What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 243 added, 162 removed, 329 unchanged (55% of the section changed)

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Papa Johns began operations in 1984.

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.

At June 28, 2026, there were 5,978 Papa John’s restaurants in operation, consisting of 469 Company-owned and 5,509 franchised restaurants operating in 51 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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Recent Developments and Trends

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.

During the second 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.

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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.

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

We also began work to refine our aggregator channel strategy, which remains an important component of our customer acquisition strategy.

We believe opportunities exist to enhance both visibility and conversion through a more targeted mix of promotional offers, supported by an ongoing evaluation of our national and local third-party marketing investments.

These efforts are intended to improve the efficiency of our spending and drive incremental customer trial.

As a brand, 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:

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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.

We have also initiated a multi-year 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 currently expect to fully deploy the new system by the end of 2027, at which point we will retire our current point-of-sale system.

During the second quarter of 2026, we began pilot testing our new point-of-sale system;

consequently, we began accelerating the remaining useful lives of our existing point-of-sale software assets.

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

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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.

The execution of actions approved under the Enterprise Transformation Plan resulted in the closure of 101 restaurants in North America during the six months ended June 28, 2026 as well as the reduction of our corporate workforce by approximately 7%.

As of June 28, 2026, the Company had approved the closure of 17 additional Company-owned restaurants, most of which we expect to close by the end of 2026.

We incurred restructuring expenses of $4.4 million during the second 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 $16.4 million recognized during 2025 and the six months ended June 28, 2026 to date.

We expect to recognize the remainder of the restructuring charges 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.

The implementation of the Enterprise Transformation Plan remains ongoing and may result in additional restructuring charges, although the amounts and nature of future expenses relating to any actions yet to be determined or approved by management or our Board of Directors are currently not estimable.

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.

As part of our efforts to reduce the overall cost to serve our Domestic Company-owned and franchised restaurants, we are realizing benefits from productivity and cost reduction initiatives designed to optimize our commissary business while maintaining 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.

We have captured approximately $16 million of cumulative benefits from these initiatives and are on track to realize at least $25 million of savings by the end of 2026.

• Development strategy:

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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.

Our near-term International development pipeline remains strong, as our International business delivered positive comparable sales for the seventh consecutive quarter.

• Partnering with and evolving our franchisee base :

We are focused on strengthening franchisee health and supporting long-term system growth through a combination of the supply chain and restaurant optimization initiatives described above, as well as incentive programs tied to operational excellence and restaurant image improvements that began during the second quarter.

We believe these actions will further align the interests of our franchisees and the Company, accelerate the execution of our transformation initiatives, and support sustainable growth across the system.

In addition, 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.

In the second quarter of 2026 we entered into an agreement to refranchise 28 restaurants in Florida, with the transaction expected to close during the third quarter, and we continue to explore 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.

Management believes the presentation of Global system-wide restaurant sales growth (decline), 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

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

2026 March 30,

Three Months Ended Six Months Ended

Growth rates below exclude the impact of foreign currency June 28,

2026 June 29,

2025 June 28, 2026 (b)

Comparable sales growth (decline):

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(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.

(a) For the three and six months ended June 28, 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,

(b) Comparable sales and system-wide restaurant sales for the six months ended June 28, 2026 have been adjusted to remove $1.0 million of Domestic Company-owned restaurant sales that were erroneously overstated in the first quarter of 2026.

Restaurant Progression Three Months Ended Six Months Ended

2026 June 29,

2025 June 28,

2026 June 29,

North America Company-owned:

Beginning of period 457 539 462 539

Opened 2 2 2 3

Closed (3) — (8) (1)

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Beginning of period 3,030 2,977 3,061 2,975

Opened 7 17 15 34

Closed (54) (18) (93) (33)

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Beginning of period 2,520 2,490 2,547 2,503

Opened 41 26 61 55

Closed (35) (57) (82) (99)

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

Three Months Ended Increase

(In thousands) March 29,

2026 March 30,

Three Months Ended Six Months Ended Increase

(Dollars in thousands) June 28,

2026 June 29,

2025 June 28,

2026 June 29,

Company-owned restaurant sales $ 142,182 $ 178,989 $ 285,316 $ 352,870 (20.6) % (19.1) %

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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.

Total revenues decreased $46.8 million, or 8.8%, to $482.4 million for the three months ended June 28, 2026 and decreased $86.5 million, or 8.3%, to $961.0 million for the six months ended June 28, 2026, as compared to the prior year comparable periods.

Changes in total revenues were impacted by the transaction noted above and are detailed in the discussions below.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $36.8 million, or 20.6%, for the three months ended June 28, 2026 and decreased $67.6 million, or 19.1%, for the six months ended June 28, 2026, as compared to the prior year comparable periods.

The decrease for the three and six month periods is primarily attributable to approximately $25 million and $50 million, respectively, 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 8.9% and 7.4% for our Domestic Company-owned restaurants for the three and six months ended June 28, 2026, respectively, driven by lower transaction volumes.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreased $1.7 million, or 3.6%, for the three months ended June 28, 2026 and decreased $2.2 million, or 2.3%, for the six months ended June 28, 2026, as compared to the prior year comparable periods.

The decrease is primarily due to a $3.3 million and $5.5 million decrease in royalties and fees from our North America franchisees due to declines in comparable sales of 8.2% and 7.4% for the three and six months ended June 28, 2026, respectively.

International franchise royalties and fees increased $0.6 million and $1.2 million due to growth in International comparable sales of 1.5% and 2.5% for the three and six months ended June 28, 2026, respectively, and due to an increase in international franchise restaurants over the periods compared.

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 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.

North America franchise restaurant sales decreased 5.3% to $712.4 million and decreased 4.4% to $1.4 billion for the three and six months ended June 28, 2026, respectively, compared to the prior year comparable periods and excluding the impact of foreign currency fluctuations.

The decline in franchise restaurant sales was primarily due to a decrease in comparable sales of 8.2% and 7.4% for the three and six months ended June 28, 2026, respectively.

Franchise equivalent units increased 1.6% for the three months ended June 28, 2026 and increased 0.3% for the six months ended June 28, 2026 compared to the prior year comparable periods.

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 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.

International franchise restaurant sales increased 5.1% to $344.0 million and increased 5.5% to $673.9 million for the three and six months ended June 28, 2026, respectively, compared to the prior year comparable periods and excluding the impact of foreign currency fluctuations.

The increase was due to growth in International comparable sales of 1.5% and 2.5% for the three and six months ended June 28, 2026, respectively, as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, decreased $3.8 million, or 1.6%, for the three months ended June 28, 2026 and decreased $10.1 million, or 2.2%, for the six months ended June 28, 2026 as compared to the prior year comparable periods.

The decrease was primarily due to lower transaction volumes, partially offset by higher prices.

The decrease in commissary revenues was also partially offset by an increase in franchised restaurants as a result of the 2025 refranchising transaction discussed above, which contributed to an increase of approximately $7 million and $14 million for the three and six months ended June 28, 2026, respectively.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business, decreased $1.7 million, or 7.2%, and decreased $3.6 million, or 7.8%, for the three and six months ended June 28, 2026, respectively, as compared to the prior year comparable periods.

The decreases were primarily due to lower revenues generated from technology services as a result of a reduction in the technology fee charged to franchisees that began in the second half of 2025, as well as North America systemwide sales declines of 8.3% and 7.4% for the three and six months ended June 28, 2026, respectively.

Advertising funds revenue, which includes the operations of PJMF as well as local and International marketing funds, decreased $2.8 million, or 6.4%, and decreased $3.0 million, or 3.4% for the three and six months ended June 28, 2026, respectively, as compared to the prior year comparable periods.

The decreases were primarily driven by global system-wide restaurant sales decline of 4.8% and 4.0% for the three and six months ended June 28, 2026, respectively.

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 Increase

March 29, 2026 March 30, 2025 QTD

(Dollars in thousands) Three Months Ended Six Months Ended Increase

June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 QTD YTD

Costs and expenses:

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Total costs and expenses $ 459,210 $ 504,676 $ 917,061 $ 999,020 (9.0) % (8.2) %

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 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

Total costs and expenses were $459.2 million, or 95.2% of total revenues, and $917.1 million, or 95.4% of total revenues, for the three and six months ended June 28, 2026, respectively, as compared to $504.7 million, or 95.4% of total revenues, and $999.0 million, or 95.4% of total revenues, for the prior year comparable periods, respectively.

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

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

Costs of sales by segment for the three and six months ended June 28, 2026 and June 29, 2025 were as follows:

Three Months Ended Six Months Ended Increase

(In thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 QTD YTD

Domestic Company-owned restaurants (a)

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(a) Segment cost of sales include stock-based compensation expenses and other adjustments that are excluded from our segment results, which are presented on an adjusted basis (see “Note 12.

(a) Segment cost of sales in the table above include stock-based compensation expenses and other adjustments that are excluded from segment expenses in the segment footnote, which are presented on an adjusted basis (see “Note 12.

Segment Information”).

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

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

The decrease in cost of sales 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.

(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.

These are not considered operating segments.

Cost of sales were $339.0 million and $679.9 million for the three and six months ended June 28, 2026, a decrease of $32.7 million and $58.3 million, respectively, from the prior year comparable periods.

The decreases in cost of sales were primarily due the Domestic Company-owned restaurant segment as a result of the 2025 refranchising transaction, which resulted in fewer Company-owned restaurants in 2026 compared to the prior year comparable periods and drove a decrease of approximately $23 million and $46 million in cost of sales for the Domestic Company-owned restaurant segment for the three and six months ended June 28, 2026, respectively.

The Domestic Company-owned restaurant segment cost of sales also decreased due to improved labor productivity and lower local advertising costs.

Cost of sales for the Domestic Company-owned restaurants and Domestic QC Centers also decreased due to lower transaction volumes as a result of lower North America comparable sales.

These decreases were partially offset by increases in labor and technology costs for our online and mobile ordering business and were further offset by decreases in intersegment cost of sales due to a decrease in the number of Domestic Company-owned restaurants as a result of the 2025 refranchising transaction discussed above.

The decrease for the six months ended June 28, 2026 was also partially offset by higher volumes for our International restaurants due to an increase in International comparable sales.

General and administrative expenses (“G&A”) expenses were $59.0 million, or 12.2% of total revenues, and $115.0 million, or 12.0% of total revenues, for the three and six months ended June 28, 2026, respectively, as compared to $70.1 million, or 13.3% of total revenues, and $135.3 million, or 12.9% of total revenues, for the prior year comparable periods, respectively.

G&A expenses consisted of the following:

Three Months Ended

(In thousands) March 29,

2026 March 30,

Three Months Ended Six Months Ended

(In thousands) June 28,

2026 June 29,

2025 June 28,

2026 June 29,

Administrative and other general expenses (a)

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Restructuring costs (b)

Gain on refranchising transaction, net (c)

3,613 2,475 7,849 4,631

Refranchising transaction expense (gain), net (c)

Other costs (d)

3,744 2,838 5,354 4,305

General and administrative expenses $ 58,954 $ 70,118 $ 114,950 $ 135,285

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(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.

(a) Administrative and other general expenses decreased by $13.3 million and $23.8 million, respectively, for the three and six months ended June 28, 2026.

The decrease for the three months ended June 28, 2026 compared to the prior year comparable period was primarily due to a $5.4 million reduction in supplemental advertising costs and a $5.6 million decrease in management and other compensation costs.

The decrease for the six months ended June 28, 2026 was primarily due to an $8.0 million year-over-year reduction in supplemental advertising costs, a $6.7 million decrease in management and other compensation costs, and $4.5 million of expenses incurred in the first quarter of 2025 for our bi-annual franchise operating conference that did not recur in 2026.

(b) For the three and six months ended June 28, 2026, represents costs associated with the Enterprise Transformation Plan.

For the three and six months ended June 29, 2025, represents costs associated with the International Transformation Plan.

Refer to “Note 9.

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.

(c) Represents additional net transaction expense (gain), associated with the refranchising of 85 restaurants on November 24, 2025.

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

(d) For the three and six months ended June 28, 2026, represents costs associated with project-based strategic initiatives that are not related to our ongoing operations.

For the three and six months ended June 29, 2025, other costs is comprised of the following:

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

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

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

Depreciation and amortization expenses were $19.2 million, or 4.0% of total revenues, and $37.0 million, or 3.8% of total revenues, for the three and six months ended June 28, 2026, respectively, as compared to $18.8 million, or 3.6% of total revenues, and $37.2 million, or 3.5% of total revenues, for the prior year comparable periods, respectively.

During the three months ended June 28, 2026, we incurred approximately $1.6 million of accelerated depreciation expense related to investments in our new point-of-sale system and omnichannel experience, as well as related to the closure or approved closure of 25 Company-owned restaurants under our Enterprise Transformation Plan.

The increase in depreciation expense as a percentage of total revenues over the comparable periods is primarily due to lower transaction volumes and the accelerated depreciation expense discussed above.

Advertising funds expense was $42.0 million, or 101.5% of advertising funds revenue, and $85.2 million, or 100.5% of advertising funds revenue for the three and six months ended June 28, 2026, respectively, compared with $44.0 million, or 99.7% of advertising funds revenue, and $88.4 million, or 100.6% of advertising funds revenue, for the prior year comparable periods, respectively.

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

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.

The decrease in advertising funds expense for the three and six months ended June 28, 2026 compared to the prior year comparable periods was primarily due to declines in global system-wide restaurant sales in 2026.

Segment Financial Performance

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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

Three Months Ended Six Months Ended Increase

(In thousands) June 28,

2026 June 29,

2025 June 28,

2026 June 29,

Domestic Company-owned restaurants $ 6,635 $ 9,864 $ 14,520 $ 14,896 $ (3,229) $ (376)

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International 7,371 5,637 15,514 11,019 1,734 4,495

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.

Domestic Company-owned restaurants segment adjusted EBITDA decreased $3.2 million for the three months ended June 28, 2026 primarily due to a decrease in comparable sales of 8.9% and due to fewer Domestic Company-owned restaurants as a result of the 2025 refranchising transaction.

The decrease was partially offset by the impact of a prospective change in our internal cost allocation methodology in 2026 to refine internal allocations of certain operating costs to our segments.

This change in allocation methodology resulted in a $2.1 million increase in Domestic Company-owned restaurants segment adjusted EBITDA for the three months ended June 28, 2026.

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

Domestic Company-owned restaurants segment adjusted EBITDA decreased $0.4 million for the six months ended June 28, 2026 due primarily to a decrease in comparable sales of 7.4% and due to fewer Domestic Company-owned restaurants as a result of the 2025 refranchising transaction, partially offset by commodity deflation and by the change in cost allocation methodology mentioned above, which resulted in a $4.2 million increase in Domestic Company-owned restaurants segment adjusted EBITDA for the six months ended June 28, 2026.

North America franchising segment adjusted EBITDA decreased $3.1 million and $5.0 million for the three and six months ended June 28, 2026 primarily due to decreases in comparable sales of 8.2% and 7.4%, respectively.

North America commissaries segment adjusted EBITDA increased $2.7 million for the three months ended June 28, 2026 primarily due to higher prices, partially offset by lower transaction volumes in 2026.

North America commissaries segment adjusted EBITDA decreased $4.2 million for the six months ended June 28, 2026 primarily due to lower transaction volumes, franchisee food cost subsidies during the first quarter, and timing of planned pricing during the year.

International segment adjusted EBITDA increased $1.7 million and $4.5 million for the three and six months ended June 28, 2026 primarily due to increases in comparable sales of 1.5% and 2.5%, respectively.

The six months ended June 28, 2026 also increased year-over-year due to favorable foreign currency exchange rate fluctuations.

4-wall EBITDA

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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,

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

(Dollars in thousands) Three Months Ended

2026 % of Related Revenues June 29,

2025 % of Related Revenues

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4-wall EBITDA margin 11.2 % 12.5 %

(Dollars in thousands) Six Months Ended

2026 % of Related Revenues June 29,

2025 % of Related Revenues

Segment revenue $ 278,607 $ 346,592

Less segment cost of sales:

COS - Product Costs 85,817 30.8 % 105,333 30.4 %

COS - Salaries & Benefits 92,178 33.1 % 115,180 33.2 %

COS - Other 68,436 24.6 % 90,485 26.1 %

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

— — % (4,190) (1.2) %

4-wall EBITDA $ 32,176 $ 39,784

4-wall EBITDA margin 11.5 % 11.5 %

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

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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.

4-wall EBITDA decreased $6.3 million to $15.6 million for the three months ended June 28, 2026 as compared to the prior year comparable period.

The decrease was partially due to the 2025 refranchising transaction, which contributed to a decrease of approximately $2 million due to fewer Domestic Company-owned restaurants.

The decrease was also due to lower transaction volumes and higher prices, partially offset by lower labor costs due to increased productivity and lower local advertising costs.

4-wall EBITDA margin for the three months ended June 28, 2026 decreased 1.3% primarily due to lower transaction volumes and higher prices, partially offset by lower labor costs due to increased productivity and lower local advertising costs.

This decrease was also partially offset by the impact of the 2025 refranchising transaction, which drove a 0.7% margin increase over the comparable periods.

4-wall EBITDA decreased $7.6 million to $32.2 million for the six months ended June 28, 2026, as compared to the prior year comparable period.

The decrease was partially due to the 2025 refranchising transaction, which contributed to a decrease of approximately $4 million.

The decrease was also due to lower transaction volumes and higher prices, partially offset by lower labor costs due to increased productivity and lower local advertising costs.

4-wall EBITDA margin for the six months ended June 28, 2026 was 11.5%, consistent with the prior year comparable period.

Margin decreases due to lower transaction volumes and higher prices in 2026 were offset by commodity deflation,

lower labor costs due to increased productivity, lower local advertising costs, and were also offset by the impact of the 2025 refranchising transaction, which drove a 0.6% margin increase over the comparable periods.

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 Increase (Decrease)

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

2026 March 30,

Three Months Ended Six Months Ended Increase (Decrease)

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

2026 June 29,

2025 June 28,

2026 June 29,

Operating income $ 23,187 $ 24,490 $ 43,945 $ 48,455 $ (1,303) $ (4,510)

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Net Interest Expense

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.

Net interest expense decreased $1.1 million and $1.5 million for the three and six months ended June 28, 2026, respectively, compared with the prior year comparable periods, primarily due to lower average interest rates.

Income Tax Expense

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

Our effective income tax rate was 36.4% and 36.8% for the three and six months ended June 28, 2026, respectively, as compared to an effective income tax rate of 30.5% and 31.6% for the prior year comparable periods, respectively.

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

Three Months Ended Six Months Ended

(Dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025

Income before income taxes $ 13,671 $ 13,906 $ 24,746 $ 27,792

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Net Income Attributable to Noncontrolling Interests

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.

Net income included $0.2 million of income attributable to noncontrolling interests for the three months ended June 28, 2026 and $0.2 million of losses attributable to noncontrolling interests for the six months ended June 28, 2026, compared with income of $0.1 million and $0.3 million, respectively, in the prior year comparable periods.

Diluted Earnings Per Common Share

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.

Diluted earnings per common share were $0.24 and $0.46 for the three and six months ended June 28, 2026, respectively, as compared to $0.28 and $0.56 for the prior year comparable periods, respectively, representing a decrease of $0.04 and $0.10, respectively.

Adjusted diluted earnings per common share, a non-GAAP measure, was $0.46 and $0.78 for the three and six months ended June 28, 2026, respectively, as compared to adjusted diluted earnings per common share of $0.41

and $0.77 for the prior year comparable periods, respectively, representing an increase of $0.05 and $0.01, respectively.

See “Non-GAAP Measures” for additional information.

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

Three Months Ended

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

2026 March 30,

Three Months Ended Six Months Ended

(In thousands, except per share amounts) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025

Net income $ 8,700 $ 9,671 $ 15,638 $ 19,014

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Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

3,438 2,451 7,548 4,631

Other costs (b)

3,744 3,031 5,354 4,498

Refranchising transaction expense (gain), net (c)

Adjusted EBITDA $ 52,719 $ 52,615 $ 100,482 $ 102,239

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General & Administrative - Domestic Company-owned restaurants 8,966 9,948 17,656 20,698

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

4-wall EBITDA (f)

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

— 2,095 — 4,190

4-wall EBITDA (g)

$ 15,601 $ 21,907 $ 32,176 $ 39,784

Segment revenue - Domestic Company-owned restaurants $ 138,936 $ 175,797 $ 278,607 $ 346,592

4-wall EBITDA margin (f)

4-wall EBITDA margin (g)

11.2 % 12.5 % 11.5 % 11.5 %

Net income attributable to common shareholders $ 8,104 $ 9,267 $ 15,063 $ 18,295

Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

Tax effect of adjustments (d)

4,416 2,475 8,706 4,610

Other costs (b)

3,744 3,031 5,354 4,498

Accelerated software depreciation (d)

Refranchising transaction expense (gain), net (c)

289 — (999) —

Tax effect of adjustments (e)

(2,112) (1,250) (3,182) (2,068)

Adjusted net income attributable to common shareholders $ 15,351 $ 13,523 $ 25,852 $ 25,335

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Restructuring costs (a)

Gain on refranchising transaction, net (b)

Other costs (c)

Tax effect of adjustments (d)

0.13 0.07 0.26 0.14

Other costs (b)

0.11 0.10 0.16 0.13

Accelerated software depreciation (d)

0.03 — 0.03 —

Refranchising transaction expense (gain), net (c)

0.01 — (0.03) —

Tax effect of adjustments (e)

(0.06) (0.04) (0.10) (0.06)

Adjusted diluted earnings per common share $ 0.46 $ 0.41 $ 0.78 $ 0.77

___________________________________

(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.

(a) For the three and six months ended June 28, 2026, represents costs associated with the Enterprise Transformation Plan.

These amounts are inclusive of $1.0 million and $1.1 million for the three and six months ended June 28, 2026, respectively, of non-cash stock-based compensation and depreciation expenses which are excluded from adjusted EBITDA above but are reflected as adjustments to non-GAAP diluted EPS.

For the three and six months ended June 29, 2025, represents costs associated with the International Transformation Plan.

Refer to “Note 9.

Restructuring” for additional details.

(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.

(b) For the three and six months ended June 28, 2026, represents costs associated with project-based strategic initiatives that are not related to our ongoing operations.

For the three and six months ended June 29, 2025, other costs is comprised of the following:

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

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

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

(c) Represents additional net transaction expense (gain), associated with the refranchising of 85 restaurants on November 24, 2025.

Net loss attributable to noncontrolling interest for the six months ended June 28, 2026 was approximately $0.4 million.

See “Note 11.

Divestitures ” for additional details.

(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.

(d) Represents incremental accelerated depreciation expense related to the shortened useful life of legacy capitalized software assets due to the ongoing development and deployment of our new point-of-sale system and omnichannel platform.

(e) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 23.2% for the three and six months ended June 28, 2026, and 22.7% for the three and six months ended June 29, 2025.

For the three and six months ended June 28, 2026, the income tax effect excludes $0.3 million of additional state income tax expense included as a separate non-GAAP adjustment that was classified within Income tax expense in the Condensed Consolidated Statements.

(f) 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.

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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.

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

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

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• returning capital to shareholders

In accordance with our capital allocation strategy, the Company’s Board of Directors voted to suspend the quarterly dividend beginning with our third quarter dividend in August 2026.

This action will allow the Company to accelerate investment in its transformation strategy to drive our next phase of growth and increases our flexibility to make targeted investments in the organization.

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 three months ended March 29, 2026 and March 30, 2025 (in thousands):

Three Months Ended

2026 March 30,

The table below summarizes our cash flows for the six months ended June 28, 2026 and June 29, 2025:

Six Months Ended

(In thousands) June 28,

2026 June 29,

Total cash provided by (used in):

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Effect of exchange rate changes on cash and cash equivalents (196) 641

Change in cash and cash equivalents $ 2,086 $ 6,057

Change in cash, cash equivalents, and restricted cash $ (8,460) $ (4,656)

Operating Activities

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.

Total cash provided by operating activities was $35.8 million for the six months ended June 28, 2026 compared to $66.8 million for the corresponding period of 2025.

The decrease of $31.0 million primarily reflects lower net income, timing of collections and marketing spend within our advertising fund, and higher compensation payments within the period, inclusive of the Enterprise Transformation Plan, partially offset by enactment of the “One Big Beautiful Bill Act” in July 2025 that reduced cash taxes paid during 2026 due to the reinstatement of 100% bonus depreciation and full expensing for domestic research and development expenditures.

Investing Activities

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.

Total cash used in investing activities was $17.9 million for the six months ended June 28, 2026 compared to $19.4 million for the same period in 2025.

Net cash used in investing activities during the six months ended June 28, 2026 primarily reflects $27.6 million in capital expenditures, which includes $1.2 million of additional capital expenditures related to natural disasters.

Primary sources of cash in investing activities included $4.3 million from the sale of the building occupied by our former print and promotions business in Louisville, Kentucky and additional cash received related to the 2025 refranchising transaction, as well as distributions of $3.2 million related to our deferred compensation plan.

Net cash used in investing activities of $19.4 million for the six months ended June 29, 2025 primarily reflects $31.7 million in capital expenditures partially offset by repayment of notes issued of $4.5 million and distributions of $4.7 million related to our deferred compensation plan.

Capital expenditures declined by $3.9 million compared to the prior year period due to lower remodel and technology spending during the first half of 2026.

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.

This estimate includes capital outlays for improvements to 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 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.

Total cash used in financing activities was $26.1 million for the six months ended June 28, 2026 compared to $52.8 million for the same period in 2025.

The primary uses of cash in financing activities during the first six months of 2026 were dividend payments of $30.9 million, payments related to finance leases of $5.1 million, and tax payments on equity award issuances of $1.6 million.

The primary source of cash from financing activities was net proceeds of $11.3 million under the PJI Revolving Facility.

In the first half of 2025, the primary uses of cash for financing activities were $30.5 million in dividend payments, payments related to finance leases of $4.9 million, and tax payments on equity award issuances of $1.2 million.

Cash used in financing activities also reflects the impact of net repayments of $16.1 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 that 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.

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

Our outstanding debt as of June 28, 2026 was $733.5 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 $133.5 million outstanding under the PJI Revolving Facility and PJMF Revolving Facility.

Remaining availability under the PJI Revolving Facility as of June 28, 2026 was approximately $468.7 million.

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 March 29, 2026

Permitted Ratio Actual Ratio as of June 28, 2026

Leverage ratio Not to exceed 5.25 to 1.0 3.3 to 1.0

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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 March 29, 2026.

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

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.

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

As of June 28, 2026, the

principal amount of debt outstanding under the PJMF Revolving Facility was approximately $2.3 million.

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

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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 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.

There was no share repurchase activity during the three and six months ended June 28, 2026 or June 29, 2025.

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

Beginning with our third quarter dividend in August 2026, the Company’s Board of Directors voted to suspend the quarterly dividend.

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

The Company paid aggregate cash dividends to common stockholders of $30.9 million ($0.92 per share) and $30.5 million ($0.92 per share) for the six months ended June 28, 2026 and June 29, 2025, respectively.

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 three month periods of 2026 and 2025 (in thousands):

Three Months Ended

2026 March 30,

The Company’s free cash flow was as follows for the six month periods of 2026 and 2025:

Six Months Ended

(In thousands) June 28,

2026 June 29,

Net cash provided by operating activities $ 35,828 $ 66,843

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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.

As of June 28, 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.

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Quantitative and Qualitative Disclosures About Market Risk.”

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.

While we continue to monitor the impact of current and potential tariffs and assess our ability to manage any impacts, tariffs have not had a material impact on our business to date, and we currently do not believe that tariffs imposed by the United States government will 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.

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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, 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 forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, depreciation and amortization, interest expenses, tax rates, system-wide sales, transformation plans, growth initiatives, restaurant portfolio optimization, restaurant operational improvements, 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, artificial intelligence 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 and changes thereto, share repurchases, 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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• risks related to our indebtedness and borrowing costs, including prolonged higher interest rates, and the current state of the credit markets;

• the Company’s ability to continue to pay dividends to stockholders based upon profitability, cash flows and capital adequacy if restaurant sales and operating results decline;

• the Company’s decision to pay or not pay dividends;

• our ability to effectively operate and improve the performance of Company-owned restaurants;

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis