What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 265 added, 290 removed, 226 unchanged (71% of the section changed)

3 unchanged sentences

Papa Johns began operations in 1984.

At September 28, 2025, there were 5,994 Papa John’s restaurants in operation, consisting of 558 Company-owned and 5,436 franchised restaurants operating in 51 countries and territories.

At March 29, 2026, there were 6,020 Papa John’s restaurants in operation, consisting of 470 Company-owned and 5,550 franchised restaurants operating in 50 countries and territories.

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.

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

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

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

Recent Developments and Trends

During the third quarter of 2025, we remained focused on executing our strategic priorities as we position the business for long-term success amidst a softening and challenging consumer environment in North America.

We continue to steer our efforts and investments toward initiatives that improve our value perception and improve our digital and loyalty experience to increase conversion and reduce friction within the customer experience.

Our key areas of focus are:

During the first quarter of 2026, we continued progressing on our business transformation initiatives as we position the business for long-term success amidst a challenging and softer consumer environment in North America and a dynamic International market.

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

Our key areas of focus include:

• Marketing strategy:

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

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

We also sharpened our value perception with Buy One, Get One Free pizza offers during the quarter, and continued emphasizing our Papa Pairings mix and match platform.

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

We anticipate spending up to an incremental $25 million in marketing investments throughout 2025 compared with 2024, inclusive of approximately $17 million spent during the first nine months of 2025, including investments in our customer relationship management platform and our loyalty program.

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

We have partnered with our franchisees to re-establish our area advertising cooperative (“Co-op”) program, helping ensure a strong presence in key regional and local markets.

Through our mix of national and local advertising, we continued investments in our messaging to highlight our six simple ingredients, fresh, never frozen original dough and the craftsmanship behind the products we serve, which we believe are key differentiators of our brand.

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

We plan to maintain a compelling value proposition while staying true to our premium positioning and layering in exciting menu innovations, such as our new pan pizzas and oven-toasted sandwiches, to expand our addressable market and strengthen our barbell strategy.

• Digital and loyalty strategy:

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

During the third quarter, we completed the initial development of and began releasing our new app across the Android and iOS platforms.

We expect to release a modernized website and enhanced mobile web experience by the end of 2025.

While we are monitoring performance across these platforms, we are excited by the initial results, and we believe that the rollout of our new omnichannel platform will lead to a more streamlined ordering journey and simplify the overall experience for our customers.

We anticipate completing the full rollout of our new omnichannel platform and retirement of legacy platforms by the end of 2026 and currently estimate that we will incur an additional $17 million to $22 million of accelerated depreciation expense during that period related to the expected retirement of certain technology assets currently in service.

In the fourth quarter of 2024, we also enhanced our loyalty program to allow members to unlock redeemable rewards in the form of “Papa Dough” faster by converting points to Papa Dough in smaller increments.

The lower redemption threshold has activated our members at higher rates to help drive transactions and order frequency.

We will continue evolving our loyalty and digital experiences to build greater brand advocacy and activation amongst our most valuable customers.

• Evaluating our cost structure:

As previously discussed, we have completed an internal review of our North American supply chain and have identified productivity initiatives that we believe will optimize our commissary business in an effort to reduce the overall cost to serve our Domestic Company-owned and franchised restaurants.

We expect to achieve at least $50 million in supply chain savings as a result of these efforts, and we currently believe that we will begin recognizing cost savings during 2026 which should benefit all of the restaurants in our system.

We have also initiated a comprehensive review of our expense structure to streamline our organization, reduce non-customer facing spend, simplify our operating model, and better align our resources to support our transformation.

We have identified at least $25 million of potential savings, exclusive of marketing spend, to be captured across fiscal years 2026 and 2027.

The review of our cost structure is ongoing and is expected to be completed during the fourth quarter of 2025.

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

In 2025, we introduced our new omnichannel platform, releasing new mobile apps across both Android and iOS platforms as well as our refreshed website and mobile web experience, which we believe provides a streamlined ordering journey for our customers.

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

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

At the time we determine that our new technology solutions, including the point-of-sale system, are feasible and will replace our legacy technology assets, these assets may require adjustments to their useful lives to better reflect remaining technology utilization.

We anticipate that we may incur an incremental $5 million to $10 million of accelerated depreciation expense related to these initiatives.

• Transforming our cost structure:

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

The execution of actions approved under the Enterprise Transformation Plan resulted in the closure of 44 restaurants in North America during the first quarter of 2026 as well as the reduction of our corporate workforce by approximately 7%.

We incurred restructuring expenses of $4.3 million during the first quarter of 2026 under the Enterprise Transformation Plan, which consisted primarily of professional services fees and non-cash charges related to Company-owned restaurant closures.

We currently estimate that we will incur aggregate restructuring charges of approximately $24 million to $31 million under the Enterprise Transformation Plan related to actions approved thus far, inclusive of the $12.0 million recognized during 2025 and the first quarter of 2026, the remainder of which we expect will be recognized during 2026 and 2027.

We believe that these initiatives will improve systemwide health and facilitate future growth, and we have identified at least $30 million of general and administrative expense savings, exclusive of marketing spend, to be captured across fiscal years 2026 and 2027.

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

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

• Optimizing our supply chain:

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

We expect to achieve at least $60 million in North America systemwide supply chain savings over the next two years, equating to meaningful restaurant-level margin improvement.

We captured approximately $7 million of benefits in the first quarter and are on track to realize at least $25 million of savings by the end of 2026.

• Development strategy:

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

During the third quarter, we opened 45 new restaurants systemwide, comprised of 18 restaurant openings in North America and 27 restaurant openings in International markets.

To pursue the opportunities we have identified in the United States and accelerate development, we are offering a three-year waiver of PJMF contributions for new restaurants opened in 2025, which is intended to deliver higher restaurant-level profit margins, add scale in key markets and attract growth-driven franchisees.

We also plan to accelerate our domestic refranchising program over the next two years, beginning with the sale of our majority ownership stake in a joint venture that currently operates 85 restaurants that we expect to close in the fourth quarter of 2025.

Refranchising is a strategic action that we will continue to pursue across our Company-owned restaurants as it provides developing franchisees opportunities to expand their businesses and strengthens the long-term health of Papa Johns.

International Transformation Plan

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

Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $35 million (inclusive of the $34.3 million incurred through the third quarter of 2025), the remainder of which we expect to be recognized in 2025.

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

The Company is in the final stages of the International Transformation Plan, which is expected to be completed during 2025.

Comparable sales for our International business have increased by 7.1% and 4.7% during the three and nine months ended September 28, 2025, which we believe is attributable to our transformation initiatives yielding operational improvement.

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

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

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

We are also providing franchise remodel incentives for eligible restaurants to refresh and elevate our customer experience.

• Accelerating our refranchising program:

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

We achieved a key milestone in the acceleration of our Domestic refranchising program during the fourth quarter of 2025, completing the refranchising of 85 restaurants, and continue exploring opportunities to refranchise additional markets.

Global Restaurant Sales and Unit Information

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

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

impacted by swings in the external factor of foreign currency.

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

Three Months Ended Nine Months Ended

Amounts below exclude the impact of foreign currency September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Three Months Ended

Growth rates below exclude the impact of foreign currency March 29,

2026 March 30,

Comparable sales growth (decline):

Domestic Company-owned restaurants (3.1)% (6.7)% (2.5)% (4.6)%

North America franchised restaurants (2.6)% (5.3)% (1.3)% (3.4)%

Domestic Company-owned restaurants (a)

(5.2)% (4.6)%

North America franchised restaurants (a)

(6.7)% (2.3)%

North America restaurants (6.4)% (2.7)%

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System-wide restaurant sales growth (decline):

Domestic Company-owned restaurants (2.1)% (4.8)% (1.2)% (2.8)%

North America franchised restaurants (0.8)% (3.8)% 1.1% (2.4)%

Domestic Company-owned restaurants (a)

(4.0)% (3.7)%

North America franchised restaurants (a)

(6.5)% (0.4)%

North America restaurants (6.1)% (1.0)%

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Total global system-wide restaurant sales growth (decline) (3.1)% 0.6%

Restaurant Progression Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

___________________________________

(a) For the three months ended March 29, 2026, comparable sales decline and system-wide restaurant sales decline for Domestic Company-owned restaurants and North America franchised restaurants were adjusted to exclude the impact of refranchising 85 restaurants during the fourth quarter of 2025.

See “Note 11.

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

Restaurant Progression Three Months Ended

2026 March 30,

North America Company-owned:

Beginning of period 462 539

Opened 4 — 7 6

Closed (5) (1)

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Beginning of period 3,061 2,975

Opened 14 18 48 43

Closed (39) (15)

2 unchanged sentences

Beginning of period 13 13

Closed — — — (43)

Refranchised — (20) — (61)

End of period 13 13

1 unchanged sentence

Beginning of period 2,547 2,503

Opened 27 36 82 115

Closed (47) (42)

Refranchised — 20 — 61

End of period 2,520 2,490

2 unchanged sentences

Results of Operations

Financial Statement Updates

During the year ended December 29, 2024, the Company implemented several financial statement changes in its Annual Report on Form 10-K, concurrent with the adoption of Accounting Standard Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” These changes evolve and modernize our financial statements and footnotes to increase transparency and better reflect management’s key performance metrics.

Presentation changes to the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows have been applied retrospectively, and as such, the results from the three and nine months ended September 29, 2024 have been reclassified for consistency with the current year presentation.

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

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

This update in methodology did not impact total reported expenses and was implemented prospectively beginning with the year ended December 29, 2024, and as such prior-period comparative information has been recast.

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

Three Months Ended Nine Months Ended Increase

(In thousands) September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Three Months Ended Increase

(In thousands) March 29,

2026 March 30,

Company-owned restaurant sales $ 143,134 $ 173,881 (17.7) %

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Total revenues $ 478,609 $ 518,309 (7.7) %

The comparability of results between 2025 and 2024 is impacted by transactions that have changed the composition of restaurants in the UK during the periods presented.

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

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

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

These transactions impact the comparability of revenues and expenses from the International segment for the nine months ended September 28, 2025, as compared to the prior year comparable period.

Restructuring” for additional information on these transactions.

Total revenues increased $1.3 million, or 0.3%, to $508.2 million for the three months ended September 28, 2025, and increased $27.0 million, or 1.8%, to $1.56 billion for the nine months ended September 28, 2025, as compared to the prior year comparable periods.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $2.7 million, or 1.6%, for the three months ended September 28, 2025, and decreased $25.7 million, or 4.7%, for the nine months ended September 28, 2025, as compared to the prior year comparable periods.

The decrease for the three and nine months ended September 28, 2025, is partially due to a $3.5 million and $6.3 million decrease in revenue from our Domestic Company-owned restaurants, respectively, due primarily to lower comparable sales driven by lower transaction volumes, along with the refranchising of 15 restaurants in September 2024.

Comparable sales for our Domestic Company-owned restaurants declined 3.1% and 2.5% for the three and nine months ended September 28, 2025, respectively.

The decrease for the three months ended September 28, 2025 was partially offset by higher average ticket and an increase in International restaurants sales driven by improved performance at our Company-owned restaurants in the

The decrease for the nine months ended September 28, 2025 was also due to a decline of $19.4 million in revenues from our Company-owned restaurants in the UK due to the transactions discussed above.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, increased $1.2 million, or 2.7%, for the three months ended September 28, 2025 and increased $3.9 million, or 2.8%, for the nine months ended September 28, 2025, as compared to the prior year comparable periods.

The increases were primarily due to a $1.3 million and $3.1 million increase from our International franchisees due to growth in International comparable sales of 7.1% and 4.7% for the three and nine months ended September 28, 2025, respectively.

Royalties and fees from our North America franchisees grew by $0.1 million and $1.3 million or the three and nine months ended September 28, 2025, respectively, as an increase in franchise equivalent units of 2.6% and 2.8% for the three and nine months ended September 28, 2025, respectively were mostly offset by declines in comparable sales for our North America franchised restaurants of 2.6% and 1.3% for the three and nine months ended September 28, 2025, respectively.

The comparability of 2026 and 2025 results is impacted by a transaction that has changed the composition of our Domestic Company-owned restaurants and Domestic franchised restaurants.

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

Upon closing of the transaction, the restaurants formerly

owned by the Company converted to franchised locations.

See “Note 21.

Divestitures” of the “Notes to Consolidated Financial Statements” of our 2025 Annual Report on Form 10-K for additional information on this transaction.

Total revenues decreased $39.7 million, or 7.7%, to $478.6 million for the three months ended March 29, 2026, as compared to the prior year comparable period.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $30.7 million, or 17.7%, for the three months ended March 29, 2026 as compared to the prior year comparable period.

The decrease was primarily attributable to $24.9 million in prior-period sales from the formerly-Company owned restaurants refranchised in the 2025 refranchising transaction, as detailed above.

The decrease was also due to lower comparable sales of 5.2% for our Domestic Company-owned restaurants driven by lower transaction volumes, partially offset by higher average ticket.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreased $0.5 million, or 1.0%, for the three months ended March 29, 2026 as compared to the prior year comparable period.

The decrease is primarily due to a $2.1 million decrease in royalties and fees from our North America franchisees due to declines in comparable sales of 6.7%, partially offset by an increase in number of restaurants due to the 2025 refranchising transaction discussed above.

International franchise royalties and fees increased $0.6 million due to growth in International systemwide sales of 6.0% for the three months ended March 29, 2026.

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

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

North America franchise restaurant sales decreased to $714.6 million, or 0.8% excluding the impact of foreign currency fluctuations, for the three months ended September 28, 2025.

North America franchise restaurant sales increased to $2.23 billion, or 1.1% excluding the impact of foreign currency fluctuations, for the nine months ended September 28, 2025 as compared to the prior year comparable period.

The primary drivers of the changes in franchise restaurant sales were the North America equivalent unit growth noted above and restaurant growth, offset by a decrease in comparable sales of 2.6% and 1.3% for the three and nine months ended September 28, 2025, respectively.

North America franchise restaurant sales decreased 3.4% to $728.7 million for the three months ended March 29, 2026 compared to the prior year comparable period, excluding the impact of foreign currency fluctuations.

The decline in franchise restaurant sales was due to a decrease in comparable sales of 6.7%, and franchise equivalent unit decrease of 1.0%, offset by the restaurant growth noted above.

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

however, our international royalty revenue is derived from these sales.

International franchise restaurant sales increased to $328.3 million, or 10.1% excluding the impact of foreign currency fluctuations, and increased to $950.4 million, or 10.0% excluding the impact of foreign currency fluctuations, for the three and nine months ended September 28, 2025, respectively.

As mentioned above, the UK restaurant closures and refranchising transactions in the second and third quarters of 2024 impacted the comparability of International franchise restaurant sales earned as compared to the prior year comparable periods.

Excluding the impact of the UK restaurant changes and foreign currency fluctuations, International franchise restaurant sales would have increased $28.6 million, or 9.6%, and increased $65.6 million, or 7.4%, for the three and nine months ended September 28, 2025, respectively.

The increases were due to growth in International comparable sales of 7.1% and 4.7% for the three and nine months ended September 28, 2025, respectively, as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, increased $0.6 million or 0.3% for the three months ended September 28, 2025 and increased $32.3 million or 4.9% for the nine months ended September 28, 2025 as compared to the prior year comparable period.

The increase for the three and nine months ended September 28, 2025 was primarily due to higher prices and higher transaction volumes.

The increase for the three months ended September 28, 2025 was offset by commodity deflation and changes in product mix as compared to the prior year comparable period .

Other revenues, which primarily includes revenues derived from our online and mobile ordering business, increased $1.9 million, or 9.7%, and increased $7.5 million, or 12.2%, for the three and nine months ended September 28, 2025, respectively, as compared to the prior year comparable periods primarily due to higher revenues generated from technology services as a result of an increase in the technology fee charged to franchisees that began in the second half of 2024.

Advertising funds revenue, which includes the operations of PJMF as well as local and International marketing funds, increased $0.3 million, or 0.7%, and increased $9.1 million, or 7.6%, for the three and nine months ended September 28, 2025, respectively, as compared to the prior year comparable periods.

The increases were primarily driven by global system-wide restaurant sales growth of 1.8% and 2.3% for the three and nine months ended September 28, 2025, respectively, as well as increases to contribution percentages in certain International markets.

The increase for the nine months ended September 28, 2025 was also driven by increases in the PJMF contribution percentage, which took effect in the second quarter of 2024.

International franchise restaurant sales increased 6.0% to $315.1 million for the three months ended March 29, 2026 compared to the prior year comparable period, excluding the impact of foreign currency fluctuations.

The increase was due to growth in International comparable sales of 3.6% as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, decreased $6.3 million, or 2.8%, for the three months ended March 29, 2026 as compared to the prior year comparable period.

The decrease was primarily due to food cost deflation, lower transaction volumes, and franchisee food cost subsidies during the quarter, partially offset by higher prices and an increase in commissary revenues compared to the prior year comparable period of approximately $7 million due to an increase in franchised restaurants as a result of the 2025 refranchising transaction discussed above.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business, decreased $2.0 million, or 8.3%, for the three months ended March 29, 2026 as compared to the prior year comparable period primarily due to lower revenues generated from technology services as a result of a decrease in the technology fee charged to franchisees that began in the second half of 2025, as well as lower North America systemwide sales.

Advertising funds revenue, which includes the operations of PJMF as well as local and International marketing funds, decreased by less than 1% for the three months ended March 29, 2026 as compared to the prior year comparable period.

The decrease was primarily driven by global system-wide restaurant sales decline of 3.1% for the three months ended March 29, 2026.

Costs and Expenses

The following table sets forth the various components of Costs and expenses from the Condensed Consolidated Statements of Operations:

(In thousands) Three Months Ended Nine Months Ended Increase

September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 QTD YTD

(In thousands) Three Months Ended Increase

March 29, 2026 March 30, 2025 QTD

Costs and expenses:

4 unchanged sentences

Total costs and expenses $ 457,851 $ 494,344 (7.4) %

Total costs and expenses were approximately $492.0 million, or 96.8% of total revenues, and $1.49 billion, or 95.8% of total revenues, for the three and nine months ended September 28, 2025, respectively, as compared to $441.6 million, or 87.1% of total revenues, and $1.40 billion, or 91.7% of total revenues in the prior year comparable periods.

The increases in costs and expenses as a percentage of total revenues were primarily due to a pre-tax gain of $41.3 million associated with the sale of two QC Center properties in the prior year third quarter.

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

Total costs and expenses were $457.9 million, or 95.7% of total revenues for the three months ended March 29, 2026, as compared to $494.3 million, or 95.4% of total revenues for the prior year comparable period.

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

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

Cost of sales were $369.1 million and $1.11 billion, respectively, for the three and nine months ended September 28, 2025, a decrease of $0.9 million and an increase of $6.6 million, respectively, from the prior year comparable periods.

Costs of sales by segment for the three and nine months ended September 28, 2025 and September 29, 2024 were as follows:

Three Months Ended Nine Months Ended Increase

(In thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 QTD YTD

Cost of sales was $340.9 million for the three months ended March 29, 2026, a decrease of $25.6 million, or 7.0% , from the prior year comparable period.

Costs of sales by segment for the three months ended March 29, 2026 and March 30, 2025 were as follows:

Three Months Ended Increase

(In thousands) March 29, 2026 March 30, 2025 QTD

Domestic Company-owned restaurants (a)

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

For the three months ended September 28, 2025, the decreases in cost of sales were due primarily to lower transaction volumes for our Domestic Company-owned restaurants and commodity deflation for our Domestic QC Centers.

decreases were partially offset by higher sales for our Company-owned restaurants in the UK as discussed above and higher transaction volumes for our Domestic QC centers compared to the prior year comparable period.

For the nine months ended September 28, 2025, the increases in cost of sales were due primarily to higher transaction volumes for our Domestic QC Centers, higher food costs for our Domestic Company-owned restaurants, and higher local advertising costs for our Domestic Company-owned restaurants.

These increases were partially offset by lower food and labor costs from our Company-owned restaurants in the UK as a result of the restaurant closures and refranchising transactions discussed above.

General and administrative expenses (“G&A”) expenses were $56.5 million, or 11.1% of revenues, and $191.8 million or 12.3% of revenues, for the three and nine months ended September 28, 2025, respectively, as compared to $12.9 million, or 2.5% of revenues, and $127.8 million, or 8.4% of revenues for the prior year comparable periods, respectively.

The decrease in cost of sales was due primarily to fewer Domestic Company-owned restaurants in 2026 as a result of the 2025 refranchising transaction, which resulted in an approximately $23 million decrease in cost of sales for the Domestic Company-owned restaurants.

The decrease was also due to commodity deflation for our Domestic QC Centers and due to lower transaction volumes for our Domestic Company-owned restaurants and Domestic QC Centers as a result of North America comparable sales declines.

These decreases in cost of sales were partially offset by higher volumes for our International restaurants due to an increase in International comparable sales.

These decreases were also partially offset by

decreases in intersegment cost of sales due to a decrease in Domestic Company-owned restaurants as a result of the 2025 refranchising transaction discussed above.

General and administrative expenses (“G&A”) expenses were $56.0 million, or 11.7% of total revenues for the three months ended March 29, 2026, as compared to $65.2 million, or 12.6% of total revenues, for the prior year comparable period.

G&A expenses consisted of the following:

Three Months Ended Nine Months Ended

(In thousands) September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Administrative and other general expenses, net (a)

$ 54,443 $ 48,815 $ 180,620 $ 144,086

Gain on sale of QC Center properties (b)

— (41,289) — (41,289)

International restructuring costs (c)

Three Months Ended

(In thousands) March 29,

2026 March 30,

Administrative and other general expenses (a)

$ 51,003 $ 61,565

Restructuring costs (b)

Gain on refranchising transaction, net (c)

Other costs (d)

1,804 1,495 6,302 5,495

General and administrative expenses $ 55,996 $ 65,167

___________________________________

(a) Administrative and other general expenses, net increased by $5.6 million and $36.5 million, respectively, for the three and nine months ended September 28, 2025.

The increases for the three and nine month periods were primarily due to incremental marketing investments of $4.4 million and $17.1 million and increases in management incentive compensation of $2.4 million and $12.0 million, respectively, due primarily to lower comparative-period equity compensation costs related to leadership changes during 2024.

The nine months ended September 28, 2025 were also impacted by expenses resulting from our bi-annual franchise operating conference held in the first quarter of 2025.

(b) Represents pre-tax gain on sale, net of transaction costs, realized upon the sale of our Texas and Florida QC Center properties during the third quarter of 2024.

Refer to Note 22 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2024 for additional information.

Restructuring”.

(d) For the three and nine months ended September 28, 2025, other costs is comprised of the following:

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

Costs associated with project-based strategic initiatives that are not related to our ongoing operations as well as transaction costs incurred in connection with the anticipated sale of our 70% interest in a joint venture operating 85 restaurants (refer to “Note 11.

Divestitures” for further information), of which approximately $0.1 million was attributable to noncontrolling interests, and;

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

For the three and nine months ended September 29, 2024, represents a non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants.

(a) Administrative and other general expenses, net decreased by $10.6 million for the three months ended March 29, 2026.

The decrease was primarily due to $4.5 million of expenses resulting from our bi-annual franchise operating conference incurred during 2025 as well as a $2.7 million year-over-year reduction in supplemental advertising costs.

(b) For the three months ended March 29, 2026, represents costs associated with the Company’s Enterprise Transformation Plan.

For the three months ended March 30, 2025, represents costs associated with the Company’s International Transformation Plan.

Refer to “Note 9.

Significant Accounting Policies of the “Notes to Condensed Consolidated Financial Statements” for further details.

Depreciation and amortization expenses were $24.9 million, or 4.9% of total revenues, and $62.1 million, or 4.0% of total revenues for the three and nine months ended September 28, 2025, respectively, as compared to $17.3 million, or 3.4% of total revenues and $52.5 million or 3.4% of total revenues for the prior year comparable periods, respectively.

During the third quarter of 2025, we completed initial development and began releasing our new omnichannel experience across the Android and iOS platforms.

Our refreshed website is currently expected to be released by the end of 2025, and the retirement of certain technology assets currently in service is expected to begin shortly thereafter.

As a result, we began accelerating depreciation of legacy omnichannel and other technology assets during the third quarter of 2025 to align with the shortened estimated useful lives of the legacy assets.

We recognized $6.1 million in additional depreciation expense during the three months ended September 28, 2025 related to the accelerated depreciation of these assets.

We currently estimate that we will incur an additional $17 million to $22 million of accelerated depreciation expense by the end of 2026

as we continue to monitor performance, finalize the roll out of our new omnichannel experience across digital channels, and retire existing legacy technology assets.

Advertising funds expenses were $41.5 million or 99.5% of advertising revenues and $129.8 million or 100.2% of advertising revenues for the three and nine months ended September 28, 2025, respectively, as compared to $41.4 million or 100.0% of advertising revenues and $120.3 million or 99.9% of advertising revenues for the prior year comparable periods, respectively.

Restructuring” for additional details.

(c) Represents additional pre-tax gain on sale, net of transaction costs, associated with the 2025 refranchising transaction related to the assignment of certain remaining leases to the Buyer.

See “Note 11.

Divestitures” for additional details.

(d) For the three months ended March 29, 2026, represents costs associated with project-based strategic initiatives that are not related to our ongoing operations.

For the three months ended March 30, 2025, other costs is comprised of costs incurred, net of anticipated insurance recoveries, arising from a tornado that damaged the Texas QC Center;

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

Depreciation and amortization expenses were $17.7 million, or 3.7% of total revenues, for the three months ended March 29, 2026, as compared to $18.3 million, or 3.5% of total revenues for the prior year comparable period.

Advertising funds expenses were $43.2 million or 99.5% of advertising revenues for the three months ended March 29, 2026, as compared to $44.3 million or 101.5% of advertising revenues for the prior year comparable period.

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

The increase for the nine months ended September 28, 2025 was primarily due to higher advertising spend resulting from the previously discussed increase in contributions to the national marketing fund.

The decrease for the three months ended March 29, 2026 was primarily due to a global system-wide restaurant sales decline of 3.1%.

Advertising funds expense also contains expenses incurred through our international marketing funds to support our International business, which may lead to Advertising funds expense being less than or in excess of Advertising funds revenue due to timing differences.

Segment Financial Performance

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

See “Note 12.

Segment Information” for further information regarding the Company’s segments.

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

Three Months Ended Nine Months Ended Increase

(In thousands) September 28,

2025 September 29,

2024 September 28,

2025 September 29,

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

Three Months Ended

(In thousands) March 29,

2026 March 30,

2025 Increase

Domestic Company-owned restaurants $ 7,885 $ 5,032 $ 2,853

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International 8,143 5,381 2,762

Domestic Company-owned restaurants decreased $0.4 million for the three months ended September 28, 2025 primarily due to lower comparable sales.

This decrease was partially offset by the impact of refranchising 15 restaurants during the third quarter of 2024.

Domestic Company-owned restaurants decreased $13.9 million for the nine months ended September 28, 2025 primarily due to higher food costs, higher local advertising costs, and lower comparable sales.

Comparable sales for the three and nine month periods declined by 3.1% and 2.5%, respectively.

North America franchising decreased $1.2 million and $2.8 million for the three and nine months ended September 28, 2025, respectively, primarily due to higher incentive compensation allocated to the segment compared to the prior year periods.

Decreases for the nine months ended September 28, 2025 were partially offset by higher royalty and franchise fee revenue as discussed above.

North America commissaries increased $2.5 million and $9.3 million for the three and nine months ended September 28, 2025, respectively.

For the three months ended September 28, 2025, the increases were due primarily to commodity deflation and higher transaction volumes for our Domestic QC Centers.

For the nine months ended September 28, 2025, the increases were due primarily to higher prices and higher transaction volumes mentioned previously.

International increased $1.2 million and $4.4 million for the three and nine months ended September 28, 2025, respectively.

The increase was primarily due to operating losses attributable to the UK Company-owned restaurants during the prior year comparable periods, partially offset by increases in advertising spend in 2025.

Domestic Company-owned restaurants segment adjusted EBITDA increased $2.9 million for the three months ended March 29, 2026 primarily due to a prospective change in our internal cost allocation methodology to refine internal allocations of certain operating costs.

This change in allocation methodology resulted in a $2.1 million increase in Domestic Company-owned restaurants segment adjusted EBITDA over the comparable periods.

Please see “4-wall EBITDA” below for a discussion on this change.

This increase was also due to lower cost of sales as a result of increased labor productivity for our Domestic Company-owned restaurants and commodity deflation, partially offset by a decrease in comparable sales of 5.2% over the periods compared and by fewer Domestic Company-owned restaurants as a result of the 2025 refranchising transaction.

North America franchising segment adjusted EBITDA decreased $1.9 million for the three months ended March 29, 2026 primarily due to a decrease in comparable sales of 6.7%, partially offset by franchise restaurant growth over the periods compared as a result of the 2025 refranchising transaction.

North America commissaries segment adjusted EBITDA decreased $6.9 million for the three months ended March 29, 2026 primarily due to franchisee food cost subsidies and timing of planned pricing during the quarter.

International segment adjusted EBITDA increased $2.8 million for the three months ended March 29, 2026 primarily due to an increase in comparable sales of 3.6%, favorable foreign currency exchange rate fluctuations, and international franchise restaurant growth over the periods compared.

4-wall EBITDA

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

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

GAAP measures.

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

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

See “Note 12.

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

(In thousands) Three Months Ended:

2026 % of Related Revenues March 30,

2025 % of Related Revenues

Segment revenue $ 139,671 $ 170,795

Less segment cost of sales:

COS - Product Costs 41,977 30.1 % 52,137 30.5 %

COS - Salaries & Benefits 46,430 33.2 % 57,976 33.9 %

COS - Other 34,689 24.8 % 44,900 26.3 %

Cost Allocation Change - Domestic Company-owned restaurants (a)

— — % (2,095) (1.2) %

4-wall EBITDA $ 16,575 $ 17,877

4-wall EBITDA margin 11.9 % 10.5 %

(a) During the current year, the Company updated its internal cost allocation methodology for certain centrally incurred costs.

As a result, a portion of costs previously allocated to the Domestic Company‑owned restaurants segment is now reflected within Unallocated corporate expenses and the North America commissaries segment.

The change is prospective and does not affect total reported expenses.

We have adjusted for the change in cost allocation in the prior period when calculating 4-wall EBITDA to ensure comparability.

4-wall EBITDA margin increased 1.4% partially due to the 2025 refranchising transaction, which drove a 0.5% increase.

4-wall EBITDA margin also increased due to lower food costs as a result of commodity deflation and due to increased labor productivity, partially offset by a 5.2% decline in comparable sales.

4-wall EBITDA decreased $1.3 million as compared to

the prior year comparable period due to the refranchising transaction mentioned above, which drove a decrease of approximately $1.9 million.

Items Below Operating Income

The following table sets forth the various items below Operating income from the Condensed Consolidated Statements of Operations:

Three Months Ended Nine Months Ended Increase (Decrease)

(In thousands, except per share amounts) September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Three Months Ended Increase (Decrease)

(In thousands, except per share amounts) March 29,

2026 March 30,

Operating income $ 20,758 $ 23,965 $ (3,207)

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Income before income taxes 11,075 13,886 (2,811)

Income tax expense (a)

(1,753) (12,812) (10,531) (25,347) (11,059) (14,816)

Income tax expense (4,137) (4,543) (406)

Net income 6,938 9,343 (2,405)

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Diluted earnings per common share $ 0.21 $ 0.27 $ (0.06)

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

Net Interest Expense

Net interest expense decreased $0.7 million and $2.0 million for the three and nine months ended September 28, 2025, respectively.

The decrease for the three and nine months ended September 28, 2025 was primarily due to lower average interest rates during the respective periods.

Net interest expense decreased $0.4 million for the three months ended March 29, 2026 primarily due to lower average interest rates during the respective periods.

Income Tax Expense

Our effective income tax rates were 28.2% and 31.0% for the three and nine months ended September 28, 2025, respectively, as compared to an income tax rate of 23.5% and 26.8% for the prior year comparable periods, respectively.

The higher effective tax rate for both periods was primarily due to lower pretax book income and larger tax shortfall generated by vesting of restricted shares through the third quarter of 2025.

Three Months Ended Nine Months Ended

(Dollars in thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Our effective income tax rate was 37.4% for the three months ended March 29, 2026 as compared to an income tax rate of 32.7% for the prior year comparable period.

The higher effective tax rate was primarily due to a shift in income between jurisdictions and tax shortfall generated by vesting of restricted shares.

Three Months Ended

(Dollars in thousands) March 29, 2026 March 30, 2025

Income before income taxes $ 11,075 $ 13,886

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Net Income Attributable to Noncontrolling Interests

Net income included losses of $0.2 million and income of less than $0.1 million, respectively, attributable to noncontrolling interests for the three and nine months ended September 28, 2025 as compared to losses of less than $0.1 million and income of $0.6 million, respectively, for the prior year comparable periods.

Net income included losses of $0.3 million attributable to noncontrolling interests for the three months ended March 29, 2026 as compared to income of $0.1 million for the prior year comparable period.

Diluted Earnings Per Common Share

Diluted earnings per common share were $0.13 and $0.69 for the three and nine months ended September 28, 2025, respectively, as compared to $1.27 and $2.09 for the prior year comparable periods, respectively, representing a decrease of $1.14 and $1.40, respectively.

Adjusted diluted earnings per common share, a non-GAAP measure, was $0.32 and $1.09 for the three and nine months ended September 28, 2025, respectively, as compared to adjusted diluted earnings per

common share of $0.43 and $1.71 for the prior year comparable periods, respectively, representing a decrease of $0.11 and $0.63, respectively.

Diluted earnings per common share were $0.21 for the three months ended March 29, 2026 as compared to $0.27 for the prior year comparable period, representing a decrease of $0.06.

Adjusted diluted earnings per common share, a non-GAAP measure, was $0.32 for the three months ended March 29, 2026 as compared to adjusted diluted earnings per common share of $0.36 for the prior year comparable period, representing a decrease of $0.04.

See “Non-GAAP Measures” for additional information.

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GAAP and include the following:

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

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

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

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The most directly comparable U.S.

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

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

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

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The table below reconciles our GAAP financial results to our non-GAAP financial measures.

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Three Months Ended

(In thousands, except per share amounts) March 29,

2026 March 30,

Net income $ 6,938 $ 9,343

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Stock-based compensation expense 4,409 3,669

International restructuring costs (a)

231 3,876 4,862 19,604

Other costs (b)

1,804 1,495 6,302 5,495

Gain on sale of QC Center properties (c)

— (41,289) — (41,289)

Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

Adjusted EBITDA $ 47,763 $ 49,624

Net income attributable to common shareholders $ 4,447 $ 41,808 $ 22,742 $ 68,687

International restructuring costs (a)

231 3,862 4,841 19,514

Accelerated software depreciation (d)

6,091 — 6,091 —

Other costs (b)

1,659 1,495 6,157 5,495

Gain on sale of QC Center properties (c)

Segment adjusted EBITDA - Domestic Company-owned restaurants $ 7,885 $ 5,032

General & Administrative - Domestic Company-owned restaurants 8,690 10,750

Cost Allocation Change - Domestic Company-owned restaurants (e)

4-wall EBITDA (f)

$ 16,575 $ 17,877

Tax effect of adjustments (e)

Segment revenue - Domestic Company-owned restaurants $ 139,671 $ 170,795

4-wall EBITDA margin (f)

Net income attributable to common shareholders $ 6,959 $ 9,028

Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

Tax effect of adjustments (d)

(1,070) (818)

1 unchanged sentence

Diluted earnings per common share $ 0.21 $ 0.27

International restructuring costs (a)

0.01 0.12 0.15 0.59

Accelerated software depreciation (d)

0.18 — 0.18 —

Other costs (b)

0.05 0.04 0.19 0.17

Gain on sale of QC Center properties (c)

— (1.25) — (1.25)

Tax effect of adjustments (e)

Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

Tax effect of adjustments (d)

(0.03) (0.02)

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___________________________________

(a) Represents costs associated with the Company’s International Transformation Plan.

(a) For the three months ended March 29, 2026, represents costs associated with the Company’s Enterprise Transformation Plan, inclusive of $0.2 million of non-cash stock-based compensation expense and depreciation expense.

For the three months ended March 30, 2025, represents costs associated with the Company’s International Transformation Plan.

Refer to “Note 9.

Restructuring” for additional details.

(b) For the three and nine months ended September 28, 2025, other costs is comprised of the following:

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

Divestitures” for further information), of which approximately $0.1 million was attributable to noncontrolling interests, and;

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

For the three and nine months ended September 29, 2024, represents a non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants.

Refer to “Note 11.

Divestitures” of the “Notes to Condensed Consolidated Financial Statements” for further details.

(c) 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.

Refer to “Note 11.

(b) Represents additional pre-tax gain on sale, net of transaction costs, associated with the 2025 refranchising transaction related to the assignment of certain remaining leases to the Buyer.

Net loss attributable to noncontrolling interest for the three months ended March 29, 2026 was approximately $0.4 million.

See “Note 11.

Divestitures ” for additional details.

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

(e) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.7% for the three and nine months ended September 28, 2025 and 22.6% for the three and nine months ended September 29, 2024.

(c) For the three months ended March 29, 2026, represents costs associated with project-based strategic initiatives that are not related to our ongoing operations.

For the three months ended March 30, 2025 other costs is comprised of costs incurred, net of anticipated insurance recoveries, arising from a tornado that damaged the Texas QC Center;

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

(d) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 23.2% for the three months ended March 29, 2026 and 22.7% for the three months ended March 30, 2025.

(e) During the current year, the Company updated its internal cost allocation methodology for certain centrally incurred costs.

The change is prospective and does not affect total reported expenses.

We have included a conforming adjustment in the historical period when reconciling segment adjusted EBITDA to 4-wall EBITDA to ensure comparability.

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

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

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

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

The most directly comparable U.S.

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

See “Note 12.

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

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

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Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the Second Amended and Restated Credit Agreement, dated as of March 26, 2025 ( the “Second Amended and Restated Credit Agreement”), which amended and restated the Amended and Restated Credit Agreement dated as of September 14, 2021 and amended May 30, 2023.

The Second Amended and Restated 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”).

Debt” for additional detail regarding the Second Amended and Restated Credit Agreement.

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

The Credit Agreement provides for a senior secured term loan in a principal amount of $200 million (the “Term Loan”) and a principal amount of $600 million available for borrowing under the PJI Revolving Facility.

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

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The Company believes that its balances of cash and cash equivalents and borrowing capacity, along with cash generated by operations and from asset sales, will be sufficient to satisfy its cash requirements, cash dividends, interest payments and share repurchases over the next twelve months and beyond.

The table below summarizes our cash flows for the nine months ended September 28, 2025 and September 29, 2024 (in thousands):

Nine Months Ended

September 28,

2025 September 29,

The table below summarizes our cash flows for the three months ended March 29, 2026 and March 30, 2025 (in thousands):

Three Months Ended

2026 March 30,

Total cash provided by (used in):

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Operating Activities

Total cash provided by operating activities was $106.2 million for the nine months ended September 28, 2025 compared to $55.9 million for the corresponding period of 2024.

The increase of $50.3 million primarily reflects a favorable impact from timing of collections and marketing spend within our advertising fund, a reduction in cash taxes paid, lower spending related to our International Transformation Plan, and favorable changes in working capital accounts compared to the prior period.

Total cash provided by operating activities was $7.2 million for the three months ended March 29, 2026 compared to $31.3 million for the corresponding period of 2025.

The decrease of $24.1 million primarily reflects lower net income and higher compensation payments within the period, inclusive of the Company’s Enterprise Transformation Plan.

Investing Activities

Total cash used in investing activities was $37.6 million for the nine months ended September 28, 2025 compared to cash provided by investing activities of $7.4 million for the same period in 2024.

Net cash used in investing activities during the nine months ended September 28, 2025 primarily reflects $52.1 million in capital expenditures, which includes $5.1 million of additional capital expenditures related to natural disasters, partially offset by $3.3 million of related insurance proceeds.

Net cash provided by investing activities for the nine months ended September 29, 2024 includes net proceeds of $46.7 million from the sale of two Domestic QC Centers in the third quarter of 2024, offset by capital expenditures of $46.9 million.

Our capital expenditures consisted primarily of capital investments for existing restaurants and new restaurant locations as well as investments in technology platforms.

We estimate that our capital expenditures during 2025 will be approximately $75 million to $85 million, which primarily consists of the acquisition of sites and construction costs for new Company-owned restaurants that have opened or that we expect to open during 2025.

This also includes an estimated $10 million to

$13 million of capital expenditures related to rebuilding tornado damage incurred at our Texas QC Center and Louisville restaurant support center and QC Center.

These amounts are subject to change as repair and reconstruction work is ongoing, and we anticipate these amounts will be recovered under our insurance policy, subject to our policy deductibles.

Total cash used in investing activities was $5.2 million for the three months ended March 29, 2026 compared to $7.1 million for the same period in 2025.

Net cash used in investing activities during the three months ended March 29, 2026 primarily reflects $13.5 million in capital expenditures, which includes $0.1 million of additional capital expenditures related to natural disasters, partially offset by proceeds of $3.5 million from the sale of the building occupied by our former print and promotions business in Louisville, Kentucky, and distributions of $3.2 million related to our deferred compensation plan.

Net cash provided by investing activities for the three months ended March 30, 2025 primarily reflects $12.2 million in capital expenditures partially offset by distributions of $4.7 million related to our deferred compensation plan.

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

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

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

Financing Activities

Total cash used in financing activities was $68.2 million for the nine months ended September 28, 2025 compared to $86.6 million for the same period in 2024.

During the first nine months of 2025, the principal financing outflows were related to dividend payments of $45.8 million and payments related to financing leases of $7.5 million.

Cash used in financing activities also reflects the impact of net repayments of $13.3 million under the PJI Revolving Facility throughout the year, which includes the refinancing of our debt via the Second Amended and Restated Credit Agreement during the first quarter of 2025.

This refinancing resulted in borrowings of $200.0 million under the new Term Loan, from which the proceeds were used to repay $196.8 million to the PJI Revolving Facility as well as $3.2 million in related issuance costs.

In the first nine months of 2024, the primary uses of cash for financing activities were $45.4 million in dividend payments, net repayments of $31.6 million from the PJI Revolving Facility and the PJMF revolving line of credit (the “PJMF Revolving Facility”), $3.5 million in tax payments on equity award issuances, and $6.8 million in payments related to financing leases.

There were no share repurchases in the first nine months of 2025 or 2024.

Our outstanding debt as of September 28, 2025 was $736.7 million, which was comprised of $400.0 million principal amount of our 3.875% senior notes (the “Notes”), $200.0 million of Term Loan borrowings, and $136.7 million outstanding under the PJI Revolving Facility.

Remaining availability under the PJI Revolving Facility was approximately $463.3 million as of September 28, 2025.

Our Second Amended and Restated 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, in each case, that are substantially similar to our previous credit agreement (the “Previous Credit Agreement”).

In addition, the Company is subject to the following financial covenants substantially similar to those in the Previous Credit Agreement (other than the new liquidity requirement described in clause (3)):

(1) a maximum Leverage Ratio of 5.25 to 1.00, subject to the Company’s election to increase the maximum Leverage Ratio by 0.5 to 1.0 in connection with material acquisitions if the Company satisfies certain requirements;

(2) a minimum ratio of EBITDA plus consolidated rental expense to consolidated interest expense plus consolidated rental expense of 2.00 to 1.00;

and (3) applicable only during the time period beginning 91 days prior to the maturity of the Company’s existing senior notes due 2029 (the “Senior Notes”) and until such Senior Notes are repaid in full or the maturity thereof is extended at least 91 days after the latest maturity date applicable to the Credit Facilities, liquidity of not less than $150.0 million.

Total cash provided by financing activities was $0.2 million for the three months ended March 29, 2026 compared to total cash used in financing activities of $18.6 million for the same period in 2025.

In the first quarter of 2026, the primary source of cash from financing activities was net proceeds of $19.4 million under the PJI Revolving Facility.

The primary uses of cash in financing activities in the first quarter of 2026 were dividend payments of $15.3 million, payments related to finance leases of $2.6 million, and $1.4 million in tax payments on equity award issuances.

In the first quarter of 2025, the primary uses of cash for financing activities were $15.2 million in dividend payments, payments related to finance leases of $2.4 million, and $1.1 million in tax payments on equity award issuances.

Cash used in financing activities also reflects the impact of the refinancing of our PJI Revolving Facility, which resulted in borrowings of $200.0 million under the Term Loan, from which the proceeds were used to repay $196.8 million under the PJI Revolving Facility during the quarter and $3.0 million in related issuance costs.

There were no share repurchases in the first three months of 2026 or 2025.

Our outstanding debt as of March 29, 2026 was $741.6 million, which was comprised of $400.0 million principal amount of our 3.875% senior notes (the “Notes”), $200.0 million of Term Loan borrowings, and $141.6 million outstanding under the PJI Revolving Facility.

Remaining availability under the PJI Revolving Facility was approximately $458.7 million as of March 29, 2026.

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 also subject to certain financial covenants, as shown in the following table, that could restrict or impose constraints on the liquidity of our business:

Permitted Ratio Actual Ratio as of September 28, 2025

Permitted Ratio Actual Ratio as of March 29, 2026

Leverage ratio Not to exceed 5.25 to 1.0 3.3 to 1.0

Interest coverage ratio Not less than 2.00 to 1.0 3.3 to 1.0

Our leverage ratio is defined as outstanding debt divided by Consolidated EBITDA (as defined in the Second Amended and Restated Credit Agreement) for the most recent four fiscal quarters.

Our leverage ratio is defined as outstanding debt divided by Consolidated EBITDA (as defined in the Credit Agreement) for the most recent four fiscal quarters.

Our interest coverage ratio is defined as the sum of Consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters.

We were in compliance with all financial covenants as of September 28, 2025.

We were in compliance with all financial covenants as of March 29, 2026.

In addition, the Indenture governing the Notes contains customary covenants that, among other things and subject to certain exceptions, limit our ability and the ability of certain of our subsidiaries to:

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and consolidate, merge or sell all or substantially all of our assets.

The PJMF Revolving Facility consists of a $30.0 million revolving line of credit pursuant to a Revolving Loan Agreement, dated September 30, 2015 and most recently amended on September 30, 2025.

We did not have any borrowings under the PJMF Revolving Facility as of September 28, 2025 or December 29, 2024.

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Second Amended and Restated Credit Agreement.

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.

As of March 29, 2026, the principal amount of debt outstanding under the PJMF Revolving Facility was approximately $0.3 million.

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

The PJMF Revolving F acility 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 plus 1.975%.

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement.

Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2025 for additional information.

Share Repurchases

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

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

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

There was no share repurchase activity during the three and nine months ended September 28, 2025 or September 29, 2024.

Approximately $90.2 million remained available under the Company’s share repurchase program as of September 28, 2025.

There was no share repurchase activity during the three months ended March 29, 2026 or March 30, 2025.

Approximately $90.2 million remained available under the Company’s share repurchase program as of March 29, 2026.

The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program.

There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise.

The Company paid aggregate cash dividends to common stockholders of $45.8 million ($1.38 per share) and $45.4 million ($1.38 per share) for the nine months ended September 28, 2025 and September 29, 2024, respectively.

On October 29, 2025, our Board of Directors declared a fourth quarter dividend of $0.46 per common share (approximately $15.4 million in the aggregate), which will be paid on November 28, 2025 to stockholders of record as of the close of business on November 17, 2025.

The Company paid aggregate cash dividends to common stockholders of $15.3 million ($0.46 per share) and $15.2 million ($0.46 per share) for the three months ended March 29, 2026 and March 30, 2025, respectively.

On May 5, 2026, our Board of Directors declared a second quarter dividend of $0.46 per common share (approximately $15.6 million in the aggregate), which will be paid on May 29, 2026 to stockholders of record as of the close of business on May 18, 2026.

The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

Enactment of the “One Big Beautiful Bill Act”

On July 4, 2025, the “One Big Beautiful Bill Act,” a comprehensive tax and spending bill which includes changes to the U.S.

corporate tax system, was signed into U.S.

We anticipate that the enactment of this bill will result in an estimated $10 million to $15 million reduction in cash taxes to be paid during the second half of 2025 due to the reinstatement of 100% bonus depreciation and full expensing for domestic research and development expenditures.

Free Cash Flow

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Free cash flow should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP measures.

The Company’s free cash flow was as follows for the nine month periods of 2025 and 2024 (in thousands):

Nine Months Ended

September 28,

2025 September 29,

The Company’s free cash flow was as follows for the three month periods of 2026 and 2025 (in thousands):

Three Months Ended

2026 March 30,

Net cash provided by operating activities $ 7,224 $ 31,336

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Cash Requirements

There have been no material changes in our cash requirements other than in the ordinary course of business since the end of 2024.

In the first quarter of 2026, the Company entered into a multi-year agreement for point‑of‑sale and restaurant operations software services which will expire on December 23, 2034, with a one year extension option.

The agreement includes deployment requirements that specify a minimum number of Company‑owned and franchised restaurants to be installed and activated on the software platform by November 30, 2026 and by November 30, 2027.

The total estimated contractual commitment for software services is approximately $125 million to $140 million over the term of the agreement, contingent upon variable components such as the timing of the deployment schedule and associated contractual credits.

These amounts are expected to be largely recovered through technology fees charged to our franchisees over the term of the agreement.

As of March 29, 2026, the Company had not incurred any amounts related to these provisions.

Other than the contractual commitment discussed above, there have been no material changes in our cash requirements other than those incurred in the ordinary course of business since the end of 2025.

Refer to “Contractual Obligations” presented within “Item 7.

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Impact of Inflation and Macroeconomic Trends

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

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

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

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

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Quantitative and Qualitative Disclosures About Market Risk.”

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

However, the extent to which tariffs may increase the price of other goods and services and how they may alter discretionary spending patterns by our customers or impact our franchisees’ profitability is currently unknown and may adversely affect the Company’s results of operations and/or financial position.

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

Forward-Looking Statements

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

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

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

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

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

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

• economic conditions in the United States and international markets;

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

and new product and concept developments by food industry competitors;

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

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

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

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

• increases in labor costs, food costs or sustained higher other operating costs, including as a result of supply chain disruption, inflation and related impacts, increased tariffs or other trade barriers, immigration policies, or climate change;

• increases in labor costs, food costs, fuel costs or sustained higher other operating costs, including as a result of supply chain disruption, inflation and related impacts, increased tariffs or other trade barriers, immigration policies, geopolitical conflicts or climate change;

• the potential for delayed new restaurant openings, both domestically and internationally;

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

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

• risks to the global economy and our business related to geopolitical conflicts in areas in which we or our franchisees operate, including those in Ukraine and the Middle East;

• increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective or that our franchisees will not execute them properly or be aligned with such initiatives;

• risks related to a prolonged US government shutdown and/or possible economic slowdown that could, among other things, reduce consumer spending or demand and result in changing consumer practices;

• risks related to US government shutdowns or possible economic slowdowns that could, among other things, reduce consumer spending or demand and result in changing consumer practices;

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

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

and new product and concept developments by food industry competitors;

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis