During the year ended December 29, 2024, we recorded a pre-tax gain on sale of approximately $ 41.3 million, net of transaction costs, which was recorded within General and administrative expenses in the Consolidated Statements of Operations. Sales proceeds of $ 46.7 million were recorded as investing cash inflows within the Consolidated Statements of Cash Flows for this period. 22. Segment Information We have four reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries, and International operations. The Domestic Company-owned restaurants segment consists of the operations of all Domestic Company-owned restaurants and principally generates revenues from retail sales of pizza and other food and beverage products. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and the collection of royalties from our franchisees located in the United States and Canada. The North America commissaries segment consists of the operations of our regional dough production and product distribution centers in the United States and Canada and derives its revenues principally from the sale and distribution of food and paper products to Domestic Company-owned and franchised restaurants in the United States and Canada. The International segment consists of distribution sales to franchised Papa Johns restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees, as well as the operations of all Company-owned restaurants located in the UK. International franchisees are defined as all franchise operations outside of the United States and Canada. Our reportable segments are distinct business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. Certain administrative and capital costs are allocated to each of our segments based upon predetermined rates or estimated resource usage. All other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, which are not operating segments, we refer to as “All Other”. These consist of operations that derive revenues from franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms. Our chief operating decision maker (“CODM”) is the Chief Executive Officer. Beginning in the first quarter of 2025, the Company updated its measure of segment profit or loss to be adjusted EBITDA, which aligns with how the CODM evaluates performance of and allocates resources to our segments. For comparability purposes, segment results for the prior year period have been recast to reflect this change in measure of segment profit or loss. Adjusted EBITDA represents Net income before Net interest expense, Income tax expense, Depreciation and amortization, Stock-based compensation expense, and other adjustments that vary from period to period, including certain general and administrative expenses and 93 other items that do not reflect normal, recurring expenses necessary to operate our business. During the annual budget and forecasting process, the CODM uses adjusted EBITDA to allocate resources (including employees, property, and financial or capital resources) to the segments. The CODM regularly reviews trends in adjusted EBITDA on at least a quarterly basis to evaluate the profitability of the segments and to make resource allocation decisions. When our CODM reviews balance sheet information, it is at a consolidated level. Segment Results The tables below present our operating results by segment (in thousands). The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM. A reconciliation to Company results is included in the following section. 94 Year Ended December 28, 2025 Domestic Company-owned restaurants North America franchising North America commissaries International Total Revenues from external customers $ 662,523 $ 139,009 $ 854,188 $ 173,836 $ 1,829,556 Intersegment revenues — 4,470 203,900 — 208,370 Segment revenue $ 662,523 $ 143,479 $ 1,058,088 $ 173,836 $ 2,037,926 Less segment expenses (a) : COS - Product Costs $ 203,443 $ — $ 756,772 $ 50,337 $ 1,010,552 COS - Salaries & Benefits 221,033 — 121,466 7,470 349,969 COS - Other (b) 168,971 — 66,498 33,022 268,491 General & Administrative 40,705 38,115 34,533 40,339 153,692 Other Segment Expenses (d) — — — 20,087 20,087 Segment adjusted EBITDA $ 28,371 $ 105,364 $ 78,819 $ 22,581 $ 235,135 Year Ended December 29, 2024 Domestic Company-owned restaurants North America franchising North America commissaries International Total Revenues from external customers $ 692,736 $ 139,091 $ 831,774 $ 174,054 $ 1,837,655 Intersegment revenues — 4,150 205,234 — 209,384 Segment revenue $ 692,736 $ 143,241 $ 1,037,008 $ 174,054 $ 2,047,039 Less segment expenses (a) : COS - Product Costs $ 207,704 $ — $ 756,170 $ 51,889 $ 1,015,763 COS - Salaries & Benefits 225,269 — 116,645 13,759 355,673 COS - Other (b) 177,656 — 62,166 38,490 278,312 General & Administrative (c) 38,448 33,028 36,278 37,984 145,738 Other Segment Expenses (d) — — — 13,635 13,635 Segment adjusted EBITDA $ 43,659 $ 110,213 $ 65,749 $ 18,297 $ 237,918 Year Ended December 31, 2023 Domestic Company-owned restaurants North America franchising North America commissaries International Total Revenues from external customers $ 726,362 $ 144,550 $ 852,361 $ 182,487 $ 1,905,760 Intersegment revenues — 4,267 210,614 — 214,881 Segment revenue $ 726,362 $ 148,817 $ 1,062,975 $ 182,487 $ 2,120,641 Less segment expenses (a) : COS - Product Costs $ 215,545 $ — $ 787,966 $ 54,514 $ 1,058,025 COS - Salaries & Benefits 237,292 — 118,678 17,853 373,823 COS - Other (b) 184,015 — 60,009 43,132 287,156 General & Administrative (c) 37,131 10,617 33,759 30,269 111,776 Other Segment Expenses (d) — — — 13,495 13,495 Segment adjusted EBITDA $ 52,379 $ 138,200 $ 62,563 $ 23,224 $ 276,366 95 ______________________________ (a) Segment expenses exclude Depreciation and amortization, Stock-based compensation expense, and certain General and Administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business (see reconciliation that follows). (b) We began including “COS - Other” as a significant expense category beginning in the first quarter of 2025, consistent with the segment expense categories regularly provided to the CODM when evaluating segment performance and allocating resources. “COS - Other” includes delivery expenses, Company-owned restaurant advertising costs, insurance, rent, aggregator fees, and other costs of sales. For comparability purposes, we have recast prior period segment results to include this expense category. (c) As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, the Company prospectively adjusted for updates in internal cost allocation methodologies in 2024, which increased the amount of internal general and administrative expenses allocated to the segments from Unallocated corporate expenses. The allocation updates resulted in the following increases to segment G&A in 2024 compared to 2023: $ 0.4 million to Domestic Company-Owned restaurants, $ 22.9 million to North America franchising, $ 3.3 million to International and $ 0.1 million to North America commissaries. There was no impact on overall company profitability, as the change was offset within Unallocated corporate expenses (see reconciliation table below). (d) Other Segment Expenses represent all operating expenses that are not included in the significant segment expense categories. The components of Other Segment Expenses are advertising fund expenses and other operating expenses. Reconciliation of Segment Results to Company Results The following table reconciles Total Revenues from our segments to Total Revenues and Total Adjusted EBITDA from our segments to Income before income taxes (in thousands): Year Ended 2025 2024 2023 Total Segment revenue $ 2,037,926 $ 2,047,039 $ 2,120,641 All Other revenue (a) 286,395 279,385 296,440 Elimination of intersegment revenue ( 270,513 ) ( 267,037 ) ( 281,368 ) Total Revenues $ 2,053,808 $ 2,059,387 $ 2,135,713 Year Ended 2025 2024 2023 Total Segment adjusted EBITDA $ 235,135 $ 237,918 $ 276,366 All Other adjusted EBITDA (a) 27,012 27,800 29,151 Unallocated corporate expenses, adjusted (b) ( 61,036 ) ( 38,538 ) ( 66,505 ) Elimination of intersegment (profit) loss — — 27 Other income/(expense) adjustments to reconcile to income before income before income taxes (c) ( 111,964 ) ( 70,476 ) ( 91,897 ) Net interest expense ( 40,769 ) ( 42,578 ) ( 43,469 ) Income before income taxes $ 48,378 $ 114,126 $ 103,673 ______________________________ (a) As noted in the commentary above, All Other revenue and adjusted EBITDA is derived from business units that do not meet the quantitative or qualitative thresholds for determining reportable segments. These consist of operations that derive revenues from franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms. Our largest marketing fund is PJMF, which is designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants. Technology-based franchisee fees are meant to offset the costs of building, operating, and depreciating technology that supports franchisee operations. As such, these fees may vary from period to period, as they are designed to operate near break-even over time including the impact of depreciation. (b) Unallocated corporate expenses represent administrative fees incurred by the restaurant support centers, including information systems and related services, corporate salaries and bonuses, and other corporate costs. These expenses are adjusted for depreciation and amortization, stock-based compensation expense, and certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business (see reconciliation that follows). (c) Other income/(expense) adjustments represent Depreciation and amortization, Stock-based compensation expense, and certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our 96 business. As such, management excludes these items from the calculation of adjusted EBITDA. For the periods above, the adjustments include: Year Ended (In thousands) December 28, 2025 December 29, 2024 December 31, 2023 Depreciation and amortization $ 92,245 $ 69,407 $ 64,090 Stock-based compensation expense 14,980 9,590 17,924 Gain on refranchising transaction, net and sale of QC Center properties (a) ( 17,053 ) ( 41,289 ) — Restructuring costs (b) 13,780 27,273 2,178 Other costs (c) 8,012 5,495 3,462 UK repositioning and acquisition-related costs (d) — — 4,243 Other (income)/expense adjustments $ 111,964 $ 70,476 $ 91,897 (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. 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) For the year ended December 28, 2025, other costs is comprised of the following: i. 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; ii. Costs associated with project-based strategic initiatives that are not related to our ongoing operations. iii. 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. (d) Represents costs associated with repositioning the UK portfolio in 2023 as well as transaction costs related to the acquisition of restaurants from franchisees. Disaggregation of Revenue Our segments earn revenue from both external and internal customers. No single external customer accounted for 10% or more of our total revenues. Our intersegment revenues primarily represent revenue earned by our QC Centers from the sale of food and paper products to our Company-owned restaurants and collection of technology fees and marketing fees from our Company-owned restaurants. We account for intercompany sales and transfers as if the sales or transfers were to third 97 parties and subsequently eliminate the activity. The accounting policies of our segments are the same as those described in Note 2. Significant Accounting Policies. In the following tables, revenues are disaggregated by major product line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Year Ended December 28, 2025 Domestic Company-owned restaurants North America franchising North America commissaries International All Other Elimination of Intersegment Revenue Total Company-owned restaurant sales $ 662,523 $ — $ — $ 13,134 $ — $ — $ 675,657 Franchise royalties and fees — 143,479 — 51,943 — ( 4,470 ) 190,952 Commissary revenues — — 1,058,088 75,756 — ( 203,900 ) 929,944 Other revenues — — — 13,713 94,306 ( 17,493 ) 90,526 Advertising funds revenue — — — 19,290 192,089 ( 44,650 ) 166,729 Total Revenues $ 662,523 $ 143,479 $ 1,058,088 $ 173,836 $ 286,395 $ ( 270,513 ) $ 2,053,808 Year Ended December 29, 2024 Domestic Company-owned restaurants North America franchising North America commissaries International All Other Elimination of Intersegment Revenue Total Company-owned restaurant sales $ 692,736 $ — $ — $ 31,930 $ — $ — $ 724,666 Franchise royalties and fees — 143,241 — 47,941 — ( 4,150 ) 187,032 Commissary revenues — — 1,037,008 67,890 — ( 205,234 ) 899,664 Other revenues — — — 12,701 85,914 ( 14,933 ) 83,682 Advertising funds revenue — — — 13,592 193,471 ( 42,720 ) 164,343 Total Revenues $ 692,736 $ 143,241 $ 1,037,008 $ 174,054 $ 279,385 $ ( 267,037 ) $ 2,059,387 Year Ended December 31, 2023 Domestic Company-owned restaurants North America franchising North America commissaries International All Other Elimination of Intersegment Revenue Total Company-owned restaurant sales $ 726,362 $ — $ — $ 34,463 $ — $ — $ 760,825 Franchise royalties and fees — 148,817 — 50,437 — ( 4,267 ) 194,987 Commissary revenues — — 1,062,975 72,287 — ( 210,614 ) 924,648 Other revenues — — — 12,617 101,789 ( 16,369 ) 98,037 Advertising funds revenue — — — 12,683 194,651 ( 50,118 ) 157,216 Total Revenues $ 726,362 $ 148,817 $ 1,062,975 $ 182,487 $ 296,440 $ ( 281,368 ) $ 2,135,713 98 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.